Service Revenues Up 10% Over Q2 2011 and Up 7% Sequentially
Second Quarter Non-GAAP Operating Margin of 12.2%
BOSTON — August 7, 2012 — Sapient (NASDAQ: SAPE) today reported the following financial results for the second quarter ended June 30, 2012:
· Service revenues were $279.0 million compared to $254.6 million in the second quarter of 2011, an increase of $24.4 million, or 10%. Sequentially, service revenues were up $18.4 million, or 7%, from $260.6 million in the first quarter of 2012. On a constant currency basis, revenues increased 11% over the second quarter of 2011 and increased 7% sequentially.
· GAAP income from operations was $24.3 million, or 8.7% of service revenues, compared to $23.1 million, or 9.1% of service revenues, reported in the second quarter of 2011.
· Non-GAAP income from operations was $34.0 million, or 12.2% of service revenues, compared to $29.9 million, or 11.8% of service revenues, reported in the second quarter of 2011.
· GAAP diluted net income per share was $0.10, compared to $0.11 in the second quarter of 2011.
· Non-GAAP diluted net income per share was $0.15, compared to $0.14 in the second quarter of 2011.
“We are very pleased with our second quarter results, with all areas of the business showing strength despite the ongoing uncertainty of the global macroeconomic environment,” said Sapient President and Chief Executive Officer Alan J. Herrick. “We remain confident in the strength of our position to address the market opportunities ahead.”
The company generated cash from operations of $17.5 million in the second quarter of 2012, compared to $38.4 million in the second quarter of 2011. As of June 30, 2012, the company had cash, cash equivalents and marketable securities of $173.0 million. During the second quarter, the company used approximately $37 million of cash to repurchase common stock under its previously announced buyback authorization. Days sales outstanding was 66 days for the second quarter of 2012, down from 69 days in the first quarter of 2012 and 69 days for the second quarter of 2011.
Sapient management provided the following guidance:
· For the quarter ending September 30, 2012, service revenues are expected to be in the range of $277 million to $284 million.
· Third quarter 2012 non-GAAP operating margin is expected to be 12.5% to 13.5%.
· For the year ended December 31, 2012, service revenues are now expected to grow 8% to 10%.
Webcast and Conference Call
Sapient will host a discussion of its first 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:
US: (877) 291-1296
International: (720) 259-9209
To access the live webcast of the event, please click on the link below:
In addition, a re-broadcast of the webcast will be available in the investors section of www.sapient.com.
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 may present service revenues in constant currency terms, which excludes the effect of currency fluctuations between the U.S. dollar and the functional currency of the entity in which the revenue was transacted. 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. 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 third quarter and full-year 2012, including expected service revenues and expected non-GAAP operating margin – that involve a number of risks and uncertainties. All forward looking statements are based upon current expectations and beliefs and various assumptions. Actual results could differ materially from management’s expectations and the forward-looking statements contained in this release. 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 risks and uncertainties as set forth in the company’s filings with the SEC, including without limitation the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances, except as required by law.
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.