Perficient CEO Discusses Q3 2010 Results - Earnings Call Transcript
Perficient Inc. (
)
Q3 2010 Earnings Call
November 04, 2010 10:00 am ET
Executives
Jeff Davis - President and CEO
Paul Martin - CFO
Analysts
Brian Kintslinger - Sidoti & Company
Matt McCormack - BGB Securities
Peter Heckmann - Avondale Partners
Jon Maietta - Needham & Company
Colin Geller - UCD Financial
Ryan Hunter - Wedge Partners
Presentation
Operator
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Perficient, Inc. Q2 2010 Earnings Call Transcript
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Perficient Inc. Q1 2010 Earnings Call Transcript
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Perficient, Inc. Q4 2009 Earnings Call Transcript
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Perficient, Inc. Q3 2009 Earnings Call Transcript
Good day ladies and gentlemen and welcome to the third quarter 2010 Perficient’s earnings conference call. My name is Katie and I will be your coordinator for today. At this time, all participants will be in a listen-only mode. We will be conducting a question-and-answer session towards the end of the call. (Operator Instruction).
I would like to now hand the call over to your host for today, Jeff Davis, CEO and President. Mr. Davis, please proceed.
Jeff Davis
Thank you very much. This is Jeff Davis. I thank you all for your time this morning. With me on the call is Paul Martin, our CFO. As usual we’ve got about 10-15 minutes of prepared comments after which we will put up the call for questions. Before we begin, Paul, would you please read the Safe Harbor statement?
Paul Martin
Thanks Jeff and good morning everyone. Some of the things we will discuss in today’s call concerning future company performance will be forward-looking statements within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and we encourage you to refer to the additional information contained in our SEC filings concerning factors that could cause those results to be different than contemplated in today’s discussion.
In addition, our earnings press release includes a reconciliation of certain non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with generally accepted accounting principles or GAAP. This is posted on our website at www.perficient.com under News and Events. We have also posted a reconciliation of certain non-GAAP goals to the most directly comparable financial measures prepared in accordance with GAAP on our website at www.perficient.com under Investor Relations.
I will now turn the call back over to Jeff. Jeff?
Jeff Davis
Thanks Paul, and thanks again everyone for joining. We are certainly glad to be with you this morning. I am pleased to say that our momentum from our really strong start to the first half of 2010 carried into third quarter and helped us deliver another set of results we feel really good about.
Revenues were up 23% year-over-year, coupled with margin expansion of 600 basis points drove significant increases in both EBITDAS, that’s EBITDA, net of stock comp and cash earnings per share, both up 100% year-over-year.
In addition to the very solid services revenue, we had our third straight quarter of strong software sales as well. Our strong Q3 performance and the visibility we now have into Q4 affords us the ability to adjust, as I’m sure you saw in the press release, our full year revenue and cash earnings per share guidance. As we indicated in the release, we are tightening full year revenue guidance from a range of 220 million to the new range of 210 to 214, and our full year cash earnings per share guidance from a range of $0.50 to $0.60 to the new range of $0.58 to $0.60.
As I said before, while the recovery remains choppy, I remain confident that Perficient’s next wave of growth is already underway. We are performing well in an economic atmosphere that’s still infused with a fair amount of uncertainty. We just posted four quarter sequential organic revenue growth of 14.7% in an environment of very modest GDP growth and high unemployment.
When the broader economy really starts to demonstrate consistent strength, I have no doubt Perficient will shine. I certainly think double-digit CAGR is possible organic only, in fact that’s what we are modeling internally and establishing our goals around going forward.
During the third quarter, we were able to maintain billing rates for US employees, nearly $120 an hour which was consistent with Q2, and up about $10 year-over-year. Utilization ticked slightly lower, but at 86% it’s still very healthy and actually a little above the high end of our target range as we’ve spoken before, 82 to 84, even 85 is where we’d like to be.
So we sold 11 deals over $500,000 million during the quarter, compared to 10 in the previous quarter. We are optimistic that many of our Q4 sales opportunities, a very, very strong pipeline right now and a very strong weighted pipeline. We’ll come to close as year end budgets are flushed and early 2011 commitments are made.
We are seeing a similar cycle that we saw last year, with improved bookings in December last year followed by record bookings in the first quarter of this year, and I think we are going to see a similar cycle as we move forward.
Our balance sheet remains strong. The company remains debt free and we have $28 million in cash on hand, that’s down a little bit sequentially, but that’s really due primarily to the more aggressive stock buyback during the third quarter where we would purchase $7.2 million worth of our stock.
The balance sheet strength obviously allows us to simultaneously invest for growth, repurchase those shares and continue our M&A exploration. As I’ve said before, our goal is actually still to complete one more deal by the end of the year or very early in 2011. I’ve said at the beginning of this year, where I tried to do two to three deals, M&As moved a little slower this year as we’ve been cautious about what we found and some of the companies need a little more history to re-strengthen their income statements, but I’m optimistic that that pace is going to pick up moving into next year. And obviously M&A remains a substantial piece of our plan over the course of the next few years, and we’ll be executing the deal that makes sense for the company that are both strategic and healthy.
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