Sapient Reports First Quarter 2013 Results
Sapient Reports First Quarter 2013 Results
First Quarter Service Revenues Up 12.4% Compared to First Quarter 2012
BOSTON--(BUSINESS WIRE)-- Sapient (NAS: SAPE) today reported the following financial results for the first quarter ended March 31, 2013. These results are consistent with the preliminary results issued on May 9, 2013.
- Service revenues were $292.6 million compared to $260.4 million in the first quarter of 2012, an increase of $32.3 million, or 12.4%. Sequentially, service revenues were down $0.5 million, or 0.2%, from $293.2 million in the fourth quarter of 2012. On a constant currency basis, revenues increased 12.8% over the first quarter of 2012 and increased 0.3% sequentially.
- GAAP income from operations was $12.0 million, or 4.1% of service revenues, compared to $15.5 million, or 6.0% of service revenues, reported in the first quarter of 2012.
- Non-GAAP income from operations was $27.3 million, or 9.3% of service revenues, compared to $24.3 million,or 9.4% of service revenues, reported in the first quarter of 2012.
- GAAP diluted net income per share was $0.05, compared to $0.06 in the first quarter of 2012.
- Non-GAAP diluted net income per share was $0.12, compared to $0.10 in the first quarter of 2012.
"Despite a slower start to the year, our business is well positioned competitively and showing strong momentum," said Sapient Chief Executive Officer and Co-Chairman Alan J. Herrick. "Both SapientNitro and Sapient Global Markets are well positioned for growth."
The company used cash from operations of $9.4 million in the first quarter of 2013, compared to a use of $13.8 million in the first quarter of 2012. As of March 31, 2013, the company had cash, cash equivalents, restricted cash and marketable securities of $226.0 million. Days sales outstanding was 65 days for the first quarter of 2013, up from 63 days in the fourth quarter of 2012 and down from 69 days in the first quarter of 2012.
Sapient management provided the following guidance which is also consistent with the guidance provided on May 9, 2013:
- For the second quarter ending June 30, 2013, service revenues are expected to be in the range of $300 million to $310 million. Both SapientNitro and Sapient Global Markets are expected to grow sequentially, with the majority of the growth coming from SapientNitro.
- Second quarter 2013 non-GAAP operating margin is expected to be 12% or higher.
Tax Liabilities Review
The company completed its self-initiated review and analysis of tax liabilities relating to cross-border mobility of employees into various countries. As a result, the company made immaterial revisions to previously reported financial results for the years 2006 through 2012 totaling $14.1 million, which is consistent with the Company's previously estimated range of $12 million to $18 million, as reported on May 9, 2013.
Webcast and Conference Call
Sapient will host a discussion of its first 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 expected growth of SapientNitro and Sapient Global Markets; the financial guidance for the second quarter of 2013, including expected service revenues and expected non-GAAP operating margin; and estimated tax liabilities resulting from cross-border mobility of employees into various countries - 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; the final amount of tax owed to various countries relating to the cross-border mobility of 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 March 31,|
|(in thousands, except per share amounts)|
|Total gross revenues||302,983||269,162|
|Project personnel expenses||206,745||183,770|
|Total project personnel expenses and reimbursable expenses||217,090||192,553|
|Selling and marketing expenses||11,792||10,695|
|General and administrative expenses||54,002||46,713|
|Restructuring and other related charges (benefits)||2,014||(76||)|
|Amortization of purchased intangible assets||3,657||2,622|
|Acquisition costs and other related charges||900||1,125|
|Impairment of intangible asset||1,494||-|
|Total operating expenses||290,949||253,632|
|Income from operations||12,034||15,530|
|Interest and other income, net||872||1,822|
|Income before income taxes||12,906||17,352|
|Provision for income taxes||6,376||8,467|
|Less: Net income (loss) attributable to noncontrolling interest||(46||)||-|
|Net income attributable to stockholders of Sapient Corporation||$||6,576||$||8,885|
|Basic net income per share attributable to stockholders of Sapient Corporation||$||0.05||$||0.06|
|Diluted net income per share attributable to stockholders of Sapient Corporation||$||0.05||$||0.06|
|Weighted average common shares||137,425||139,458|
|Weighted average dilutive common share equivalents||4,781||4,458|
|Weighted average common shares and dilutive common share equivalents||142,206||143,916|
|Consolidated Unaudited Condensed Balance Sheets|
|March 31, 2013||December 31, 2012|
|Cash and cash equivalents||$||214,050||$||234,038|
|Marketable securities, current portion||6,460||6,321|
|Restricted cash, current portion||465||9,026|
|Deferred tax assets, current portion||17,890||15,809|
|Prepaid expenses and other current assets||47,454||43,791|
|Total current assets||534,636||549,778|
|Marketable securities, noncurrent portion||1,202||1,202|
|Restricted cash, noncurrent portion||3,845||2,914|
|Property and equipment, net||79,943||80,661|
|Purchased intangible assets, net||30,309||35,050|
|Other noncurrent assets||9,421||8,651|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued restructuring costs, current portion||979||129|
|Income tax payable||9,455||8,273|
Total current liabilities
|Accrued restructuring costs, noncurrent portion||510||246|
|Deferred tax liabilities, noncurrent portion||20,517||19,892|
|Other long-term liabilities||69,520||66,561|
|Total liabilities and stockholders' equity||$||790,796||$||806,884|
|Consolidated Unaudited Statements of Cash Flows|
|Three Months Ended|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash used in operating activities:|
|Deferred income taxes||(1,541||)||15|
|Unrealized (gain) loss on financial instruments||(274||)||107|
|Loss recognized on disposition of fixed assets||762||47|
|Depreciation and amortization expense||10,666||8,086|
|Impairment of intangible asset||1,494||-|
|Stock-based compensation expense||7,156||5,148|
|Excess tax benefits from exercise and release of stock-based awards||(463||)||-|
|Non-cash restructuring charges||146||-|
|Changes in operating assets and liabilities, excluding impact of acquisitions:|
|Prepaid expenses and other current assets||(3,114||)||1,400|
|Other noncurrent assets||127||196|
|Other accrued liabilities||(332||)||(23||)|
|Accrued restructuring costs||978||(208||)|
|Other long-term liabilities||187||2,247|
|Net cash used in operating activities||(9,407||)||(13,809||)|
|Cash flows from investing activities:|
|Purchases of property and equipment and cost of internally developed software||(6,396||)||(10,162||)|
|Cash paid for acquisitions, net of cash acquired||(4,948||)||-|
|Sales and maturities of marketable securities classified as available-for-sale||-||1,900|
|Purchases of marketable securities||(100||)||(86||)|
|Acquisition of cost method investment||(200||)||-|
|Cash received on financial instruments, net||177|