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Service Revenues Up 8% over Q1 2011 Led by 17% Growth in SapientNitro
"While 2012 started modestly slower than we would have liked, we are
seeing momentum across all areas of the business," said Sapient
President and Chief Executive Officer
The company used cash from operations of
Outlook
Sapient management provided the following guidance:
Webcast and Conference Call
Sapient will host a discussion of its first quarter results at
US: (877) 291-1296
International: (720) 259-9209
To access the live webcast of the event, please click on the link below:
http://sape.client.shareholder.com/events.cfm
In addition, a re-broadcast of the webcast will be available in the investors section of www.sapient.com.
Adjusted (Non-GAAP) Financial Measures
Sapient provides non-GAAP financial measures to complement reported GAAP results. Management believes these measures help illustrate underlying trends in the company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the company's business and evaluating its performance. The company anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets, acquisition costs and other related charges, and income tax benefits or provisions resulting from changes in the valuation allowance. In addition, the company may present service revenues in constant currency terms, which excludes the effect of currency fluctuations between the U.S. dollar and the functional currency of the entity in which the revenue was transacted. The effect is excluded by translating the current period's local currency service revenues into U.S. dollars using the average local currency exchange rates that were in effect during the prior period of comparison. Because the company's reported non-GAAP financial measures are not calculated according to GAAP, these measures are not comparable to GAAP and may not necessarily be comparable to similarly described non-GAAP measures reported by other companies within the company's industry. Consequently, Sapient's non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but, rather, should be considered together with its consolidated financial statements, which are prepared according to GAAP.
Safe Harbor Statement
This press release contains forward-looking statements — in particular,
the financial guidance for the second quarter of 2012, including
expected service revenues and expected non-GAAP operating margin — that
involve a number of risks and uncertainties. All forward looking
statements are based upon current expectations and beliefs and various
assumptions. Actual results could differ materially from management's
expectations and the forward-looking statements contained in this
release. A number of factors could cause actual events to differ
materially from those indicated, including, without limitation: the
continued acceptance of the company's services; a reduction in the
demand for the company's services in light of the current economic
environment; the company's ability to accurately set fees for and
complete its current and future client projects on a timely basis,
successfully manage risks associated with its international operations,
manage its growth and projects effectively, successfully integrate and
achieve anticipated benefits from acquisitions, and continue to attract
and retain high-quality employees; and other risks and uncertainties as
set forth in the company's filings with the
About Sapient
Sapient is a global services company that helps clients transform in the
areas of business, marketing, and technology. The company operates three
divisions that enable clients to gain a competitive advantage and
succeed in an increasingly digital world. SapientNitro, Sapient Global
Markets and Sapient Government Services fuse insight, creativity and
technology to drive innovation and to help clients navigate complex
business problems. Our approach is the subject of case studies used by
MBA programs at
Sapient is a registered service mark of
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| Consolidated Unaudited Condensed Statements of Operations | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2012 | 2011 | ||||||||||
| (in thousands, except per share amounts) | |||||||||||
| Revenues: | |||||||||||
| Service revenues | $ | 260,622 | $ | 241,340 | |||||||
