Perficient Reports Third Quarter 2022 Results

~ Revenues Up 18%; Earnings Per Share Up 33%; Company Expands and Extends Share Repurchase Program ~

ST. LOUIS--()--Perficient, Inc. (Nasdaq: PRFT) (“Perficient”), the leading global digital consultancy transforming the world’s largest enterprises and biggest brands, today reported its financial results for the quarter ended September 30, 2022.

Financial Highlights

For the quarter ended September 30, 2022:

  • Revenues increased 18% to $227.6 million from $192.8 million in the third quarter of 2021;
  • Net income increased 32% to $23.0 million from $17.4 million in the third quarter of 2021, primarily as a result of higher revenues, higher gross margin percentage, and lower selling, general and administrative expenses as a percentage of revenue;
  • GAAP earnings per share results on a fully diluted basis increased 33% to $0.64 from $0.48 in the third quarter of 2021;
  • 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 26% to $1.11 from $0.88 in the third quarter of 2021; and
  • Adjusted EBITDA (a non-GAAP measure; see attached schedule, which reconciles to GAAP net income) increased 28% to $53.0 million from $41.5 million in the third quarter of 2021.

Expanding margins drove strong profitability during the third quarter,” said Jeffrey Davis, chairman and CEO. “Our fully integrated delivery model and global depth in the United States, Latin America and India ensure we can serve enterprise customers with the quality, structure and support they desire and require. The recent acquisitions of Inflection Point Systems in Mexico and Ameex Technologies in India brought more than 600 talented colleagues to Perficient and will further supplement our robust offshore growth.”

Other Highlights

Among other recent achievements, Perficient:

  • Expanded the Company’s stock repurchase program by $60.0 million for a total repurchase program of $375.0 million and extended the expiration date of the program from December 31, 2022 to December 31, 2024, through a Board of Directors authorization subsequent to September 30, 2022;
  • Further strengthened its global delivery capabilities and capacity with the acquisition in October 2022 of Ameex Technologies Corporation, a digital experience consultancy based in Schaumburg, Illinois, with offshore operations in Chennai, India;
  • Enhanced its nearshore development expertise with the acquisition in September 2022 of Inflection Point Systems, Inc., a software consulting and product development firm based in Columbia, Maryland, with nearshore operations in Monterrey, Mexico;
  • Was named the 2022 Optimizely Solution Partner of the Year, recognizing Perficient for demonstrating outstanding business performance and excellence in both sales and delivery of Optimizely solutions;
  • Was recognized by Modern Healthcare as the eighth-largest healthcare management consulting firm based on 2021 revenue from total healthcare consulting fees;
  • Announced the graduation of 50 students from Perficient’s Bright Paths program and expanded the customized technology training program to Dallas;
  • Announced a continuance of its collaboration with the Mark Cuban Foundation to host Artificial Intelligence (AI) Bootcamps for high school students in the Dallas and Houston regions; and
  • Was included in the “Technology Transformation Dominant” category in the “IDC Market Analysis Perspective: Worldwide Digital Transformation Professional Services” report, signifying a high market perception of Perficient’s digital transformation capabilities.

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 fourth quarter 2022 revenue to be in the range of $233 million to $239 million. Fourth quarter GAAP earnings per share is expected to be in the range of $0.69 to $0.74. Fourth 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 $1.11 to $1.16.

Perficient is updating its full year 2022 revenue guidance to a range of $905 million to $911 million, updating its 2022 GAAP earnings per share guidance to a range of $2.85 to $2.90 and narrowing its 2022 adjusted earnings per share (a non-GAAP measure; see attached schedule which reconciles to GAAP earnings per share guidance) guidance to a range of $4.25 to $4.30.

Conference Call Details

Perficient will host a conference call regarding third quarter financial results today, October 27, 2022, at 11 a.m. Eastern.

Analysts and investors who wish to ask questions during the Q&A session can register for the call on https://register.vevent.com/register/BI28a92c1364fe4c2197d2edea1e7ac4c1. Registrants will receive confirmation with dial-in details.

A live webcast of the event can be accessed on https://perficient.gcs-web.com/events/event-details/q3-2022-perficient-earnings-conference-call. A replay of the webcast will be available on https://perficient.gcs-web.com/ starting approximately two hours after the event and will be archived on the site for one year.

