Perficient (PRFT) 30 Apr 222022 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q1 2022 Perficient Earnings Conference Call. Later, we will conduct a question-and-answer session, and [Operator Instructions] I would now like to turn the conference over to your host, Chairman and CEO, Jeff Davis. Please go ahead, sir.

Thank you, and good morning, everyone. call our Paul President the and our on Hogan, Tom and me today Martin, is CFO; With COO. the we We to got, open which XX XX questions. up will minutes of as prepared comments, typical, call for about after please But harbor the statement. before safe read would we Paul, proceed, you

Thanks, Jeff, everyone. and good morning,

in and concerning contained today's call to to cause from that Actual statements forward-looking the of meaning within these to during be Some today's adjusted of additional refer things we EPS those results results At discussions. performance encourage company to in EBITDA. the information our those will we call, future in the SEC laws. filings may the differ materially refer this will factors different discussed in security times contemplated we and discuss than concerning be will could statements, forward-looking you adjusted

accordance most principles our to www.perficient.com. press financial measures earnings financial non-GAAP website Our measures in generally including certain release, directly posted on comparable of GAAP, is reconciliation with accepted the at a prepared or accounting

a We includes slide Relations. with financial on prepared accordance posted of certain the a directly deck, measures in which guidance Jeff? comparable under website have Investor our GAAP most non-GAAP also to reconciliation

second of quarterly wind Revenue QX. during ended Thanks, and to QX, reached an all-time set our strong XXXX this the record and in the and XX%, morning some was beyond. the morning. we first provide North rates setting large a as were Paul. to bill 'XX up begun high. strongly. adjusted quarter period. We're a once earnings quarter good in record be Well, again on up thoughts heels discuss American bookings again, XX% Utilization average on has excited with you was performance and

up overall annually. the as were fact, beyond bookings sales. And success the well extends as sequentially In

doing high. very are and customer delivery Our amazing teams work satisfaction remains

reached insights much, interacted our We our directly share I organization. a is out how had routinely to not team feedback just wonderful of with fact, customer positive X weeks behalf ago, our through to received In previously complement serve the project me on client program, to performing underscores and a stages which life offer our directly CEO various delivering. cycle. a when reaches team the at proactively reference, out that to feedback solicits But we're as value really throughout real-time

than as offshore and between and propose with our are spreads to quarter, markets, revenue accounts markets Organic opportunities customers clients work revenue us new So end XX% more and grew grows before. and brand in offshore grew offering are asking within ever word current us the XXX%. between and more on accounts overall and

integrated continues with fully global delivery the local clients combination global approach. who of resonate to Our our model value and

In behind performance. that fact, delivery fully model catalyst primary it's our the that integrated is global

to years back, the a intentions bring a our recall technology You paying just began real dividends. few Perficient may to best strong world's and We've done the into global relationships domestic via that, we we've transform a client truly presence. forged it's ubiquitous and longstanding to articulate to entity talent

blended XXX success, proficient customers even seamless, a of now, believe in we've nearly And Offshore well, year booking right global built both us to enabling accounts period. fact, the for tremendous a earlier. support rates with land skilled ABR just to continues replicate. record mentioned collaboratively true a X% the them our deals. experts American as clients. and to experience world I and benefit up Our the in we're our impressive and new bill difficult one other versus midst that's current to advantage more increasingly because and pipeline domestic We clients competitive driving where replenish. gains sustainable It's pursuing XX% from sequentially it's now prior North our were Remarkably, of expansion atmosphere. our resources. pay willing colleagues portfolio for away, are and X-figure

to shine, offset tight with increases into to enabling acquisition talent ABR, aggressive labor function us Our rapidly new increasing talent the hiring wage growth. continues is market. despite our And to roles support scale, coupled our

a So to And on quarter and all a to fronts, great turn I'll start things that, great with over XXXX. Paul.

