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Perficient Reports Second Quarter 2023 Results

~ CEO Jeff Davis to Transition to Executive Chairman on October 1, 2023 ~

~ President and COO Tom Hogan Appointed Chief Executive Officer and Joins Board, Each Effective October 1, 2023 ~

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 June 30, 2023.

Financial Highlights

For the quarter ended June 30, 2023:

  • Revenues increased 4% to $231.1 million from $222.7 million in the second quarter of 2022;
  • Net income remained strong at $26.4 million, but decreased from $27.8 million in the second quarter of 2022;
  • GAAP earnings per share results on a fully diluted basis decreased 5% to $0.73 from $0.77 in the second quarter of 2022;
  • Adjusted earnings per share results (a non-GAAP measure; see attached schedule, which reconciles to GAAP earnings per share) on a fully diluted basis decreased 6% to $1.00 from $1.06 in the second quarter of 2022; and
  • Adjusted EBITDA (a non-GAAP measure; see attached schedule, which reconciles to GAAP net income) decreased 6% to $48.2 million from $51.2 million in the second quarter of 2022.

“While enterprises are proceeding cautiously amidst conflicting macroeconomic signals, Perficient’s integrated delivery model that blends great global talent and depth in North America, Latin America and India continues to appeal to the world’s leading companies and biggest brands,” said Jeffrey Davis, chairman and CEO. “In the second half of the year, we’re focused on continuing to deliver best-of-breed margins.”

Other Highlights

Among other recent achievements, Perficient:

  • Announced that effective October 1, 2023, Mr. Davis will transition from CEO to Executive Chairman, and Thomas J. Hogan, Perficient’s President and COO, will succeed Mr. Davis as CEO. Mr. Hogan will continue to serve as President, a role he has served in since February 2021. Mr. Hogan joined Perficient in 2008 and began serving as COO in 2018. The Perficient Board of Directors (the “Board”) also approved an increase in the size of the Board and appointed Mr. Hogan to fill the newly-created vacancy, effective as of October 1, 2023;
  • Has added Jill A. Jones, former executive vice president at Brown-Forman Corp. (NYSE: BFA and BFB), to its Board of Directors upon her election at the 2023 annual meeting of Perficient’s stockholders;
  • Launched the Perficient Cultural Connections Employee Resource Group (ERG), a global community of colleagues focused on exploring, understanding, and advancing the cultural differences that help shape Perficient’s global workforce;
  • Was named a 2023 Top Workplace USA, recognizing Perficient’s collaborative and people-centric work culture. Perficient ranks 12th on the national list, ranking higher than all other listed large digital consultancies;
  • Received the 2023 Sitecore Partner Award for Excellence in Business Impact, honoring Perficient’s outstanding performance in delivering quality solutions using the Sitecore platform that transform business outcomes;
  • Was recognized with Sunbelt Rentals as the 2023 Adobe Experience Maker Engager Award winner for exceptional achievement in transforming pipeline creation to drive measurable business growth;
  • Was recognized as a 2023 Microsoft U.S. Partner of the Year finalist for having a track record of building new cloud-native apps and providing outstanding solutions and services in Cloud Native App Development;
  • For the fourth year in a row, was recognized in Modern Healthcare’s annual survey as one of the 10 largest healthcare management consulting firms; and
  • Was included in Forrester’s “Commerce Services Landscape, Q3, 2023” report as a medium-sized consultancy helping companies craft end-to-end commerce strategies and operate total commerce experiences.

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 2023 revenue to be in the range of $220 million to $226 million. Third quarter GAAP earnings per share is expected to be in the range of $0.56 to $0.60. 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 $0.89 to $0.94.

Perficient reduced its full year 2023 revenue guidance to a range of $900 million to $916 million from a range of $945 million to $985 million, reduced its 2023 GAAP earnings per share guidance to a range of $2.73 to $2.84 from a range of $3.24 to $3.40 and reduced its 2023 adjusted earnings per share (a non-GAAP measure; see attached schedule which reconciles to GAAP earnings per share guidance) guidance to a range of $3.93 to $4.05 from a range of $4.60 to $4.75.