About Perficient

Perficient is the leading global digital consultancy. We imagine, create, engineer, and run digital transformation solutions that help our clients exceed customers’ expectations, outpace competition, and grow their business. With unparalleled strategy, creative, and technology capabilities, we bring big thinking and innovative ideas, along with a practical approach to help the world’s largest enterprises and biggest brands succeed. Traded on the Nasdaq Global Select Market, Perficient is a member of the Russell 2000 index and the S&P SmallCap 600 index. 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 2022. 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 other securities filings, and the following, many of which are, or may be, amplified by the novel coronavirus (COVID-19) pandemic:

(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 and political uncertainty on our business;

(3)

the impact of the COVID-19 pandemic on our business;

(4)

risks associated with potential changes to federal, state, local and foreign laws, regulations, and policies;

(5)

risks associated with the operation of our business generally, including:

a. client demand for our services and solutions;

b. effectively competing in a highly competitive market;

c. risks from international operations including fluctuations in exchange rates;

d. adapting to changes in technologies and offerings;

e. obtaining favorable pricing to reflect services provided;

f. risk of loss of one or more significant software vendors;

g. maintaining a balance of our supply of skills and resources with client demand;

h. changes to immigration policies;

i. protecting our clients’ and our data and information;

j. changes to tax levels, audits, investigations, tax laws or their interpretation;

k. making appropriate estimates and assumptions in connection with preparing our consolidated financial statements; and

l. maintaining effective internal controls;

(6)

risks associated with managing growth organically and through acquisitions;

(7)

risks associated with servicing our debt, the potential impact on the value of our common stock from the conditional conversion features of our debt and the associated convertible note hedge transactions;

(8)

legal liabilities, including intellectual property protection and infringement or the disclosure of personally identifiable information; and

(9)

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 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.

Unaudited Consolidated Statements of Operations

(in thousands, except per share information)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

Services excluding reimbursable expenses

$

224,934

 

$

190,103

 

$

664,244

 

 

$

537,792

Reimbursable expenses

 

2,110

 

 

2,316

 

 

6,497

 

 

 

7,132

Total services

 

227,044

 

 

192,419

 

 

670,741

 

 

 

544,924

Software and hardware

 

570

 

 

401

 

 

1,722

 

 

 

1,373

Total revenues

 

227,614

 

 

192,820

 

 

672,463

 

 

 

546,297

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization, shown separately below)

 

 

 

 

 

 

 

Cost of services

 

134,195

 

 

115,796

 

 

404,641

 

 

 

330,699

Stock compensation

 

2,221

 

 

2,464

 

 

7,055

 

 

 

6,803

Total cost of revenues

 

136,416

 

 

118,260

 

 

411,696

 

 

 

337,502

 

 

 

 

 

 

 

 

Selling, general and administrative

 

40,440

 

 

35,526

 

 

116,366

 

 

 

100,461

Stock compensation

 

3,833

 

 

3,790

 

 

11,018

 

 

 

10,258

Total selling, general and administrative

 

44,273

 

 

39,316

 

 

127,384

 

 

 

110,719

 

 

 

 

 

 

 

 

Depreciation

 

2,355

 

 

1,607

 

 

6,233

 

 

 

4,682

Amortization

 

6,087

 

 

4,317

 

 

18,064

 

 

 

17,702

Acquisition costs

 

2,148

 

 

1,264

 

 

2,508

 

 

 

1,332

Adjustment to fair value of contingent consideration

 

3,115

 

 

42

 

 

(351

)

 

 

46

Income from operations

 

33,220

 

 

28,014

 

 

106,929

 

 

 

74,314

 

 

 

 

 

 

 

 

Net interest expense

 

616

 

 

3,481

 

 

2,308

 

 

 

10,144

Loss on debt extinguishment

 

 

 

250

 

 

 

 

 

250

Net other expense

 

20

 

 

103

 

 

406

 

 

 

234

Income before income taxes

 

32,584

 

 

24,180

 

 

104,215

 

 

 

63,686

Provision for income taxes

 

9,569

 

 

6,784

 

 

26,282

 

 

 

16,124

 

 

 

 

 

 

 

 

Net income

$

23,015

 

$

17,396

 

$

77,933

 

 

$

47,562

 

 

 

 

 

 

 

 

Basic net income per share

$

0.68

 

$

0.54

 

$

2.30

 

 

$

1.49

Diluted net income per share

$

0.64

 

$

0.48

 

$

2.17

 

 

$

1.39

Shares used in computing basic net income per share

 

33,861

 