decreased XX.X%. Services expenses Jeff. year. XX% quarter XX.X% revenues, of excluding quarter expense compared a million the were 'XX the first was compensation, for and the revenue, Thanks, the quarter XXXX of the 'XX, as or quarter million or to quarter in the SG&A of XX.X% to first Adjusted margin, stock reimbursed expenses, prior for excluding in $XXX.X percent $XX.X constant reimbursable gross of million a over remain of 'XX. of Services first for million at compared million $XX first of in expense $XX.X to first revenues was the SG&A XX.X% from XX.X% XXXX. of year. $XX.X revenues prior EBITDA increase

the of GAAP a higher primarily XXXX from Adjusted a XXXX. quarter release and of to $X.XX result the year quarter XXXX, for margin. $X.X XXXX first for increased of quarter to nearly $XX.X $XX.X in increased prior share share earnings as to million the share quarter first XXXX. $X.X year, a interest in XXXX. And quarter the Diluted The in million compared from million the from quarter $X.X in is in a prior to to GAAP result first of for intangibles amortization standard Net becoming new per revenues gross convertible of income in first $X.XX earnings. Net acquisitions first of a our per a the the due primarily $X share see certain quarter million to debt of from amortized. million the share as $X.XX first first fully million for full quarter the earnings XXXX first amortization decreased for of accounting The compared the doubled of first includes adopting press period. to primarily our expense XXXX $X.XX reconciliation quarter XXXX decrease of of in the of to please the for

subcontractors. consultants headcount SG&A Our ending headcount Ending XXXX, was at XXX X,XXX was X,XXX, billable March XXX. including XX, and billable

debt net outstanding million. of March was costs issuance as XX, $XXX.X Our deferred XXXX, of

also equivalents and million as $XX.X cash on facility. XX, availability cash of our March credit million $XXX.X We had and in of

XXXX. XX the I'll days little Tom of us the Hogan continues on very positioned sheet XXXX plan. increased of at compared behind to against balance to quarter first Tom? turn commentary metrics. outstanding call a the now over quarter of Our execute the the receivable to leave first accounts at the to of sales for to well our XX end strategic days Days end more

morning, Paul. everybody. Good Thanks,

a and quarter record mentioned, substantially. bookings grew to $XXX,XXX set I'd XX minute close take period. quarter We prior XXXX, to a the ago compares to our work XXXX, just fourth deals deal some the first the type the quarter win in Jeff of record-setting of year XXX of after we're volume during like which of the of than and As XXXX booked greater from highlight large XX again and winning.

continue health a the We to be proven leader care in vertical.

services client, partnership private with demonstrated in development, teams. past had the digitally XX-year This history We've As transform largest an we as deals company this X-year quarter, has digital closed agile, includes with one fully true insurance a and offerings. health company. rapid their this large relationship we a extension of team of product our example,

Our down on needs. structure projects up enables based and scale business efficiently to

Our U.S.-based experience support coupled development, will for with leaders teams testing the industry member digital applications. mobile multi-shore support engineering company's and and

just As care, industries, we're many proven not a you obviously. health know, digital within partner

XX that a operates recently of X-year for and also with our As provide engines. an work of our content and digital and agreement secured leading the we as diesel Through delivery organizations across example, owner support teams public-facing content properties provide web marketing holding website international a multi-shore team company closely agreement, brand support updates to the trucks an the this portfolio. will company's to

extensive will work teams U.S.-based ensure up with are to Our operations DevOps keeping evolving needs. their integration conduct customers' also

launched excited our providing constituencies which to remain is and collaborate smiles programs the see and perspective. key we more And already also markets. the and futures innovative always fully begun see but to of have during need, We've our quarter, balance new masks. to of customer, flexibility invigorating program, We're going offices. in teams industry person to Paths under-represented work-life recently in trained really and platform continue We X Bright deserving from I'm diversified this been colleagues our members we we're ensure and providing replacing it's well excitingly, a to hired that for our and all returning colleagues return, XX ambitious communities.

that, I'll and also make to positive world to impact of enterprises, As things influence our discuss to change the over we focused biggest the remainder second scale increase XXXX. can of quarter And remain on world's around the us. with behalf continue the in we growing the on and we Jeff turn and

to $XXX the in Thanks, Tom. Perficient range million. $XXX expects its second XXXX revenue be million of to quarter

