Perficient Reports Fourth Quarter and Full Year 2023 Results

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 and year ended December 31, 2023.

Financial Highlights

For the quarter ended December 31, 2023:

  • Revenues decreased 5% to $221 million from $233 million in the fourth quarter of 2022;
  • Net income decreased 12% to $23.2 million, compared to $26.5 million in the fourth quarter of 2022;
  • GAAP earnings per share results on a fully diluted basis decreased 12% to $0.65 from $0.74 in the fourth 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 13% to $0.99 from $1.14 in the fourth quarter of 2022; and
  • Adjusted EBITDA (a non-GAAP measure; see attached schedule, which reconciles to GAAP net income) decreased 14% to $46.7 million from $54.3 million in the fourth quarter of 2022.

For the year ended December 31, 2023:

  • Revenues slightly increased to $907 million from $905 million in 2022;
  • Net income decreased 5% to $98.9 million from $104.4 million in 2022;
  • GAAP earnings per share results on a fully diluted basis decreased 5% to $2.76 from $2.90 in 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 8% to $3.95 from $4.28 in 2022; and
  • Adjusted EBITDA (a non-GAAP measure; see attached schedule, which reconciles to GAAP net income) decreased 7% to $190.7 million from $205.8 million in 2022.

“Solid fourth quarter bookings have us positioned for a return to growth, particularly in the second half of 2024,” said Tom Hogan, President and CEO. “Perficient’s enterprise customers value our global depth and breadth and the recent addition of the SMEDIX team now enables us to replicate in Europe what we’ve built already in North America, Latin America, and India.”

Other Highlights

Among other recent achievements, Perficient:

  • In January, completed the acquisition of SMEDIX, Inc., a healthcare and life sciences software engineering company with established operations located in Cluj-Napoca, Romania;
  • Enhanced its Envision Online digital transformation platform to introduce a broader spectrum of business tools that cater to the evolving needs of modern enterprises;
  • Announced that nine Perficient colleagues have been named Sitecore 2024 Most Valuable Professionals for demonstrating advanced knowledge of the Sitecore platform and sharing their knowledge and expertise with the global Sitecore community;
  • Expanded its Electrifying the Future of Automotive initiative to support 13 Formula SAE and Formula Student teams from notable universities across the U.S., Mexico, and Germany as they build the next generation of formula-style race cars;
  • Announced that effective March 1, 2024, Jeffrey S. Davis will transition from Executive Chairman of the Company to non-executive Chairman of the Board of Directors;
  • Extended its partnership with the St. Louis Cardinals of Major League Baseball to further drive brand awareness and strengthen its client relationships in the St. Louis region and beyond;
  • Launched the Perficient LiveWell Employee Resource Group, a global community of Perficient colleagues passionate about health and wellness that supports colleagues in achieving better overall well-being;
  • Received the 2023-2024 Coveo Relevance Accelerator Award, recognizing Perficient’s deep knowledge and technical expertise, ability to understand clients’ business challenges, and consistency in delivering value-driven business outcomes;
  • Was named a Major Player in the “IDC MarketScape: Worldwide Experience Build Services” and the “IDC MarketScape: Worldwide Experience Design Services” 2023-2024 Vendor Assessments, acknowledging the scope of Perficient’s capabilities and its global network of industry and innovation centers; and
  • Was recognized in Forrester’s “AI Services Landscape, Q1 2024” report as a service provider with a geographic focus across three regions and an industry focus in pharmaceutical and medical equipment, transportation, and financial services.

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 first quarter 2024 revenue to be in the range of $212 million to $218 million. First quarter GAAP earnings per share is expected to be in the range of $0.31 to $0.35. First 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 $0.74 to $0.79.

Perficient is providing its full year 2024 revenue guidance in the range of $925 million to $965 million, 2024 GAAP earnings per share guidance in the range of $2.64 to $2.77 and 2024 adjusted earnings per share (a non-GAAP measure; see attached schedule which reconciles to GAAP earnings per share guidance) guidance in the range of $4.05 to $4.20.

Conference Call Details

Perficient will host a conference call regarding fourth quarter and full year 2023 financial results today, February 27, 2024, at 8:00 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/BI062768281333498a8f48fd6448ea733d. 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/q4-2023-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 2024. 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 U.S. 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. 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 (the “SEC”).