 

31,987

 

 

33,873

 

 

 

31,925

Shares used in computing diluted net income per share

 

36,663

 

 

35,893

 

 

36,763

 

 

 

34,177

 

 

 

 

 

 

 

 

Net income used in computing diluted net income per share

$

23,554

 

$

17,396

 

$

79,645

 

 

$

47,562

 

Perficient, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

September 30,
2022 (unaudited)

 

December 31,
2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

20,845

 

 

$

24,410

 

Accounts receivable, net

 

 

192,903

 

 

 

177,602

 

Prepaid expenses

 

 

6,536

 

 

 

5,400

 

Other current assets

 

 

4,755

 

 

 

7,296

 

Total current assets

 

 

225,039

 

 

 

214,708

 

Property and equipment, net

 

 

18,529

 

 

 

14,747

 

Operating lease right-of-use assets

 

 

29,357

 

 

 

33,353

 

Goodwill

 

 

545,842

 

 

 

515,229

 

Intangible assets, net

 

 

82,384

 

 

 

81,277

 

Other non-current assets

 

 

47,586

 

 

 

23,258

 

Total assets

 

$

948,737

 

 

$

882,572

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

19,300

 

 

$

26,074

 

Other current liabilities

 

 

84,715

 

 

 

93,877

 

Total current liabilities

 

 

104,015

 

 

 

119,951

 

Long-term debt, net

 

 

394,050

 

 

 

326,126

 

Operating lease liabilities

 

 

20,661

 

 

 

23,898

 

Other non-current liabilities

 

 

45,741

 

 

 

47,832

 

Total liabilities

 

$

564,467

 

 

$

517,807

 

Stockholders' equity:

 

 

 

 

Preferred stock

 

$

 

 

$

 

Common stock

 

 

53

 

 

 

53

 

Additional paid-in capital

 

 

393,101

 

 

 

423,235

 

Accumulated other comprehensive loss

 

 

(14,217

)

 

 

(5,843

)

Treasury stock

 

 

(346,471

)

 

 

(324,412

)

Retained earnings

 

 

351,804

 

 

 

271,732

 

Total stockholders’ equity

 

 

384,270

 

 

 

364,765

 

Total liabilities and stockholders’ equity

 

$

948,737

 

 

$

882,572

 

 

 

 

 

 

 

Perficient, Inc.

Unaudited Condensed Consolidated Statements of Cash Flow

(in thousands)

 

 

Nine Months Ended September 30,

 

2022

 

2021

Net income

$

77,933

 

 

$

47,562

 

Adjustments to reconcile net income to net cash provided by operations

 

36,148

 

 

 

45,114

 

Changes in operating assets and liabilities, net of business acquisitions

 

(42,640

)

 

 

(54,541

)

Net cash provided by operating activities

 

71,441

 

 

 

38,135

 

Net cash used in investing activities

 

(52,413

)

 

 

(21,526

)

Net cash used in financing activities

 

(21,227

)

 

 

(42,785

)

Effect of exchange rate on cash and cash equivalents

 

(1,366

)

 

 

(623

)

Change in cash and cash equivalents

 

(3,565

)

 

 

(26,799

)

Cash and cash equivalents at beginning of period

 

24,410

 

 

 

83,204

 

Cash and cash equivalents at end of period

$

20,845

 

 

$

56,405

 

 

See the Company's Form 10-Q for the full interim unaudited condensed consolidated statements of cash flows.

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 adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock compensation, loss on extinguishment of debt, 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, amortization of debt discounts and issuance costs related to convertible senior notes, loss on extinguishment of debt, 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 adjusted EBITDA 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 adjusted EBITDA, 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

Perficient has incurred expense on amortization of intangible assets primarily related to various acquisitions. Management excludes these items for the purposes of calculating adjusted EBITDA, 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 adjusted EBITDA, 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.

Adjustment 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 EBITDA, 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.