Second quarter expected its $X.XX, in be is and GAAP range raising range XXXX the the $X.XX. $XXX revenue share share the $X.XX second full of GAAP $X.XX to XXXX year in $X.XX. earnings per expected to to to earnings share quarter Perficient be the per is adjusted is $XXX $X.XX of guidance guidance range to earnings range to and of to share million, per and of raising adjusted $X.XX per range $X.XX million to XXXX the of to to guidance earnings raising

we operator, that, the call can up with questions. for So open

first question coming from Needham. line Tandon of your [Operator from the Instructions] have We Mayank

what Jeff, a quarter? your growth. sense the embedded housekeeping give And of terms in wanted Congrats, year? strong with the first on us of full just start a first item expectations for Could and XXXX. XQ growth you I in start to was organic a organic the to what's in

to was second midpoint, XX% XX%. quarter, It And quarter. around say, the the in is first I the for want Yes.

So below at mid high. XX% XX% for below XX%. then it's same the the year, just and And high is at about the the just end the

know And it. sounds Got really then good. I demand

demand to you us question. to delivery ability hubs. to going I'm meet are exploring give you just to ask your other And a able strong side of recruit be the Could the sense supply climate? So

on to I'm side America supply the meet a of strong be You've done just job great demand your to in initiatives able and scaling curve. Latin India. curious

against and our I'm of talent the add is obviously of a kind a team. unprecedented ask team They've sort to recruiting tight that increases done itself. some done job, And as a our ABR really going of the acquisition job remarkable pretty this, what great demand. And to just reflect. Tom to Actually, has Yes. market color team they've scaled but

hedging, on to America saturation. Asia, nothing India. within but presence, kind South But really In little, if close India, very decent terms you as focused of a as will, we have well primarily of we're still Latin

possibility. a Latin within to uncertainty want within is actually to contribute to also We're we're now, holding But still you be kind that there the add might India of So exploring that. given able some America. looking we're right do expanding But acquisitions and color regard. that? in at more on that Europe Tom,

globally, looking in increased just of We United in mentioned, And have at talent strategic India. definitely beyond Latin years not our last the cities we individuals Mayank, outside we the acquisition cities. a of building States, of in pretty capacity in the have are but India, in X Jeff where and major as were presence team couple America. additional the hiring we're of more of in we hubs

lot we're of organic marketplace. in India relatively So big the mentioned, in the of a as growth scheme in the we see potential Jeff year, things small

our the So and ourselves growth, plenty differentiate employer team to become and the of in continues for choice. marketplace of room

to continue to able the well, and really as hire way exciting. been it's is demand along meet which proactively So

that, then inflation Got wage pricing be the And be leverage is impact? Just to would demand, strong helpful. the the around just that enough given any to able it. comments finally, offset strong

Yes.

the We increase than actually North an increase. ABR and mentioned about have wage reflects I differential -- is actually -- bps. record, the higher, XX Actually, is there the at is American that all-time more

increases. offshore, So up even have certainly more a and wage than average about U.S. XX% XX in rates we better outpacing actually that's wages. it's increase the offshore. That's bps mentioned I

side, is contracted And we're going optimistic that that. as the maintain supply the again, customers competitors able our on see we're see market be that and so to to pretty

think So I to at to be our cost increases. we're least going able offset

Alliance Global And question from your we line Kinstlinger have from next the Partners. Brian of

you business quarter. X about we Great and don't talk much automotive as verticals the Can services. about, hear

enjoyed provide the presentation. largest you what your verticals, strongest rates some aren't they've back-of-the-envelope growth of on in the these While

X, or can are So whether then out? some X if you if addition something a transformation there, follow-up. digital details else able it's provide you're or client to related industries those call I large to have And

largest, might And the there. a actually one of got largest accounts currently running anchor we've at of our be phenomenal Automotive, account one Yes. couple our is moment. is

the that say, long-standing X there. it's think It's been had a up XX one client we're been of, there. gosh, So suppliers And ladder I X now we've years. for, I or to move we've able want to global

well. to anchor account see has to consulting we're -- that worth seeing and the actually, have have well in we a practice. talked lot tech worked always on going side, traction real strategy the great some some, on continues beyond practice, team big had We've some And but there, been story, relationship changed didn't very underrepresented and fin starting of serv. dividends really as and we other within really business that, that always and tech But it's So hard that's is this great expanding. big, I really there automotive we very, mentioning manufacturing, a within But about grow. clients again, then similar long-standing

then to services. at numbers. gross And mentioned dig was The to on maybe just XX.X% margin Paul, the one you into Great. flat

on You more spreads being is delivered XX-point you about delivery, have offshore, and which about improvement labor. a for the talked work obviously fantastic. margin generally, as think those X% of higher we But

that lower can not, improvement? is if potential Or that's you help that bridge that utilization So us offsetting margin gap?