Conference Call Details

Perficient will host a conference call regarding second quarter financial results today, July 27, 2023, 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/BIec555ee83c9a4f5c94ff854133b408f2. 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/q2-2023-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 2023. 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:

(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)

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

(4)

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. the ongoing transition of our executive leadership team;

f. obtaining favorable pricing to reflect services provided;

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

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

i. changes to immigration policies;

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

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

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

m. maintaining effective internal controls;

(5)

risks associated with managing growth organically and through acquisitions;

(6)

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;

(7)

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

(8)

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.

Unaudited Consolidated Statements of Operations

(in thousands, except per share information)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues

 

 

 

 

 

 

 

Services excluding reimbursable expenses

$

228,573

 

 

$

219,835

 

 

$

456,957

 

 

$

439,310

 

Reimbursable expenses

 

2,127

 

 

 

2,428

 

 

 

4,596

 

 

 

4,387

 

Total services

 

230,700

 

 

 

222,263

 

 

 

461,553

 

 

 

443,697

 

Software and hardware

 

405

 

 

 

475

 

 

 

960

 

 

 

1,152

 

Total revenues

 

231,105

 

 

 

222,738

 

 

 

462,513

 

 

 

444,849

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Cost of services

 

143,560

 

 

 

134,356

 

 

 

285,248

 

 

 

270,446

 

Stock compensation

 

2,608

 

 

 

2,406

 

 

 

5,132

 

 

 

4,834

 

Total cost of revenues

 

146,168

 

 

 

136,762

 

 

 

290,380

 

 

 

275,280

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

39,390

 

 

 

37,150

 

 

 

78,994

 

 

 

75,926

 

Stock compensation

 

4,787

 

 

 

3,710

 

 

 

9,103

 

 

 

7,185

 

Total selling, general and administrative

 

44,177

 

 

 

40,860

 

 

 

88,097

 

 

 

83,111

 

 

 

 

 

 

 

 

 

Depreciation

 

2,224

 

 

 

2,005

 

 

 

4,529

 

 

 

3,878

 

Amortization

 

5,523

 

 

 

5,998

 

 

 

11,340

 

 

 

11,977

 

Acquisition costs

 

(71

)

 

 

61

 

 

 

8

 

 

 

360

 

Adjustment to fair value of contingent consideration

 

(2,701

)

 

 

(2,487

)

 

 

(4,727

)

 

 

(3,466

)

Income from operations

 

35,785

 

 

 

39,539

 

 

 

72,886

 

 

 

73,709

 

 

 

 

 

 

 

 

 

Net interest expense

 

296

 

 

 

805

 

 

 

801

 

 

 

1,692

 

Net other expense

 

387

 

 

 

153

 

 

 

462

 

 

 

386

 

Income before income taxes

 

35,102

 

 

 

38,581

 

 

 

71,623

 

 

 

71,631

 

Provision for income taxes

 

8,740

 

 

 

10,799

 

 

 

18,461

 

 

 

16,713

 

 

 

 

 

 

 

 

 

Net income

$

26,362

 

 

$

27,782

 

 

$

53,162

 

 

$

54,918

 

 

 

 

 

 

 

 

 

Basic net income per share

$

0.78

 

 

$

0.82

 

 

$

1.57

 

 

$

1.62

 

Diluted net income per share

$

0.73

 

 

$

0.77

 

 

$

1.48

 

 

$

1.52

 

Shares used in computing basic net income per share

 

33,988

 

 

 

33,914

 

 

 

33,951

 

 

 

33,879

 

Shares used in computing diluted net income per share

 

36,717

 

 

 

36,785

 

 

 

36,707

 

 

 

36,812

 

 

 

 

 

 

 

 

 

Net income used in computing diluted net income per share

$

26,935

 

 

$

28,332

 

 

$

54,295

 

 

$

56,088

 

Perficient, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

June 30, 2023

(unaudited)

 

December 31, 2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

60,471

 

 

$

30,130

 

Accounts receivable, net

 

 

186,124

 

 

 

202,298

 

Prepaid expenses

 

 

6,383

 

 

 

6,432

 

Other current assets

 

 

15,652

 

 

 

16,756

 

Total current assets

 

 

268,630

 

 

 

255,616

 

Property and equipment, net

 

 

15,298

 

 

 

17,970

 

Operating lease right-of-use assets

 

 

25,606

 

 

 

