Sapient Reports Fourth Quarter and Full-Year 2012 Results
Sapient Reports Fourth Quarter and Full-Year 2012 Results
Fourth Quarter Service Revenues Up 12% Compared to Fourth Quarter 2011
Full-year 2012 Revenues Up 10% Compared to 2011
For the fourth quarter of 2012:
- Service revenues were $293.2 million compared to $262.4 million in the fourth quarter of 2011, an increase of $30.8 million, or 11.7%. Sequentially, service revenues were up $4.7 million, or 1.6%, from $288.5 million in the third quarter of 2012. On a constant currency basis, revenues increased 11.5% over the fourth quarter of 2011 and increased 1.3% sequentially.
- GAAP income from operations was $30.9 million, or 10.5% of service revenues, compared to $33.8 million, or 12.9% of service revenues, reported in the fourth quarter of 2011.
- Non-GAAP income from operations was $42.4 million, or 14.5% of service revenues, compared to $41.6 million,or 15.9% of service revenues, reported in the fourth quarter of 2011.
- GAAP diluted net income per share was $0.14, compared to $0.19 in the fourth quarter of 2011.
- Non-GAAP diluted net income per share was $0.20, compared to $0.23 in the fourth quarter of 2011.
For the year ended December 31, 2012:
- Service revenues were $1.12 billion compared to $1.02 billion for 2011, an increase of 9.8%.
- GAAP income from operations was $104.1 million, compared to $104.1 million in 2011.
- Non-GAAP income from operations was $143.7 million, an increase of $8.7 million or 6.4%, from $135.0 million in 2011.
- GAAP diluted net income per share was $0.46, compared to $0.51 in 2011.
- Non-GAAP diluted net income per share was $0.65, compared to $0.66 in 2011.
"The company posted solid growth in 2012 despite the challenging economic environment, expanding our client relationships globally through continued delivery of highly differentiated capabilities," said Sapient Chief Executive Officer and Co-Chairman Alan J. Herrick. "In addition to our growth, the company's strategic position was further strengthened through a combination of investments and acquisitions. While the economic environment remains unsettled, we believe the company is positioned to have an even stronger year in 2013."
The company generated cash flow from operations of $63.9 million in the fourth quarter of 2012, compared to $68.9 million in the fourth quarter of 2011. For the year ended December 31, 2012, cash flow from operations was $107.6 million compared to $131.9 million for the year ended December 31, 2011. As of December 31, 2012, the company had cash, cash equivalents, restricted cash and marketable securities of $251.0 million. Days sales outstanding was 63 days for the fourth quarter of 2012, down from 67 days in the third quarter of 2012 and the same as 63 days in the fourth quarter of 2011.
Sapient management provided the following guidance:
- For the first quarter ending March 31, 2013, service revenues are expected to be in the range of $295.0 million to $300.0 million.
- First quarter 2013 non-GAAP operating margin is expected to be 9.2% to 10.2%.
- For the year ending December 31, 2013, service revenues are expected to grow by 10.0% or higher.
- Non-GAAP operating margin for 2013 is expected to be 12.8% or modestly higher.
Webcast and Conference Call
Sapient will host a discussion of its fourth quarter results at 4:30 p.m. ET today, which will be broadcast live on the Internet. The dial-in information for the conference call is:
US: (877) 291-1296
International: (720) 259-9209
To access the live webcast of the event, please click on the link below:
In addition, a re-broadcast of the webcast will be available in the investors section of www.sapient.com.
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 first quarter and full-year 2013, including expected service revenues, expected non-GAAP operating margin and the Company's performance in 2013 - 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, including mPhasize and iThink, and continue to attract and retain high-quality employees; and other risks and uncertainties as set forth in the company's filings with the SEC, including without limitation the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances, except as required by law.
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 Harvard and Yale. The company has operations in The Americas, Europe, and Asia-Pacific. For more information, visit www.sapient.com.
Sapient is a registered service mark of Sapient Corporation.
|Consolidated Unaudited Condensed Statements of Operations|
|Three Months Ended December 31,||Year Ended December 31,|
|(in thousands, except per share amounts)|
|Total gross revenues||304,023||273,213||1,161,548||1,062,447|
|Project personnel expenses||195,083||170,767||764,843||691,041|
|Total project personnel expenses and reimbursable expenses||205,931||181,583||805,381||732,405|
|Selling and marketing expenses||11,515||9,921||44,661||39,025|
|General and administrative expenses||50,582||45,093||191,599||171,759|
|Restructuring and other related charges (benefits)||503||(270||)||394||6,507|
|Amortization of purchased intangible assets||2,941||2,527||11,052||6,813|
|Acquisition costs and other related charges||1,640||556||4,354||1,861|
|Total operating expenses||273,112||239,410||1,057,441||958,370|
|Income from operations||30,911||33,803||104,107||104,077|
|Interest and other income, net||871||1,590||4,584||6,342|
|Income before income taxes||31,782||35,393||108,691||110,419|
|Provision for income taxes||12,192||8,407||43,450||37,743|
|Basic net income per share||$||0.14||$||0.19||$||0.47||$||0.53|
|Diluted net income per share||$||0.14||$||0.19||$||0.46||$||0.51|
|Weighted average common shares||137,128||139,126||138,188||137,788|
|Weighted average dilutive common share equivalents||3,749||4,170||3,921||4,208|
|Weighted average common shares and dilutive common share equivalents||140,877||143,296||142,109||141,996|
|Consolidated Unaudited Condensed Balance Sheets|
|December 31, 2012||December 31, 2011|
|Cash and cash equivalents||$||234,178||$||212,406|
|Marketable securities, current portion||6,321||7,748|
|Restricted cash, current portion||5,236||426|
|Accounts receivable, net of allowance for doubtful accounts||168,951||156,109|
|Deferred tax assets, current portion||15,809||22,739|
|Prepaid expenses and other current assets||36,311||22,734|
|Total current assets||538,819||483,897|
|Restricted cash, net of current portion||4,074||3,779|
|Marketable securities, net of current portion||1,202||1,290|
|Property and equipment, net||82,833||64,877|
|Purchased intangible assets, net||35,050||36,822|
|Deferred tax assets, net of current portion||79||629|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued restructuring costs, current portion||129||324|
|Other current liabilities||49,802||50,143|
|Total current liabilities||187,916||178,297|
|Accrued restructuring costs, net of current portion||246||407|
|Other long-term liabilities||89,785||62,790|
|Total liabilities and stockholders' equity||$||798,493||$||707,856|
|Consolidated Unaudited Statements of Cash Flows|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash used in operating activities:|
|Loss recognized on disposition of fixed assets||1||37||254||79|
|Unrealized loss (gain) on financial instruments||723||(52||)||143||98|
|Depreciation and amortization expense||9,274||7,957||34,544||26,186|
|Deferred income taxes||4,242||8,457||13,672||17,924|
|Provision for (recovery of) allowance for doubtful accounts, net||-||8||-||8|
|Stock-based compensation expense||6,409||5,019||23,795||19,256|
|Excess tax shortfalls (benefits) from exercise and release of stock-based awards||511||(4,391||)||(10,100||)||(4,391||)|
|Non-cash restructuring charges||-||-||-||4,564|
|Changes in operating assets and liabilities, excluding impact of acquisitions:|
|Prepaid expenses and other current assets||(2,945||)||3,801||(13,782||)||(2,153||)|
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