CAMBRIDGE, Mass. — Nov. 8, 2007 — Sapient (NASDAQ: SAPE) today reported the following financial results for the third quarter ended September 30, 2007:
• Service revenues were $141.6 million, an increase of 32.4% from $106.9 million in the third quarter of 2006.
• GAAP income from operations was $6.6 million, or 4.6% of service revenues, an increase of $9.2 million from a GAAP loss from operations of $2.6 million in the third quarter of 2006.
• Non-GAAP income from operations (excluding stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets and expense relating to the stock-based compensation review and restatement) was $12.5 million, or 8.8% of service revenues. This compares to non-GAAP income from operations of $5.7 million or 5.3% of service revenues in the third quarter of 2006.
• GAAP diluted income per share from continuing operations increased to $0.03 from $0.01 in the third quarter of 2006.
• Non-GAAP diluted income per share from continuing operations was $0.08 compared to $0.07 in the third quarter of 2006.
“We’re very pleased with our results in the third quarter, delivering robust revenue growth as well as marked improvements in operating efficiency,” said Sapient Chief Executive Officer Alan J. Herrick. “Our highly differentiated value proposition enabled us to provide great results for our clients and drove record win rates for the company. Going forward, we believe we are well-positioned to continue to build value for our clients and to expand our business.”
The Company generated cash from operations of $38.7 million in the third quarter of 2007, compared to $15.0 million in the third quarter of 2006. Sapient exited the third quarter of 2007 with cash and marketable securities of $147.4 million and no debt. Days sales outstanding was 62 days for the third quarter of 2007, improved from 80 days in the second quarter of 2007 and 83 days in the third quarter of 2006. During the third quarter of 2007, Sapient repurchased 608,187 shares of its common stock for $3.8 million.
Outlook
Sapient management offers the following guidance for the fourth quarter ending December 31, 2007:
1. Service revenues are expected to be $146 million or greater.
2. Non-GAAP operating margin is expected to be between 9% and 10%.
Webcast and Conference Call
Sapient will host a discussion of its third quarter results at 5:00 p.m. (ET) today, which will be broadcast live on the Internet. The dial-in information for the conference call is:
U.S.: (888) 679-8034
International: (617) 213-4847
Passcode: 76986690
Please use the following link to pre-register for the conference call as well as to access the live webcast of this event: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=65979&eventID=1600688.
In addition, a re-broadcast of the conference call will be available from Nov. 8 at 7:00 p.m. (ET) through Nov. 15 at 11:59 p.m. (ET). The replay information is as follows:
U.S.: (888) 286-8010
International: (617) 801-6888
Passcode: 81397376
The archived webcast of this event may be accessed at:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=65979&eventID=1600688.
This link will also be posted at http://www.sapient.com/about+us/Investors.htm.
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 which exclude stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets and expense relating to the stock-based compensation review and restatement.
Safe Harbor Statement
This press release contains forward-looking statements that involve a number of risks and uncertainties, in particular the financial guidance for future periods. Actual results could differ materially from management’s expectations. A number of factors could cause actual events to differ materially from those indicated. Such factors include, without limitation: the continued acceptance of the Company’s services; 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 and continue to attract and retain high quality employees; as well as 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.
About Sapient
Sapient, a global services firm, operates two groups—Sapient Interactive and Sapient Consulting—that help clients compete, evolve and grow in an increasingly complex marketplace. Sapient Interactive provides brand and marketing strategy, award-winning creative work, web design and development and emerging media expertise. Sapient Consulting provides business and IT strategy, process and systems design, package implementation and custom development, as well as outsourcing services such as testing, maintenance and support.
Sapient’s passion for client success—evidenced by its ability to foster collaboration, drive innovation and solve challenging problems—is the subject of case studies on leadership and organizational behavior used by MBA students at both Harvard and Yale. Leading clients, including BP, Essent Energie, Harrah's Entertainment, Hilton International, Janus, Sony Electronics and Verizon, rely on the company’s unique approach to drive growth and market momentum. Headquartered in Cambridge, Massachusetts, Sapient operates across North America, Europe and India. For more information, please visit www.sapient.com.
To view the financial schedules that are part of this release, click here .
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Sapient is a registered service mark of Sapient Corporation.