27,088

 

Goodwill

 

 

575,173

 

 

 

565,161

 

Intangible assets, net

 

 

79,391

 

 

 

88,937

 

Other non-current assets

 

 

49,594

 

 

 

41,116

 

Total assets

 

$

1,013,692

 

 

$

995,888

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

16,220

 

 

$

24,351

 

Other current liabilities

 

 

62,071

 

 

 

104,780

 

Total current liabilities

 

 

78,291

 

 

 

129,131

 

Long-term debt, net

 

 

395,731

 

 

 

394,587

 

Operating lease liabilities

 

 

19,964

 

 

 

18,528

 

Other non-current liabilities

 

 

45,015

 

 

 

43,515

 

Total liabilities

 

$

539,001

 

 

$

585,761

 

Stockholders’ equity:

 

 

 

 

Preferred stock

 

$

 

 

$

 

Common stock

 

 

53

 

 

 

53

 

Additional paid-in capital

 

 

418,123

 

 

 

403,866

 

Accumulated other comprehensive loss

 

 

(10,142

)

 

 

(17,519

)

Treasury stock

 

 

(364,768

)

 

 

(354,536

)

Retained earnings

 

 

431,425

 

 

 

378,263

 

Total stockholders’ equity

 

 

474,691

 

 

 

410,127

 

Total liabilities and stockholders’ equity

 

$

1,013,692

 

 

$

995,888

 

Perficient, Inc.

Unaudited Condensed Consolidated Statements of Cash Flow

(in thousands)

 

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

Net income

$

53,162

 

 

$

54,918

 

Adjustments to reconcile net income to net cash provided by operations

 

18,662

 

 

 

24,901

 

Changes in operating assets and liabilities, net of business acquisitions

 

(6,713

)

 

 

(45,839

)

Net cash provided by operating activities

 

65,111

 

 

 

33,980

 

Net cash used in investing activities

 

(3,553

)

 

 

(6,728

)

Net cash used in financing activities

 

(31,830

)

 

 

(12,250

)

Effect of exchange rate on cash and cash equivalents

 

613

 

 

 

(544

)

Change in cash and cash equivalents

 

30,341

 

 

 

14,458

 

Cash and cash equivalents at beginning of period

 

30,130

 

 

 

24,410

 

Cash and cash equivalents at end of period

$

60,471

 

 

$

38,868

 

 

See the Company's Form 10-Q for the full 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, adjustment to fair value of contingent consideration and other acquisition adjustments), 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 issuance costs related to convertible senior notes, loss on extinguishment of debt, acquisition costs, adjustments to the fair value of contingent consideration, other acquisition adjustments, 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 Issuance Costs

On November 9, 2021, Perficient issued $380.0 million aggregate principal amount of 0.125% Convertible Senior Notes due 2026, and on August 14, 2020, Perficient issued $230.0 million aggregate principal amount of 1.250% Convertible Senior Notes due 2025 (the “2026 Notes,” and “2025 Notes,” respectively, and collectively, the “Notes”) in private placements to qualified institutional purchasers. 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.

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, 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 and August 2020 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 June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP Net Income

$

26,362

 

 

$

27,782

 

 

$

53,162

 

 

$

54,918

 

Adjustments:

 

 

 

 

 

 

 

Provision for income taxes

 

8,740

 

 

 

10,799

 

 

 

18,461

 

 

 

16,713

 

Amortization

 

5,523

 

 

 

5,998

 

 

 

11,340

 

 

 

11,977

 

Acquisition costs

 

(71

)

 

 

61

 

 

 

8

 

 

 

360

 

Adjustment to fair value of contingent consideration

 

(2,701

)

 

 

(2,487

)

 

 

(4,727

)

 

 

(3,466

)

Amortization of debt issuance costs

 

631

 

 

 

608

 

 

 

1,239

 

 

 

1,215

 

Foreign exchange loss

 

382

 

 

 

158

 

 

 

471

 

 

 

373

 

Stock compensation

 

7,395

 

 

 

6,116

 

 

 

14,235

 

 

 

12,019

 

Adjusted Net Income Before Tax

 

46,261

 

 

 

49,035

 

 

 

94,189

 

 

 

94,109

 

Adjusted income tax (1)

 

11,843

 