Amortization of Debt Discount and Debt Issuance Costs

On November 9, 2021, Perficient issued $380.0 million aggregate principal amount of 0.125% Convertible Senior Notes due 2026, on August 14, 2020, Perficient issued $230.0 million aggregate principal amount of 1.250% Convertible Senior Notes due 2025, and on September 11, 2018, Perficient issued $143.8 million aggregate principal amount of 2.375% Convertible Senior Notes due 2023 (the “2026 Notes,” “2025 Notes,” and “2023 Notes,” respectively, and collectively, the “Notes”) in private placements to qualified institutional purchasers. In accordance with accounting for debt with conversions and other options, Perficient bifurcated the principal amount of the Notes into liability and equity components. The resulting debt discounts were amortized to interest expense over the period from the issuance dates through the respective contractual maturity dates. Upon adoption of Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) on January 1, 2022, Perficient no longer records amortization of debt discount as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. Issuance costs attributable to the Notes, in addition to issuance costs related to Perficient’s credit agreement, are being amortized to interest expense over their respective terms. Perficient believes that excluding these non-cash expenses from its non-GAAP financial measures is useful to investors because the expenses are not reflective of Perficient’s business performance.

Loss on Extinguishment of Debt

Perficient repurchased its 2023 Notes in 2020 and 2021, which resulted in a loss on extinguishment of debt. Perficient believes that excluding this loss from its non-GAAP financial measures is useful to investors because the expenses are not reflective of Perficient’s business performance.

Foreign Exchange Loss (Gain)

Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in net other expense (income) in our consolidated statements of operations. As our operations expand into countries outside of the United States, and in particular as a result of our 2021 acquisition of Izmul S.A. and its subsidiaries (“Overactive”), based in Argentina, Chile, Colombia, Puerto Rico, and Uruguay, and our 2020 acquisition of Productora de Software S.A.S., based in Colombia, foreign exchange gains and losses have and will become increasingly material. Perficient believes that excluding these gains and losses from its non-GAAP financial measures is useful to investors because foreign exchange gains and losses will vary as the underlying currencies fluctuate, which makes it difficult to compare current and historical results.

Stock 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 adjusted EBITDA, 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.

Dilution Offset from Convertible Note Hedge Transactions

It is Perficient’s current intent to settle conversions of the Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of our common stock. Perficient excludes the shares that are issuable upon conversions of the Notes because Perficient expects that the dilution from such shares will be offset by the convertible note hedge transactions entered into in November 2021, August 2020, and September 2018 in connection with the issuance of the Notes.

Perficient, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

(in thousands, except per share data)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

GAAP Net Income

$

23,015

 

 

$

17,396

 

 

$

77,933

 

 

$

47,562

 

Adjustments:

 

 

 

 

 

 

 

Provision for income taxes

 

9,569

 

 

 

6,784

 

 

 

26,282

 

 

 

16,124

 

Amortization

 

6,087

 

 

 

4,317

 

 

 

18,064

 

 

 

17,702

 

Acquisition costs

 

2,148

 

 

 

1,264

 

 

 

2,508

 

 

 

1,332

 

Adjustment to fair value of contingent consideration

 

3,115

 

 

 

42

 

 

 

(351

)

 

 

46

 

Amortization of debt discount and issuance costs

 

607

 

 

 

2,594

 

 

 

1,822

 

 

 

7,684

 

Loss on extinguishment of debt

 

 

 

 

250

 

 

 

 

 

 

250

 

Foreign exchange loss

 

54

 

 

 

121

 

 

 

427

 

 

 

257

 

Stock compensation

 

6,054

 

 

 

6,254

 

 

 

18,073

 

 

 

17,061

 

Adjusted Net Income Before Tax

 

50,649

 

 

 

39,022

 

 

 

144,758

 

 

 

108,018

 

Adjusted income tax (1)

 

12,764

 

 

 

9,482

 

 

 

36,913

 

 

 

26,788

 

Adjusted Net Income

$

37,885

 

 

$

29,540

 

 

$

107,845

 

 

$

81,230

 

 

 

 

 

 

 

 

 

GAAP Earnings Per Share (diluted)

$

0.64

 

 

$

0.48

 

 

$

2.17

 

 

$

1.39

 

Adjusted Earnings Per Share (diluted)

$

1.11

 

 

$

0.88

 

 

$

3.14

 

 

$

2.49

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP Earnings Per Share (diluted)

 

36,663

 

 

 

35,893

 

 

 

36,763

 

 

 

34,177

 

Dilution offset from convertible note hedge transactions

 

(2,431

)

 

 

(2,252

)

 

 

(2,431

)

 

 

(1,515

)

Shares used in computing Adjusted Earnings Per Share (diluted)

 

34,232

 

 

 

33,641

 

 

 

34,332

 

 

 

32,662

 

 

 

 

 

 

 

 

 

Net income used in computing GAAP Earnings Per Share (diluted)

$

23,554

 