| Reimbursable expenses | 8,783 | 8,554 | |||||||||
|
Total gross revenues |
269,405 | 249,894 | |||||||||
| Operating expenses: | |||||||||||
| Project personnel expenses | 183,371 | 166,676 | |||||||||
| Reimbursable expenses | 8,783 | 8,554 | |||||||||
| Total project personnel expenses and reimbursable expenses | 192,154 | 175,230 | |||||||||
| Selling and marketing expenses | 10,695 | 10,156 | |||||||||
| General and administrative expenses | 46,772 | 39,105 | |||||||||
| Restructuring and other related (benefits) charges | (76 | ) | 5,642 | ||||||||
| Amortization of purchased intangible assets | 2,622 | 1,273 | |||||||||
| Acquisition costs and other related charges | 1,125 | - | |||||||||
| Total operating expenses | 253,292 | 231,406 | |||||||||
| Income from operations | 16,113 | 18,488 | |||||||||
| Interest and other income, net | 1,822 | 1,459 | |||||||||
| Income before income taxes | 17,935 | 19,947 | |||||||||
| Provision for income taxes | 8,453 | 7,789 | |||||||||
| Net income | $ | 9,482 | $ | 12,158 | |||||||
|
|
$ | 0.07 | $ | 0.09 | |||||||
| Diluted net income per share | $ | 0.07 | $ | 0.09 | |||||||
| Weighted average common shares | 139,458 | 136,293 | |||||||||
| Weighted average dilutive common share equivalents | 4,458 | 4,272 | |||||||||
| Weighted average common shares and dilutive common share | |||||||||||
| equivalents | 143,916 | 140,565 | |||||||||
|
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|||||||||||
| Consolidated Unaudited Condensed Balance Sheets | |||||||||||
|
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||||||||||
| (in thousands) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 196,961 | $ | 212,406 | |||||||
| Marketable securities, current portion | 6,297 | 7,748 | |||||||||
| Restricted cash, current portion | 372 | 426 | |||||||||
| Accounts receivable, less allowance for doubtful accounts | 137,626 | 156,109 | |||||||||
| Unbilled revenues | 89,280 | 61,712 | |||||||||
| Deferred tax assets, current portion | 20,209 | 19,966 | |||||||||
| Prepaid expenses and other current assets | 21,538 | 22,734 | |||||||||
| Total current assets | 472,283 | 481,101 | |||||||||
| Restricted cash, net of current portion | 3,775 | 3,779 | |||||||||
| Marketable securities, net of current portion | 1,290 | 1,290 | |||||||||
| Property and equipment, net | 72,644 | 64,257 | |||||||||
| Purchased intangible assets, net | 35,141 | 36,822 | |||||||||
| Goodwill | 109,786 | 107,971 | |||||||||
| Deferred tax assets, net of current portion | 9,375 | 9,227 | |||||||||
| Other assets | 8,528 | 8,591 | |||||||||
| Total assets | $ | 712,822 | $ | 713,038 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 22,739 | $ | 25,389 | |||||||
| Accrued restructuring costs, current portion | 150 | 324 | |||||||||
| Accrued compensation | 56,896 | 77,721 | |||||||||
| Deferred revenues | 21,023 | 25,599 | |||||||||
| Other current liabilities | 49,246 | 61,680 | |||||||||
| Total current liabilities | 150,054 | 190,713 | |||||||||
| Accrued restructuring costs, net of current portion | 374 | 407 | |||||||||
| Other long-term liabilities | 59,305 | 42,514 | |||||||||
| Total liabilities | 209,733 | 233,634 | |||||||||
| Stockholders' equity | 503,089 | 479,404 | |||||||||
| Total liabilities and stockholders' equity | $ | 712,822 | $ | 713,038 | |||||||
|
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||||||||||||||
| Consolidated Unaudited Statements of Cash Flows | ||||||||||||||
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2012 | 2011 | |||||||||||||
| (in thousands) | ||||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | 9,482 | $ | 12,158 | ||||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||
| Loss recognized on disposition of fixed assets | 47 | 1 | ||||||||||||
| Unrealized loss on financial instruments | 107 | 120 | ||||||||||||
| Depreciation and amortization expense | 8,086 | 5,480 | ||||||||||||
| Deferred income taxes | 15 | 1,984 | ||||||||||||
| Non-cash restructuring charges | - | 4,612 | ||||||||||||
| Stock-based compensation expense | 5,148 | 3,876 | ||||||||||||
| Changes in operating assets and liabilities, net of impact of acquisitions: | ||||||||||||||
| Accounts receivable | 19,911 | (1,512 | ) | |||||||||||