 

 

12,700

 

 

 

24,207

 

 

 

24,186

 

Adjusted Net Income

$

34,418

 

 

$

36,335

 

 

$

69,982

 

 

$

69,923

 

 

 

 

 

 

 

 

 

GAAP Earnings Per Share (diluted)

$

0.73

 

 

$

0.77

 

 

$

1.48

 

 

$

1.52

 

Adjusted Earnings Per Share (diluted)

$

1.00

 

 

$

1.06

 

 

$

2.04

 

 

$

2.03

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP Earnings Per Share (diluted)

 

36,717

 

 

 

36,785

 

 

 

36,707

 

 

 

36,812

 

Dilution offset from convertible note hedge transactions

 

(2,430

)

 

 

(2,431

)

 

 

(2,430

)

 

 

(2,431

)

Shares used in computing Adjusted Earnings Per Share (diluted)

 

34,287

 

 

 

34,354

 

 

 

34,277

 

 

 

34,381

 

 

 

 

 

 

 

 

 

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

$

26,935

 

 

$

28,332

 

 

$

54,295

 

 

$

56,088

 

(1)

The estimated adjusted effective tax rate of 25.6% and 25.9% for the three months ended June 30, 2023 and 2022, respectively, and 25.7% for both the six months ended June 30, 2023 and 2022, 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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP Net Income

$

26,362

 

 

$

27,782

 

 

$

53,162

 

 

$

54,918

 

Adjustments:

 

 

 

 

 

 

 

Provision for income taxes

 

8,740

 

 

 

10,799

 

 

 

18,461

 

 

 

16,713

 

Net interest expense

 

296

 

 

 

805

 

 

 

801

 

 

 

1,692

 

Net other expense

 

387

 

 

 

153

 

 

 

462

 

 

 

386

 

Depreciation

 

2,224

 

 

 

2,005

 

 

 

4,529

 

 

 

3,878

 

Amortization

 

5,523

 

 

 

5,998

 

 

 

11,340

 

 

 

11,977

 

Acquisition costs

 

(71

)

 

 

61

 

 

 

8

 

 

 

360

 

Adjustment to fair value of contingent consideration

 

(2,701

)

 

 

(2,487

)

 

 

(4,727

)

 

 

(3,466

)

Stock compensation

 

7,395

 

 

 

6,116

 

 

 

14,235

 

 

 

12,019

 

Adjusted EBITDA (1)

$

48,155

 

 

$

51,232

 

 

$

98,271

 

 

$

98,477

 

(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)

 

Q3 2023

 

Full Year 2023

 

Low end of

adjusted goal

 

High end of

adjusted goal

 

Low end of

adjusted goal

 

High end of

adjusted goal

GAAP EPS

$

0.56

 

 

$

0.60

 

 

$

2.73

 

 

$

2.84

 

Non-GAAP adjustment (1):

 

 

 

 

 

 

 

Non-GAAP reconciling items

 

0.44

 

 

 

0.44

 

 

 

1.57

 

 

 

1.57

 

Tax effect of reconciling items

 

(0.11

)

 

 

(0.10

)

 

 

(0.37

)

 

 

(0.36

)

Adjusted EPS

$

0.89

 

 

$

0.94

 

 

$

3.93

 

 

$

4.05

 

(1)

Non-GAAP adjustment represents the impact of amortization expense, stock compensation, amortization of debt issuance costs, foreign exchange gains and losses, acquisition costs and adjustments to fair value of contingent consideration, net of the tax effect of these adjustments, divided by adjusted fully diluted shares. Perficient currently expects its Q3 2023 and full year 2023 GAAP effective income tax rate to be approximately 30% and 27%, respectively. Perficient currently expects its Q3 2023 and full year 2023 estimated adjusted effective income tax rate to be approximately 29% and 27%, respectively. Perficient’s estimates of GAAP and adjusted fully diluted shares for 2023 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)

Q3 2023

 

Full Year 2023

GAAP Fully Diluted Shares

36.9

 

 

36.8

 

Non-GAAP adjustment (2):

 

 

 

Dilution offset from convertible note hedge transactions

(2.4

)

 

(2.4

)

Adjusted Fully Diluted Shares

34.5

 

 

34.4

 

(2)

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.

 

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