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

December 31,

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Revenues

 

 

 

 

 

 

 

Services excluding reimbursable expenses

$

216,496

 

 

$

228,806

 

 

$

892,920

 

 

$

893,050

Reimbursable expenses

 

3,483

 

 

 

2,874

 

 

 

11,272

 

 

 

9,371

Total services

 

219,979

 

 

 

231,680

 

 

 

904,192

 

 

 

902,421

Software and hardware

 

811

 

 

 

919

 

 

 

2,349

 

 

 

2,641

Total revenues

 

220,790

 

 

 

232,599

 

 

 

906,541

 

 

 

905,062

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Cost of services

 

138,439

 

 

 

138,419

 

 

 

564,586

 

 

 

543,060

Stock compensation

 

2,680

 

 

 

2,588

 

 

 

9,892

 

 

 

9,643

Total cost of revenues

 

141,119

 

 

 

141,007

 

 

 

574,478

 

 

 

552,703

 

 

 

 

 

 

 

 

Selling, general and administrative

 

35,698

 

 

 

39,831

 

 

 

152,175

 

 

 

156,197

Stock compensation

 

4,651

 

 

 

3,913

 

 

 

18,380

 

 

 

14,931

Total selling, general and administrative

 

40,349

 

 

 

43,744

 

 

 

170,555

 

 

 

171,128

 

 

 

 

 

 

 

 

Depreciation

 

2,245

 

 

 

2,285

 

 

 

8,968

 

 

 

8,518

Amortization

 

4,260

 

 

 

6,454

 

 

 

20,632

 

 

 

24,518

Acquisition costs

 

362

 

 

 

1,145

 

 

 

826

 

 

 

3,653

Adjustment to fair value of contingent consideration

 

37

 

 

 

618

 

 

 

(6,438

)

 

 

267

Income from operations

 

32,418

 

 

 

37,346

 

 

 

137,520

 

 

 

144,275

 

 

 

 

 

 

 

 

Net interest (income) expense

 

(431

)

 

 

846

 

 

 

363

 

 

 

3,154

Net other (income) expense

 

(22

)

 

 

(246

)

 

 

676

 

 

 

160

Income before income taxes

 

32,871

 

 

 

36,746

 

 

 

136,481

 

 

 

140,961

Provision for income taxes

 

9,696

 

 

 

10,287

 

 

 

37,548

 

 

 

36,569

 

 

 

 

 

 

 

 

Net income

$

23,175

 

 

$

26,459

 

 

$

98,933

 

 

$

104,392

 

 

 

 

 

 

 

 

Basic net income per share

$

0.68

 

 

$

0.78

 

 

$

2.91

 

 

$

3.08

Diluted net income per share

$

0.65

 

 

$

0.74

 

 

$

2.76

 

 

$

2.90

Shares used in computing basic net income per share

 

34,075

 

 

 

33,856

 

 

 

33,992

 

 

 

33,869

Shares used in computing diluted net income per share

 

36,714

 

 

 

36,636

 

 

 

36,711

 

 

 

36,731

 

 

 

 

 

 

 

 

Net income used in computing diluted net income per share

$

23,713

 

 

$

27,008

 

 

$

101,146

 

 

$

106,653

Perficient, Inc.

Consolidated Balance Sheets

(in thousands)

 

 

 

December 31, 2023

 

December 31, 2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

128,886

 

 

$

30,130

 

Accounts receivable, net

 

 

178,998

 

 

 

202,298

 

Prepaid expenses

 

 

5,638

 

 

 

6,432

 

Other current assets

 

 

12,431

 

 

 

16,756

 

Total current assets

 

 

325,953

 

 

 

255,616

 

Property and equipment, net

 

 

11,996

 

 

 

17,970

 

Operating lease right-of-use assets

 

 

21,786

 

 

 

27,088

 

Goodwill

 

 

581,387

 

 

 

565,161

 

Intangible assets, net

 

 

71,118

 

 

 

88,937

 

Other non-current assets

 

 

52,364

 

 

 

41,116

 

Total assets

 

$

1,064,604

 

 

$

995,888

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

18,688

 

