Perficient, Inc. (NASDAQ:PRFT) is a leading global digital consultancy that is transforming how the world's biggest brands connect with customers and grow their businesses. With unparalleled strategy, creative, and technology capabilities across industries, Perficient's end-to-end digital consulting services are helping clients drive faster speed-to-market and stronger, more compelling experiences for consumers.
Financials
In the fiscal year 2023, Perficient reported annual revenue of $906.5 million, a net income of $98.9 million, and operating cash flow of $143.0 million. The company's free cash flow for the year reached $137.6 million. These strong financial results demonstrate Perficient's ability to consistently deliver value for its clients and shareholders.
Perficient's services revenues, which include professional services and other services, accounted for $892.9 million, or 98.5% of the company's total revenue in 2023. The remaining $13.6 million, or 1.5%, came from software and hardware sales. Within the services revenue, the company saw a mix shift, with a 6.9% decrease in services revenues delivered by base business resources, partially offset by a 3.1% increase in services revenues delivered by resources of acquired companies.
The company's geographic revenue breakdown shows that the United States accounted for $871.3 million, or 96.1% of total revenue, while other countries contributed $35.2 million, or 3.9%. Perficient's strategic focus on expanding its global footprint, particularly in Latin America and India, has been a key driver of its growth in recent years.
Business Overview
Perficient's business model is centered around six primary service categories: strategy and transformation, data and intelligence, platforms and technology, customer experience and digital marketing, innovation and product development, and optimized global delivery. The company's deep and broad portfolio of solutions enables its clients to operate a real-time enterprise that dynamically adapts business processes and supporting systems to meet the changing demands of a global and competitive marketplace.
Recent Developments
One of the highlights of Perficient's 2023 performance was the acquisition of SMEDIX, a healthcare software engineering firm headquartered in San Diego, California, with offshore operations in Romania. This strategic acquisition strengthened Perficient's healthcare industry digital capabilities, enhanced its global delivery capacity, and expanded its footprint in Eastern Europe. The addition of SMEDIX's nearly 200 professionals has increased Perficient's billable headcount, with nearly 60% of its workforce now located outside the United States.
Perficient's strong fourth-quarter 2023 bookings, up nearly double digits on an annual basis and even stronger sequentially, also contributed to the company's confidence in its growth prospects for 2024. The company booked 56 deals greater than $1 million during the fourth quarter, flat year-over-year but sequentially up from 37 in the third quarter. This indicates that Perficient is winning larger, more strategic engagements with its clients.
Another positive development was the ramp-up of a large project with a client that will require 100 Perficient colleagues to support the client's digital transformation initiatives. This program began in the fourth quarter of 2023 and is expected to be fully staffed by early 2024. This type of capacity model relationship is expected to provide revenue consistency and serve as a foundation for continued project-based initiative growth.
Perficient's diversified customer base, spanning various industries, has been a key strength. The company's top verticals, healthcare and financial services, remain strong, and it is also seeing momentum in manufacturing and automotive. Clients across these industries are expressing strong interest in Perficient's capabilities in artificial intelligence (AI), a discipline the company has been investing in for nearly a decade.
Perficient's Generative AI innovation group, consisting of more than 800 colleagues worldwide, has been developing multiple proofs of concept, client demos, and frameworks for both client-facing and internal operational efficiency initiatives. The company is also engaged with clients in delivering significant AI-powered applications, such as personalized customer experience chatbots and data anomaly detection tools for clinical research teams in the pharmaceutical industry.
In January 2024, Perficient launched its PACE framework, which provides a holistic approach to responsibly operationalizing AI across organizations, empowering them to unlock the benefits of AI while proactively addressing risks.
Perficient's proprietary Envision Online platform has also seen continuous progress, with the business capability library module growing to more than 700 defined capabilities and the platform selection module addressing over 8,000 system requirements, 500 vendors, and 80 different types of platforms.
The company's focus on investing in programs that support its global workforce, such as the launch of the LiveWell employee resource group, has contributed to an enthusiastic and engaged workforce, leading to even greater outcomes for its enterprise customers.
Outlook
Looking ahead, Perficient has provided guidance for the first quarter of 2024, expecting revenue to be in the range of $212 million to $218 million, GAAP earnings per share between $0.31 and $0.35, and adjusted earnings per share between $0.74 and $0.79. For the full year 2024, the company expects revenue to be in the range of $925 million to $965 million, GAAP earnings per share between $2.64 and $2.77, and adjusted earnings per share between $4.05 and $4.20.
Liquidity
Perficient's strong financial position, with $128.9 million in cash and cash equivalents and $300 million of unused borrowing capacity under its credit facility as of December 31, 2023, provides the company with the flexibility to continue executing its strategic growth initiatives, including disciplined acquisitions.
Conclusion
In conclusion, Perficient's consistent financial performance, strategic acquisitions, global expansion, and innovative service offerings position the company as a leading digital transformation partner for enterprises. With a robust pipeline, a diversified customer base, and a focus on emerging technologies like AI, Perficient is well-poised to capitalize on the growing demand for digital solutions and drive continued growth in the years ahead.