| Unbilled revenues | (27,152 | ) | (29,784 | ) | ||||||||||
| Prepaid expenses and other current assets | 1,400 | (2,933 | ) | |||||||||||
| Other assets | 419 | (604 | ) | |||||||||||
| Accounts payable | (4,205 | ) | 1,463 | |||||||||||
| Accrued compensation | (23,177 | ) | (18,101 | ) | ||||||||||
| Accrued restructuring costs | (208 | ) | (854 | ) | ||||||||||
| Deferred revenues | (4,731 | ) | (2,051 | ) | ||||||||||
| Other current liabilities | (909 | ) | 5,573 | |||||||||||
| Other long-term liabilities | 2,245 | 1,598 | ||||||||||||
| Net cash used in operating activities | (13,522 | ) | (18,974 | ) | ||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Purchases of property and equipment and cost of internally developed software | (10,450 | ) | (8,065 | ) | ||||||||||
| Sales and maturities of marketable securities classified as available-for-sale | 1,900 | 2,197 | ||||||||||||
| Purchases of marketable securities classified as available-for-sale | (86 | ) | (2,298 | ) | ||||||||||
| Cash received (paid) on financial instruments, net | 56 | (37 | ) | |||||||||||
| Change in restricted cash | 112 | 926 | ||||||||||||
| Net cash used in investing activities | (8,468 | ) | (7,277 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Principal payments under capital lease obligations | (20 | ) | (21 | ) | ||||||||||
| Proceeds from credit facilities | - | 1,768 | ||||||||||||
| Repayment of amounts borrowed under credit facilities | - | (4,862 | ) | |||||||||||
| Proceeds from stock option and purchase plans | 457 | 4,236 | ||||||||||||
| Net cash provided by financing activities | 437 | 1,121 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 6,108 | 2,068 | ||||||||||||
| Decrease in cash and cash equivalents | (15,445 | ) | (23,062 | ) | ||||||||||
| Cash and cash equivalents, at beginning of period | 212,406 | 219,448 | ||||||||||||
| Cash and cash equivalents, at end of period | $ | 196,961 | $ | 196,386 | ||||||||||
|
|
|||||||||||||
| Unaudited Reconciliation of Non-GAAP Financial Measures | |||||||||||||
| Three Months Ended March 31, | |||||||||||||
| 2012 | 2011 | ||||||||||||
| (in thousands, except per share amounts) | |||||||||||||
| Service revenues | $ | 260,622 | $ | 241,340 | |||||||||
| GAAP income from operations | $ | 16,113 | $ | 18,488 | |||||||||
| Stock-based compensation expense | 5,148 | 3,876 | |||||||||||
| Restructuring and other related (benefits) charges | (76 | ) | 5,642 | ||||||||||
| Amortization of purchased intangible assets | 2,622 | 1,273 | |||||||||||
| Acquisition costs and other related charges | 1,125 | - | |||||||||||
| Stock-based compensation review and restatement benefit | - | (3,500 | ) | ||||||||||
| Non-GAAP income from operations | $ | 24,932 | $ | 25,779 | |||||||||
| GAAP operating margin | 6.2 | % | 7.7 | % | |||||||||
| Effect of adjustments detailed above | 3.4 | % | 3.0 | % | |||||||||
| Non-GAAP operating margin | 9.6 | % | 10.7 | % | |||||||||
| GAAP net income | $ | 9,482 | $ | 12,158 | |||||||||
| Stock-based compensation expense, net of tax | 3,243 | 2,451 | |||||||||||
| Restructuring and other related (benefits) charges, net of tax | (54 | ) | 3,496 | ||||||||||
| Amortization of purchased intangible assets, net of tax | 2,091 | 1,025 | |||||||||||
| Acquisition costs and other related charges, net of tax | 796 | - | |||||||||||
| Stock-based compensation review and restatement benefit, net of tax | - | (2,085 | ) | ||||||||||
| Non-GAAP net income | $ | 15,558 | $ | 17,045 | |||||||||
| GAAP basic income per share | $ | 0.07 | $ | 0.09 | |||||||||
| Effect of adjustments detailed above | 0.04 | 0.04 | |||||||||||
| Non-GAAP basic income per share | $ | 0.11 | $ | 0.13 | |||||||||
| GAAP and Non-GAAP weighted average common shares | 139,458 | 136,293 | |||||||||||
| GAAP diluted income per share | $ | 0.07 | $ | 0.09 | |||||||||
| Effect of adjustments noted above and change in dilution noted below | 0.04 | 0.03 | |||||||||||
| Non-GAAP diluted income per share | $ | 0.11 | $ | 0.12 | |||||||||
| GAAP and Non-GAAP weighted average common shares and dilutive common share equivalents | 143,916 | 140,565 | |||||||||||
Investor Relations Contact:
Sapient
dridlon@sapient.com
or
Media
Contact:
Sapient
dlabar@sapient.com
Source:
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