Yes. Sure.

know, from lower modestly want year-over-year, utilization that that strengthening I in So And with is expectations Tom perspective? our see to line don't certainly but anything QX. add you if Hogan, in and

program. Yes, things, there I Bright as as Brian, mentioned, as the we a couple contribute of Paths well also,

program We by the come into capacity we go the the great out utilization people trading, here all and hiring had college big joined we So also building through QX those of quarter coming there. online on of had and a start individuals adding as XX hedge for here beyond. second pyramid, in bottom

in make of are modestly as just for understand, you're but sure not utilization essentially, hired is some I counting utilization growth. people only So you've to the preparing down yet

other one. So on maybe why that's the metrics, other suggesting flat margin right? despite that the is Is

And mostly they're about kind are very a that seasonally. that is typically and lower actually of utilization be the you QX included way, by Yes, year. differentiator. last would annualization, Yes, recall small might QX XX%

actually XX%, quite year But was last XX%. about was So which good. it's

slightly. year-over-year We of a down, I on So basis, margin it's a had mentioned, expansion as still XX about bps, gross think. Paul

got it. absorbed that And of yes, XX rest So about that differential. XX, the we're seeing of in probably

Stanley. Jonathan question of And comes your line next from the Lee from Morgan

of provide like growth number looks a a to some around you'd as headcount growth see you're deceleration. It that quarterly saw the slight and billable you headcount color of year? add how Can about able that you sequential thinking the do headcount be net appropriate over the on basis? remainder additions What

surge see hundreds. you'll we And it's kind gosh, the well here. in actually, added we've QX, Oh, into -- of a have had

as as we sort recruits also, campus to Bright of that from little QX. So the then We design. when we're by held going But was report Again, see revealed well both numbers a rise. Paths in a influx you'll large that we've back bit. utilization had let that

to to have how people fixed recruit and well in quarter. So can on many comment a to actually. add it's do on I'd actually, -- want put a that, hundreds Tom anything that you done But high that? into number given the we've Tom, we past, the a in might but hesitate

You hit off. it

month. every numbers Some

that of How acquisitions. more way are public you that have compress? a a things -- pipeline your Got market if the And in does little on we're market it. year? acquisition private And same that follow-up valuation make the And so, you helpful. palatable? like? compress . the the then seeing seen valuations about strategy for That's remainder What's thinking does

question. good a It's

mentioned, lot remain lot if very now. still a the on were couple But with pretty I'd active. see deals undeterred got issue a out at hopper in competition there moment we're opposite anything, We of the valuation, some got kind by nutty really there's get very, on up, close the and come is got from it We've I gone we're and didn't -- some terms not seeing right there's the least as down. that perspective. That's of now. what of really that. at it's just valuations way, we -- high. We're in love done. of of deals the a exceptions, the based So Actually, my to

we're say on it seeing we're So good point, -- to public lot I your market. question, We've but still the would got in down, hunt. a come the on of -- pipeline. a opportunities. valuation still And There's we've seen directly like not the but

the of next line your comes William And Maggie Blair. Nolan from from question

seeing you kind commentary kind more last that's case, And right, any of there are maybe interpreting when the do just inbounds? drivers client inflection? think specific unsolicited that seen the your this And for in of of that inbounds? you the you're noting of if Am in did effects I way we've couple pandemic of recent beyond years, kind any of uptick start

Yes.

I alluding so inbound. specifically more to wasn't -- I think

than we build reason sales. are that we have But brand in happen. really that a We the as result of the does that more awareness of past. continue driven lot brand, I is that we've increased simply the in the think seeing And capacity is that et to of word-of-mouth, a for cetera,

getting do. so getting it's as as trying existing of and entrenching not really, sort otherwise with success is are your to good hard relationships those where We're that. door. in much there clients to it do much relationships, in a the way So of and It's unsolicited is really kind getting foot cold difficult

Our win interesting. rates, it's

more our we get mid-XXs, of you we around rates we Our sales, still the and clients front our at that stay the reality But once have we win would in in that come increase XX% the is, the incredible gone to not sales household against of as it, to naturally competition, names, typical win down that. And XX%. kind expect talent out got expect capacity in rates It's process, down. the as high.

