-- Fourth Quarter Service Revenues Up 21% Over Q4 2009 --
-- Full-Year Service Revenues Up 29% Over 2009 --
BOSTON — February 15, 2011 — Sapient (NASDAQ: SAPE) today reported the following financial results for the fourth quarter and year ended December 31, 2010. For the fourth quarter of 2010:
• Service revenues were $222.9 million compared to $183.5 million in the fourth quarter of 2009, an increase of 21%. Sequentially, service revenues were up $5.8 million, or 3%, from $217.1 million in the third quarter of 2010. On a constant currency basis, revenues increased 22% over the fourth quarter of 2009 and 1% sequentially.
• GAAP income from operations was $22.1 million, or 9.9% of service revenues, up 15.1% from $19.2 million, or 10.4% of service revenues, reported in the fourth quarter of 2009.
• Non-GAAP income from operations was $27.6 million, or 12.4% of service revenues, up 11.3% from $24.8 million, or 13.5% of service revenues, reported in the fourth quarter of 2009.
• GAAP diluted net income per share was $0.11, compared to $0.51 in the fourth quarter of 2009 which included a non-recurring net tax benefit of $54.8 million, or $0.40 per share.
• Non-GAAP diluted net income per share was $0.14, compared to $0.11 in the fourth quarter of 2009.
For the year ended December 31, 2010, service revenues were $823.5 million compared to $638.9 million for 2009, an increase of 29%.
“We had a strong finish to 2010 and are proud of the results we achieved for the year, with all three business segments posting excellent growth,” said Sapient President and Chief Executive Officer Alan J. Herrick. “We continue to position the company to help our clients succeed in a rapidly-changing business and consumer environment.”
The company generated cash from operations of $44.0 million in the fourth quarter of 2010, compared to $21.0 million in the fourth quarter of 2009. For the year ended December 31, 2010, cash from operations was $87.3 million, up 126% from $38.7 million for the twelve months ended December 31, 2009. As of December 31, 2010, the company had cash, cash equivalents and marketable securities of $234.1 million. Days sales outstanding was 65 days for the fourth quarter of 2010, improved from 68 days in the third quarter of 2010 and 66 days for the fourth quarter of 2009.
Sapient management provided the following guidance:
• For the first quarter ending March 31, 2011, service revenues are expected to be $228 million or higher.
• First quarter 2011 non-GAAP operating margin is expected to be 9.5% or better.
• During the first quarter of 2011, it is expected that there will be a restructuring charge of approximately $5.5 million primarily due to the acceleration of stock-based compensation expense related to the previously-announced transition of Chris Clarke, the founder of Nitro Group, from employee to consultant.
• For the year ending December 31, 2011, service revenues are expected to grow by 20% or higher.
• Non-GAAP operating margin for 2011 is expected to be in the range of 12% to 14%.
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:
U.S.: (888) 713-4217
International: (617) 213-4869
Please use the following link to pre-register for the conference call:
Please use the following link to access the live webcast of this event as well as an archive of the webcast:
The link to the webcast will also be posted at:
In addition, a re-broadcast of the conference call will be available from February 15 at 7:30 p.m. ET through February 22 at 11:59 p.m. ET. The replay information is as follows:
U.S.: (888) 286-8010
International: (617) 801-6888
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 has presented service revenues in constant currency terms, which excludes the effect of currency fluctuations between the U.S. dollar and the local functional currencies in countries where the company operates. 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. However, 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 2011 – that involve a number of risks and uncertainties. Actual results could differ materially from management’s expectations. 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 risk factors set forth in the company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as filed with the SEC.
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 North America, Europe, and Asia-Pacific. For more information, visit www.sapient.com.
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Sapient is a registered service mark of Sapient Corporation.