CAMBRIDGE, Mass.— Sapient (NASDAQ: SAPE) today announced its financial results for the first quarter ended March 31, 2007.
First Quarter Financial Results
For the first quarter of 2007, Sapient reported service revenues of $121.3 million, an increase of 39% year over year.
On a non-GAAP basis (excluding stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets and $3.2 million of expense relating to the stock-based compensation review and restatement), Sapient reported first quarter income from operations of $7.7 million, or 6.4% of service revenues. This compares to non-GAAP income from operations of $1.9 million, or 2.2% of service revenues, for the first quarter of 2006. On a GAAP basis, Sapient reported first quarter income from continuing operations of $0.8 million, compared to a loss from continuing operations of $1.2 million in the first quarter of 2006.
Non-GAAP diluted income per share from continuing operations for the first quarter was $0.07, compared to $0.03 for the first quarter of 2006. On a GAAP basis, diluted income per share from continuing operations for the first quarter was $0.01, compared to a diluted loss per share of $0.01 for the first quarter of 2006.
"Our revenue growth continues to validate our strategy,” said Alan J. Herrick, chief executive officer and president of Sapient. "Clients recognize that we have a unique and valuable proposition they're not finding anywhere else. We're ahead of the curve in delivering services based on the new intersections of marketing, business and technology."
The Company used cash of $18 million in operations in the first quarter of 2007 due largely to the payout of seasonal compensation expenses, comparable to the use of $19 million in cash for the first quarter of 2006. Cash, cash equivalents and marketable securities totaled $108.3 million at March 31, 2007. Days sales outstanding (in accounts receivable and unbilled revenue, net of deferred revenue) was 79 days compared to 85 days for the first quarter of 2006.
Financial Outlook
Sapient management provided the following financial guidance for the second quarter ending June 30, 2007:
1. Service revenues are expected to be in excess of $126 million.
2. Non-GAAP operating margins are expected to be in excess of 7%.
3. Expenses related to the stock-based compensation review and restatement are expected to be approximately $3.3 million.
Completion of Stock-Based Compensation Review
Sapient also announced today in a separate press release that it completed its stock-based compensation review and filed with the Securities and Exchange Commission its Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and its Quarterly Reports on Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006. Further, the Company announced its intent to file by June 15, 2007 its Form 10-Q for the quarter ended March 31, 2007. For further details please refer to that press release.
Webcast and Conference Call
Sapient will host a discussion of its first quarter at 5:00 p.m. (ET) today, which will be broadcast live on the Internet. For webcast registration information, please go to http://www.sapient.com/about+us/investors.htm. To listen to the call live, please dial 866-800-8652 (inside the U.S.) or 617-614-2705 (outside the U.S.) and enter passcode 65373231 when prompted. A re-broadcast of the call will be available from today at 7:00 p.m. (ET) through June 19 at 11:59 p.m. (ET) by dialing 888-286-8010 (within the U.S.) or 617-801-6888 (outside the U.S.) and entering passcode 87733070 when prompted.
Adjusted (Non-GAAP) Financial Measures
Sapient provides non-GAAP financial measures to complement reported GAAP results. Management believes the measures help illustrate underlying trends in the Company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, in managing the Company’s business and evaluating its performance. The Company anticipates that it will continue reporting both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results 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 efforts.
Forward-Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties, in particular the financial guidance for future periods. There are a number of factors that 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 timely complete its current and future client projects, its ability to successfully manage risks associated with its international operations, its ability to manage its growth and projects effectively, and its ability to continue to attract and retain high quality employees, as well as other 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 helps clients innovate their businesses in the areas of marketing, business operations, and technology. Leveraging a unique approach, breakthrough thinking, and disciplined execution, Sapient leads its industry in delivering the right business results on time and on budget. Sapient works with clients that are driven to make a difference, including BP, Essent Energie, Harrah’s Entertainment, Hilton International, Janus, National Institutes of Health (NIH), Sony Electronics, the U.S. Marine Corps, and Verizon.
Founded in 1990, Sapient is headquartered in Cambridge, Massachusetts, and operates across North America, Europe, and India. More information about Sapient can be found at www.sapient.com.
Sapient is a registered service mark of Sapient Corporation.
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To view the financial schedules that are part of this release, click here.