So rates, which the growth an sign acceleration. again, if of is not sustainability current encouraging our about

talk then kind of And solution used the Great. Okay. ago, of in years to you context your area.

us So business. important, largest solution some are for custom what analytics consulting, can kind it's or you your like types the solution of maybe those feel currently buckets. insight some areas things the into And areas of fastest-growing of you development, product give

has mix The fairly stable. interesting. It's Yes. stayed

particular sort Far any not that we're there's for in vast dev time necessarily of So really runaway app when #X. of delivering Keep mind remains the away, a decline. custom solutions. even and of it's or a majority multitude client, the

So when reality, And engagement, involved. we're in measure there's those sort together. development, fit involved, doing in they every those we integration separate analytics custom are services, -- all app there's but almost of as

the Custom on app stayed similar remain relative continues So dev a pretty again strong. very basis. mix to very, again,

bread things what maybe seeing more it a with but dev custom the than probably are past, like We anything, I technologies, someone a I puzzle. and that in really standalone, some and platforms. newer more And more have considered maybe butter. around the all would said, kind are app opportunities But of complementary that to little together newer think niche our fits like remains still

line from And of a Puneet from we question JPMorgan. have the Jain

quarter. Nice

clients a signing about -- then of talked clients, quarter, you sorry, pipeline is this strong. are So lot bookings XXX-plus

You're increases. seeing price

the you or the in slowdown slowdown not anywhere, business all? guidance. sales impact are any of in any Maybe Are all cycle You potential that raised it seeing from adverse say vertical. to at you business? any signs your Is seeing macro fair in your at

been, obviously, phenomenal. look at always year-over-year environment we're absolute weighted and in I about the But I'm mean, it's is the percentage. at is ever pipeline there. indication look it's there's our the no as you would both I the our at and when a it's dollars, moment. it's aware best ever deals year-over-year been probably And but about obviously comp metrics, not pipeline, and you above no, if The that. also at XX% macro talking -- best nervous the gosh, of say

of moment, Clients at budgets. and flow their in So terms not we're the seeing ebb that.

thing, clients, client-by-client an again, But individual I think wood, in I it's least sense, and yet. not a not of, think broad on at that, don't it's knock more seeing Some macro broad a basis. we're

a good headcount. Or that's about mean for into hear. mix good, And No, of slowed reading then does basis should sort I Am subcontractor margins? sequential very slowdown it? the that That's term? Understood. was your the to subcontractor some in little mix much bit, on over average headcount we too what And same ending actually. expect near as

yes, Yes, a we that unique subcontractors now. to and drive sub-number but we very responsible down to leverage have prefer we skill and mean, We the feel full-time need very a employees, we would leverage necessarily I for right confident design. valuable have we we assets, set don't by when have them like capacity. or long-term But

our the relative would hire basis. a on preference be employees subcontractors, to absolutely full-time number of reduce So both and

market more is that subcontractors? But your hire a environment, of on mix, point that you hiring subcontractor instead environment reduce that, achieve own people can relying at on

see that. graduates up in be bringing you'll large as I showing we're the QX, is Yes, mentioned what's the that numbers bringing groups those particularly in. May in in, earlier, not we'll that I think And

having We're the good business do a So really allow and benefits. to differentiating that it's market compensation good really, yes, deal, I success attractive confident beyond will the culture. employees like that. feel us We're a employer,

collegial there's think and the I we're greatest free-to-core very provision.

your Vincent Barrington the of next from from question And Colicchio line comes Research.

going after, and I missed Yes. remarks Jeff, prepared size. large you had some you're deals the in mentioned your

you size clarify If And that. your the pipeline. average curious in also, deal if increasing could I'm is

pretty number plus, the every that X $X deals, plus. XXX answer was are like said it we what deals percent, have we yes, question I plus And definitely million does much maybe definitely. few XX XXX not not yes, but quarter-over-quarter, to so to that dramatic The if second figures add a quarter. It is over that

you're pipeline That's working in business or on? the

In pursuit. Yes, in pursuit. Fairly above.

