Cambridge, Mass. — Sapient (NASDAQ: SAPE), a business innovator, today announced financial results for its second quarter ended June 30, 2005.
Financial Highlights
- Consolidated services revenues were $76.3 million, up 18% from the second quarter of 2004
- Earnings per share were $0.06, excluding an increase to a pre-existing restructuring charge. With the increase, earnings per share were $0.02.
- Operating margin increased to 9.4%, excluding an increase to a pre-existing restructuring charge. With the increase, operating margin was 2.5%.
- Revenue from long-term engagements increased to 39%, compared to 21% of revenue in the second quarter of 2004.
- Sapient completed its previously announced acquisition of Business Information Solutions, expanding its SAP and business intelligence services.
“In the second quarter, we continued to grow our long-term revenue, which increased to 39% of revenues,” said Jerry A. Greenberg, Sapient’s co-chairman and co-chief executive officer. “We are also experiencing strong demand for our Internet-related consulting and our SAP business intelligence services – two key growth areas we have previously discussed.”
Consolidated services revenues for the second quarter of 2005 were $76.3 million, a less than 1% decrease compared to the first quarter of 2005, and an 18% increase compared to the second quarter of 2004. Gross revenues for the second quarter of 2005 were $78.8 million, which included $2.5 million of reimbursable expenses.
Operating income for the second quarter of 2005 was $7.2 million, or an operating margin of 9.4%, excluding an increase to a pre-existing restructuring charge. With the restructuring charge increase, operating income was $1.9 million, or an operating margin of 2.5%. This compared to operating income of $6.2 million, or an 8.0% operating margin, for the first quarter of 2005, and operating income of $5.3 million, or an 8.2% operating margin, for the second quarter of 2004.
Net income for the second quarter of 2005 was $8.0 million, or $0.06 per diluted share, excluding an increase to a pre-existing restructuring charge. With the restructuring charge increase, net income was $2.7 million, or $0.02 per diluted share. This compared to net income of $6.2 million, or $0.05 per diluted share, for the first quarter of 2005, and net income of $5.7 million, or $0.04 per diluted share, for the second quarter of 2004.
During the second quarter of 2005, Sapient decreased its original estimate of sublease income from its Santa Monica, California office space, due to real estate market conditions and negotiations with potential sublease tenants. As a result, the company increased its restructuring charge, first established in 2001, by approximately $5.2 million.
“Our revenue growth and margin expansion – despite recent adverse foreign currency movement and some challenges in the European market – underscore the strength of Sapient’s business model,” said Scott Krenz, Sapient’s chief financial officer.
Conference Call
Sapient will host a discussion of the second quarter results in a conference call today at 4:30 p.m. (ET), which will be broadcast live on the Internet. For webcast registration information, please go to http://www.sapient.com/earnings.htm. It is advisable to register at least 15 minutes prior to the call to download and install any necessary audio software. A re-broadcast of the call will be available from July 28 at 6:30 p.m. (ET) through August 4 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 85971660 when prompted.
You may download the Consolidated Statements of Operations and Consolidated Balance Sheets in PDF format.
Non-GAAP Financial Measures
In this press release, Sapient’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) in the United States and using certain non-GAAP financial measures. In particular, Sapient provides its earnings figures for its second quarter 2005, excluding charges and gains, all of which are non-GAAP financial measures. These results are provided as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help indicate underlying trends in the Company’s business, and uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally, to manage the Company’s business and to evaluate its performance.
About Sapient
Sapient, a business innovator, helps clients achieve extraordinary results from their customer relationships, 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 Energy, Harrah’s Entertainment, Hilton International, Janus, National Institutes of Health (NIH), Nextel Communications, Sony Electronics, the U.S. Marine Corps, and Verizon.
Founded in 1991, 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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