 

$

24,351

 

Other current liabilities

 

 

59,784

 

 

 

104,780

 

Total current liabilities

 

 

78,472

 

 

 

129,131

 

Long-term debt, net

 

 

396,874

 

 

 

394,587

 

Operating lease liabilities

 

 

16,446

 

 

 

18,528

 

Other non-current liabilities

 

 

42,189

 

 

 

43,515

 

Total liabilities

 

$

533,981

 

 

$

585,761

 

Stockholders’ equity:

 

 

 

 

Preferred stock

 

$

 

 

$

 

Common stock

 

 

53

 

 

 

53

 

Additional paid-in capital

 

 

432,160

 

 

 

403,866

 

Accumulated other comprehensive loss

 

 

(5,461

)

 

 

(17,519

)

Treasury stock

 

 

(373,325

)

 

 

(354,536

)

Retained earnings

 

 

477,196

 

 

 

378,263

 

Total stockholders’ equity

 

 

530,623

 

 

 

410,127

 

Total liabilities and stockholders’ equity

 

$

1,064,604

 

 

$

995,888

 

 

 

 

 

 

Perficient, Inc.

Consolidated Statements of Cash Flow

(in thousands)

 

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

Net income

$

98,933

 

 

$

104,392

 

Adjustments to reconcile net income to net cash provided by operations

 

42,441

 

 

 

51,484

 

Changes in operating assets and liabilities, net of business acquisitions

 

1,593

 

 

 

(37,808

)

Net cash provided by operating activities

 

142,967

 

 

 

118,068

 

Net cash used in investing activities

 

(5,581

)

 

 

(81,750

)

Net cash used in financing activities

 

(39,669

)

 

 

(29,078

)

Effect of exchange rate on cash, cash equivalents and restricted cash

 

1,039

 

 

 

(1,520

)

Change in cash, cash equivalents and restricted cash

 

98,756

 

 

 

5,720

 

Cash, cash equivalents and restricted cash at beginning of period

 

30,130

 

 

 

24,410

 

Cash, cash equivalents and restricted cash at end of period

$

128,886

 

 

$

30,130

 

See the Company's Form 10-K 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 income taxes, interest, depreciation, amortization, acquisition costs, adjustment to fair value of contingent consideration, stock compensation and the impact of other infrequent or unusual transactions), 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, 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 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.

Business Optimization

Perficient incurs severance costs for business optimization, which are not part of an ongoing written or substantive plan, and 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 expenses are infrequent causing comparison of current and historical financial results to be difficult.

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

December 31,

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP Net Income

$

23,175

 

 

$

26,459

 

 

$

98,933

 

 

$

104,392

 

Adjustments:

 

 

 

 

 

 

 

Provision for income taxes

 

9,696

 

 

 

10,287

 

 

 

37,548

 

 

 

36,569

 

Amortization

 

4,260

 

 

 

6,454

 

 

 

20,632

 

 

 

24,518

 

Acquisition costs

 

362

 

 

 

1,145

 

 

 

826

 

 

 

3,653

 

Adjustment to fair value of contingent consideration

 

37

 

 

 

618

 

 

 

(6,438

)

 

 

267

 

Amortization of debt issuance costs

 

631

 

 

 

609

 

 

 

2,501

 

 

 

2,431

 

Foreign exchange (gain) loss and other

 

(10

)

 

 

(230

)

 

 

707

 

 

 

197

 

Stock compensation

 

7,331

 

 

 

6,501

 

 

 

28,272

 

 

 

24,574

 

Business optimization (1)

 

 

 

 

 

 

 

922

 

 

 

 

Adjusted Net Income Before Tax

 

45,482

 

 

 

51,843

 

 

 

183,903

 

 

 

196,601

 

Adjusted income tax (2)

 

11,598

 

 

 

12,961

 

 

 

48,550

 

 

 

49,917

 

Adjusted Net Income

$

33,884

 

 

$

38,882

 

 

$

135,353

 

 

$

146,684

 

 

 

 

 

 

 

 

 

GAAP Earnings Per Share (diluted)

$

0.65

 

 

$

0.74

 

 

$

2.76

 

 

$

2.90

 

Adjusted Earnings Per Share (diluted)