burnout impacting of overall large I relatively business? mix declined. the all. The curious has Okay. health some heard minimize has are that's out you we deal And looking the at that due to wondering I'm take And change. from health health . some Tom care to how's spoken the of if about, if care employees, health providers care that I'm

Yes, a a down. mind in still healthy. long-standing relationship Keep in is we've actually our large business process I the question. think that there winding it's we're of good care really, health really had that

So bit that's turnaround. a that. impact sort little of seeing an we're of having on actually But a

Now bookings if QX, bookings than in substantially QX. you revenue at the were look in higher growth

And payer. see So I think we're going so technology no we're there's provider far in health think is pressure that being folks, understand still yes, I curve behind these can and a But the maybe that terms on trend still to priority. a both reverse. digital payer, kind care provider side of in are transformation on challenge. the more and than of the the exception spend top as provider and is certainly, the side a on most seeing must even And I industries

And transformation the elsewhere, that. designed about or spending budgets some make they doing their employee A reducing middle we're maybe. of in still burnout on they're be that health digital your lives the better. to So cases, and employee work even may where interesting, lot observation is actually health

a at foreseeable So going least there's for that to base future. good good demand there stable of I pretty be first feel the

Aarde Vander the line question Maxim [Operator comes of from next Group. Instructions] Jack Your from

the Congrats and Paul. continued for Jeff a execution. question Great. on Maybe

are any see Or Do onshore, the teams? reasons? differences? recent you for then margin your profile various there and all offshore increasing. whatever growing Or And touched both You and are and are faster of similar on gross these groups? the are a increase across linear than and margin others across offshore, gross ABR ABR, onshore

Good Yes. question.

than associated but yes, are are points, in to so rates X the XX In lower costs X%, consistent the margins terms the fairly America, within of XX range. around in the and somewhere Latin it's India margins, maybe

[trends] done would ABR, We with been there accounts of to recent of America, I we've acquisitions some Latin standing types introduce relationships, where different we've say, in particularly out driven. an and seeing in have able are more increase the different and that actually in

lot that a is So some of that of -- XX% skewed.

managed up our yet. not it's organic to there kind in we because the XX% these some But XX% rates number haven't anniversaried And of of in even couple yet drive a really range. to of

were is acquisitions, would I the as and underpricing rapidly that's little they changing. we Latin bit So say, probably leading a when did America way, those

color. X-figure twice. you remind I'm of great That's has deals this mentioned Could sorry, currently? And the me you're number pursuing then been Appreciate of that. like

It's over yes. plus, XXX X-figure

Okay.

then last just on one rates. And is Okay. win question the

You X-figure win mentioned those are are? XX% whether there now just are maybe what of there and deals then deal not around rates deal the remaining of and size and it's Can about considered you over $XXX,XXX these So XX%, talk deals? rates the large a overall. across win win deals, is your for or across any win sort variance expectation strong rates

back doors, to we $XX there, able are a sometimes analysis, are we into talk say And that's about front of million. to, variability lot I of new I opportunity But those actually the there's of up when where to ones the At with we're a same right? lot a them client foot start get X what alluding we an initiated during, multiple Again, time, and and in door small. figures. to we a a -- sales particularly do think metrics than the shine deals we that look more at of one do around would do. was We I have it is we relationships, lot we get We was ever our Yes, do these have open of that me in look at before. more able that. do it now. I don't XXXX, at. days

XX% mix. of good here and not win still But So or it deal a those say is a -- versus say, there time," the are sit I there's XX% occasionally. somewhere XX% "Gosh, closes else. can't $XXX,XXX are rates I our would

at further call I this I Jeff turn comments. the time. questions showing would to no like am to back for further Davis

Well, really everybody's appreciate our call. time right. today. All obviously concludes that We

the rest to Really, you And momentum the about and not as the than year. quarter, just see, great behind but more could ever. always, year, this start great outlook really that. of As super optimistic a

all time to Thank days. your look and appreciate So you. you seeing XX forward again in

this Thank for you today's all And you. Thank joining. conference concludes call.

disconnect. now may You