 

$

17,396

 

 

$

79,645

 

 

$

47,562

 

(1)

The estimated adjusted effective tax rate of 25.2% and 24.3% for the three months ended September 30, 2022 and 2021, respectively, and 25.5% and 24.8% for the nine months ended September 30, 2022 and 2021, 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
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

GAAP Net Income

$

23,015

 

$

17,396

 

$

77,933

 

 

$

47,562

Adjustments:

 

 

 

 

 

 

 

Provision for income taxes

 

9,569

 

 

6,784

 

 

26,282

 

 

 

16,124

Net interest expense

 

616

 

 

3,481

 

 

2,308

 

 

 

10,144

Net other expense

 

20

 

 

103

 

 

406

 

 

 

234

Depreciation

 

2,355

 

 

1,607

 

 

6,233

 

 

 

4,682

Amortization

 

6,087

 

 

4,317

 

 

18,064

 

 

 

17,702

Acquisition costs

 

2,148

 

 

1,264

 

 

2,508

 

 

 

1,332

Adjustment to fair value of contingent consideration

 

3,115

 

 

42

 

 

(351

)

 

 

46

Loss on extinguishment of debt

 

 

 

250

 

 

 

 

 

250

Stock compensation

 

6,054

 

 

6,254

 

 

18,073

 

 

 

17,061

Adjusted EBITDA (1)

$

52,979

 

$

41,498

 

$

151,456

 

 

$

115,137

(1)

Adjusted EBITDA 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. Adjusted EBITDA measures presented may not be comparable to similarly titled measures presented by other companies.

Perficient, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

 

 

Q4 2022

 

Full Year 2022

 

Low end of
adjusted goal

 

High end of
adjusted goal

 

Low end of
adjusted goal

 

High end of
adjusted goal

GAAP EPS

$

0.69

 

 

$

0.74

 

 

$

2.85

 

 

$

2.90

 

Non-GAAP adjustment (1):

 

 

 

 

 

 

 

Non-GAAP reconciling items

 

0.49

 

 

 

0.49

 

 

 

1.77

 

 

 

1.77

 

Tax effect of reconciling items

 

(0.07

)

 

 

(0.07

)

 

 

(0.37

)

 

 

(0.37

)

Adjusted EPS

$

1.11

 

 

$

1.16

 

 

$

4.25

 

 

$

4.30

 

(1)

Non-GAAP adjustment represents the impact of amortization expense, stock compensation, amortization of debt issuance costs, foreign exchange gains and losses, loss on extinguishment of debt, acquisition costs, and adjustments to fair value of contingent consideration, net of the tax effect of these adjustments, divided by adjusted fully diluted shares. Upon adoption of ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) on January 1, 2022, Perficient no longer records amortization of debt discount as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. Perficient currently expects its Q4 2022 and full year 2022 GAAP effective income tax rate to be approximately 29% and 26%, respectively. Perficient’s estimates of GAAP and adjusted fully diluted shares for 2022 are included in the following table. These estimates could be affected by share repurchases, shares issued in conjunction with future acquisitions, changes in share price and the potential impact from the conditional conversion features of our debt.

(in millions)

Q4 2022 (2)

 

Full Year 2022 (2)

GAAP Fully Diluted Shares (3)

36.7

 

 

36.7

 

Non-GAAP adjustment (4):

 

 

 

Dilution offset from convertible note hedge transactions

(2.4

)

 

(2.4

)

Adjusted Fully Diluted Shares

34.3

 

 

34.3

 

(2)

The calculation of fully diluted shares assumes an average share price of $70 per share for the three months ending December 31, 2022; provided, however, that Perficient makes no prediction as to what its actual stock price will be for such period or any other period.

(3)

Upon adoption of ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) on January 1, 2022, Perficient prospectively utilizes the if-converted method to calculate the impact of convertible instruments on GAAP diluted earnings per share.

(4)

Non-GAAP adjustment represents the exclusion of shares that are issuable upon conversion of our convertible notes due to the expectation that shares relating to the principal amount of our convertible notes will be paid in cash and any excess will be offset by the convertible note hedge transactions entered into in August 2020 and November 2021.

 

Contacts

Bill Davis, Perficient, 314-529-3555
bill.davis@perficient.com

Release Summary

Perficient today reported its financial results for the quarter ended September 30, 2022.

Contacts

Bill Davis, Perficient, 314-529-3555
bill.davis@perficient.com