$

0.99

 

 

$

1.14

 

 

$

3.95

 

 

$

4.28

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP Earnings Per Share (diluted)

 

36,714

 

 

 

36,636

 

 

 

36,711

 

 

 

36,731

 

Dilution offset from convertible note hedge transactions

 

(2,430

)

 

 

(2,395

)

 

 

(2,430

)

 

 

(2,422

)

Shares used in computing Adjusted Earnings Per Share (diluted)

 

34,284

 

 

 

34,241

 

 

 

34,281

 

 

 

34,309

 

 

 

 

 

 

 

 

 

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

$

23,713

 

 

$

27,008

 

 

$

101,146

 

 

$

106,653

 

(1)

Business optimization includes $0.7 million of severance costs related to billable resources and $0.2 million of severance costs related to non-billable resources for the twelve months ended December 31, 2023.

(2)

The estimated adjusted effective tax rate of 25.5% and 25.0% for the three months ended December 31, 2023 and 2022, respectively, and 26.4% and 25.4% for the year ended December 31, 2023 and 2022, 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

December 31,

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

GAAP Net Income

$

23,175

 

 

$

26,459

 

 

$

98,933

 

 

$

104,392

Adjustments:

 

 

 

 

 

 

 

Provision for income taxes

 

9,696

 

 

 

10,287

 

 

 

37,548

 

 

 

36,569

Net interest (income) expense

 

(431

)

 

 

846

 

 

 

363

 

 

 

3,154

Net other (income) expense

 

(22

)

 

 

(246

)

 

 

676

 

 

 

160

Depreciation

 

2,245

 

 

 

2,285

 

 

 

8,968

 

 

 

8,518

Amortization

 

4,260

 

 

 

6,454

 

 

 

20,632

 

 

 

24,518

Acquisition costs

 

362

 

 

 

1,145

 

 

 

826

 

 

 

3,653

Adjustment to fair value of contingent consideration

 

37

 

 

 

618

 

 

 

(6,438

)

 

 

267

Stock compensation

 

7,331

 

 

 

6,501

 

 

 

28,272

 

 

 

24,574

Business optimization (1)

 

 

 

 

 

 

 

922

 

 

 

Adjusted EBITDA (2)

$

46,653

 

 

$

54,349

 

 

$

190,702

 

 

$

205,805

(1)

Business optimization includes $0.7 million of severance costs related to billable resources and $0.2 million of severance costs related to non-billable resources for the twelve months ended December 31, 2023.

(2)

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)

 

Q1 2024

 

Full Year 2024

 

Low end of

adjusted goal

 

High end of

adjusted goal

 

Low end of

adjusted goal

 

High end of

adjusted goal

GAAP EPS

$

0.31

 

 

$

0.35

 

 

$

2.64

 

 

$

2.77

 

Non-GAAP adjustment (1):

 

 

 

 

 

 

 

Non-GAAP reconciling items

 

0.56

 

 

 

0.57

 

 

 

1.76

 

 

 

1.77

 

Tax effect of reconciling items

 

(0.13

)

 

 

(0.13

)

 

 

(0.35

)

 

 

(0.34

)

Adjusted EPS

$

0.74

 

 

$

0.79

 

 

$

4.05

 

 

$

4.20

 

(1)

Non-GAAP adjustment represents the impact of amortization expense, acquisition costs, adjustments to fair value of contingent consideration, amortization of debt issuance costs, foreign exchange gains and losses and stock compensation, net of the tax effect of these adjustments, divided by adjusted fully diluted shares. Perficient currently expects its Q1 2024 and full year 2024 GAAP effective income tax rate to be approximately 29% and 28%, respectively. Perficient currently expects its Q1 2024 and full year 2024 estimated adjusted effective income tax rate to be approximately 26%. Perficient’s estimates of GAAP and adjusted fully diluted shares for 2024 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)

Q1 2024

 

Full Year 2024

GAAP Fully Diluted Shares

36.9

 

 

36.9

 

Non-GAAP adjustment (2):

 

 

 

Dilution offset from convertible note hedge transactions

(2.4

)

 

(2.4

)

Adjusted Fully Diluted Shares

34.5

 

 

34.5

 

(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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