Perficient Reports First Quarter 2019 Results

ST. LOUIS–(BUSINESS WIRE)–Perficient,
Inc. (NASDAQ: PRFT) (“Perficient”), the leading digital
transformation consulting firm serving Global 2000® and other large
enterprise customers throughout North America, today reported its
financial results for the quarter ended March 31, 2019.

Financial Highlights

For the quarter ended March 31, 2019:

• Services revenue increased 11% to $132.9 million from $120.2 million
  in the first quarter of 2018;
• Total revenue increased 11% to $133.8 million from $120.9 million in
  the first quarter of 2018;
• Net income increased 43% to $7.0 million from $4.9 million in the
  first quarter of 2018;
• GAAP earnings per share results on a fully diluted basis increased 47%
  to $0.22 from $0.15 in the first quarter of 2018;
• Adjusted earnings per share results (a non-GAAP measure; see attached
  schedule, which reconciles to GAAP earnings per share) on a fully
  diluted basis increased 23% to $0.43 from $0.35 in the first quarter
  of 2018; and
• EBITDAS(a non-GAAP measure; see attached schedule, which
  reconciles to GAAP net income) increased 17% to $19.7 million from
  $16.9 million in the first quarter of 2018.

“Our first quarter performance was strong and we expect that momentum to
continue as 2019 unfolds,” said Jeffrey Davis, chairman and CEO.
“Enterprises are increasingly realizing that Perficient is a unique and
compelling digital transformation consultancy and are recognizing and
rewarding the value we deliver by extending, enhancing and expanding
their investment with us. Our sales, marketing and delivery teams
continue to help us take share, our pipeline continues to grow and we’re
seeing strength across verticals, platforms and high-growth disciplines
like cloud and digital.”

Other Highlights

Among other recent achievements, Perficient:

• Was cited as a key service provider in Forrester Research’s report,
  “Now Tech: Application Modernization and Migration Services, Q1 2019,”
  and named a “Strong Performer” in the “Forrester Wave^TM:
  Specialist API Strategy and Delivery Service Providers, Q2 2019”
  report;
• Announced that its digital agency, Perficient Digital, received three
  Interactive Marketing Awards – Search Agency of the Year, Large
  Interactive Marketing Agency of the Year, and Best Interactive
  Marketing Campaign (Retail/E-commerce). These awards recognize the
  firm’s deep expertise in search engine optimization (SEO) and content
  marketing solutions; and
• Added new customer relationships and follow-on projects with such
  leading companies as Ascension Health, Bunzl, Emerson, Enterprise
  Holdings, Express Scripts, Ford, MasterCard, Navistar, New York Life,
  Santander Bank, TD Ameritrade, and Toyota.

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 second quarter 2019 revenue to be in the range of
$132 million to $138 million. Second quarter GAAP earnings per share is
expected to be in the range of $0.22 to $0.25. Second 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 $0.46 to $0.49.

Perficient is raising its previously provided full year 2019 revenue
guidance range from $515 million to $545 million to $535 million to $560
million, raising its 2019 GAAP earnings per share guidance range from
$0.74 to $0.86 to $0.90 to $1.02 and raising its 2019 adjusted earnings
per share (a non-GAAP measure; see attached schedule which reconciles to
GAAP earnings per share guidance) guidance range from $1.65 to $1.77 to
$1.80 to $1.92.

Conference Call Details

Perficient will host a conference call regarding first quarter 2019
financial results today at 11 a.m. Eastern.

WHAT: Perficient Reports First Quarter 2019 Results
WHEN: Thursday,
May 2, 2019 at 11 a.m. Eastern
CONFERENCE CALL NUMBERS: 855-246-0403
(U.S. and Canada); 414-238-9806 (International)
PARTICIPANT
PASSCODE: 4281836
REPLAY TIMES: Thursday, May 2, 2019,
at 2 p.m. Eastern, through Thursday, May 9, 2019, at 2 p.m. Eastern
REPLAY
NUMBER: 855-859-2056 (U.S. and Canada); 404-537-3406 (International)
REPLAY
PASSCODE: 4281836

About Perficient
Perficient is the leading digital
transformation consulting firm serving Global 2000® and enterprise
customers throughout North America. With unparalleled information
technology, management consulting, and creative capabilities, Perficient
and its Perficient Digital agency deliver vision, execution, and value
with outstanding digital experience, business optimization, and industry
solutions. Our work enables clients to improve productivity and
competitiveness; grow and strengthen relationships with customers,
suppliers, and partners; and reduce costs. Perficient’s professionals
serve clients from a network of offices across North America and
offshore locations in India and China. Traded on the Nasdaq Global
Select Market, Perficient is a member of the Russell 2000 index and the
S&P SmallCap 600 index. Perficient is an award-winning Adobe Premier
Partner, Platinum Level IBM business partner, a Microsoft National
Service Provider and Gold Certified Partner, an Oracle Platinum Partner,
an Advanced Pivotal Ready Partner, a Gold Salesforce Consulting Partner,
and a Sitecore Platinum Partner. 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 2019. 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 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 federal, state, local 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) maintaining a
balance of our supply of skills and resources with client demand;
c)
effectively competing in a highly competitive market;
d) protecting
our clients’ and our data and information;
e) risks from
international operations including fluctuations in exchange rates;
f)
changes to immigration policies;
g) obtaining favorable pricing to
reflect services provided;
h) adapting to changes in technologies
and offerings;
i) risk of loss of one or more significant software
vendors;
j) making appropriate estimates and assumptions in
connection with preparing our consolidated financial statements;
k)
maintaining effective internal controls; and
l) changes to tax
levels, audits, investigations, tax laws or their interpretation;

(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.

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 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.

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 EBITDAS (earnings before interest,
income taxes, depreciation, amortization, stock compensation,
acquisition costs and adjustment to fair value of contingent
consideration), 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 discounts and 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 EBITDAS 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 EBITDAS, 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 EBITDAS,
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 EBITDAS, 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 EBITDAS, 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 Discount and Debt Issuance Costs
On
September 11, 2018, Perficient issued $143.8 million aggregate principal
amount of 2.375% Convertible Senior Notes due 2023 (the “Notes”) in a
private placement to qualified institutional purchasers. In accordance
with accounting for debt with conversions and other options, Perficient
bifurcated the principal amount of the Notes into liability and equity
components. The resulting debt discount is being amortized to interest
expense over the period from the issuance date through the contractual
maturity date of September 15, 2023. Issuance costs related to the Notes
were allocated pro rata based on the relative fair values of the
liability and equity components. Issuance costs attributable to the
liability component of 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 the company’s
business performance.

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
EBITDAS, 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.