prft-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-15169

PERFICIENT, INC.

(Exact name of registrant as specified in its charter)

Delaware

No.

74-2853258

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

555 Maryville University Drive

Suite 600

Saint Louis, Missouri 63141

(Address of principal executive offices)

(314) 529-3600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	PRFT	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements during the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of October 23, 2023, there were 34,771,617 shares of Common Stock outstanding.

TABLE OF CONTENTS


Part I.	Financial Information	1

Item 1.	Financial Statements	2

	Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	2

	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	3

	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7

	Notes to Interim Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4.	Controls and Procedures	31

Part II.	Other Information	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

	Signatures	34

PART I. FINANCIAL INFORMATION

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on this Form 10-Q (“Form 10-Q”) are not purely historical statements, discuss future expectations, contain projections of results of operations or financial condition, or state other forward-looking information. Those statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The “forward-looking” information is based on various factors and was derived using numerous assumptions. In some cases, you can identify these so-called forward-looking statements by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of those words and other comparable words. You should be aware that those statements only reflect our predictions and are subject to risks and uncertainties. Actual events or results may differ substantially. Important factors that could cause our actual results to be materially different from the forward-looking statements include (but are not limited to) the following:

(1)the impact of the general economy and economic and political uncertainty on our business;

(2)risks associated with potential changes to U.S. and foreign laws, regulations, and policies;

(3)risks associated with the operation of our business generally, including:

a. client demand for our services and solutions;

b. effectively competing in a highly competitive market;

c. risks from international operations including fluctuations in exchange rates;

d. adapting to changes in technologies and offerings;

e. the ongoing transition of our executive leadership team;

f. obtaining favorable pricing to reflect services provided;

g. risk of loss of one or more significant software vendors;

h. maintaining a balance of our supply of skills and resources with client demand;

i. changes to immigration policies;

j. protecting our clients’ and our data and information;

k. changes to tax levels, audits, investigations, tax laws or their interpretation;

l. making appropriate estimates and assumptions in connection with preparing our consolidated financial statements; and

m. maintaining effective internal controls;

(4)risks associated with managing growth organically and through acquisitions;

(5)risks associated with servicing our debt, the potential impact on the value of our common stock from the conditional conversion features of our debt and the associated convertible note hedge transactions;

(6)legal liabilities, including intellectual property protection and infringement or the disclosure of personally identifiable information; and

(7)the risks detailed from time to time within our filings with the Securities and Exchange Commission (the “SEC”).

This discussion is not exhaustive, but is designed to highlight important factors that may impact our forward-looking statements. Because the factors referred to above, as well as the statements included under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, including documents incorporated by reference therein and herein, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf, you should not place undue reliance on any forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this Form 10-Q to conform such statements to actual results.

All forward-looking statements, express or implied, included in this report and the documents we incorporate by reference that are attributable to Perficient, Inc. and its subsidiaries (collectively, “we,” “us,” “Perficient,” or the “Company”) are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or any persons acting on our behalf may issue.

Item 1. Financial Statements

Perficient, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share information)


	September 30, 2023 (unaudited)		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	80,087	$	30,130
Accounts receivable, net	185,140		202,298
Prepaid expenses	6,840		6,432
Other current assets	19,148		16,756
Total current assets	291,215		255,616
Property and equipment, net	13,918		17,970
Operating lease right-of-use assets	23,588		27,088
Goodwill	577,628		565,161
Intangible assets, net	74,882		88,937
Other non-current assets	47,266		41,116
Total assets	$	1,028,497	$	995,888

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,307	$	24,351
Other current liabilities	54,992		104,780
Total current liabilities	70,299		129,131
Long-term debt, net	396,303		394,587
Operating lease liabilities	18,052		18,528
Other non-current liabilities	41,154		43,515
Total liabilities	$	525,808	$	585,761
Stockholders’ equity:
Preferred stock (par value $0.001 per share; 8,000,000 authorized; no shares issued or outstanding as of September 30, 2023 and December 31, 2022)	$	—	$	—
Common stock (par value $0.001 per share; 100,000,000 authorized; 53,317,130 shares issued and 34,122,836 shares outstanding as of September 30, 2023; 53,082,010 shares issued and 34,071,750 shares outstanding as of December 31, 2022)	53		53
Additional paid-in capital	424,989		403,866
Accumulated other comprehensive loss	(8,705)		(17,519)
Treasury stock, at cost (19,194,294 shares as of September 30, 2023; 19,010,260 shares as of December 31, 2022)	(367,669)		(354,536)
Retained earnings	454,021		378,263
Total stockholders’ equity	502,689		410,127
Total liabilities and stockholders’ equity	$	1,028,497	$	995,888

See accompanying notes to interim unaudited condensed consolidated financial statements.

Perficient, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share information)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022

Revenues	$	223,238	$	227,614	$	685,751	$	672,463


Cost of revenues (cost of services, exclusive of depreciation and amortization, shown separately below)	142,979		136,416		433,359		411,696
Selling, general and administrative	42,109		44,273		130,206		127,384
Depreciation	2,194		2,355		6,723		6,233
Amortization	5,032		6,087		16,372		18,064
Acquisition costs	456		2,148		464		2,508
Adjustment to fair value of contingent consideration	(1,748)		3,115		(6,475)		(351)
Income from operations	32,216		33,220		105,102		106,929

Net interest (income) expense	(7)		616		794		2,308

Net other expense	236		20		698		406
Income before income taxes	31,987		32,584		103,610		104,215
Provision for income taxes	9,391		9,569		27,852		26,282

Net income	$	22,596	$	23,015	$	75,758	$	77,933

Basic net income per share	$	0.66	$	0.68	$	2.23	$	2.30
Diluted net income per share	$	0.63	$	0.64	$	2.11	$	2.17
Shares used in computing basic net income per share	33,989		33,861		33,964		33,873
Shares used in computing diluted net income per share	36,713		36,663		36,709		36,763

See accompanying notes to interim unaudited condensed consolidated financial statements.

Perficient, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

(in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022

Net income	$	22,596	$	23,015	$	75,758	$	77,933
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax	1,437		(5,356)		8,814		(8,374)
Comprehensive income	$	24,033	$	17,659	$	84,572	$	69,559

See accompanying notes to interim unaudited condensed consolidated financial statements.

Perficient, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022


Common Stock
Beginning of period		$	53	$	53	$	53	$	53
	Stock compensation related to restricted stock vesting and retirement savings plan contributions	—		—		—		—
End of period		53		53		53		53
Additional Paid-in Capital
Beginning of period		418,123		383,987		403,866		423,235
	Proceeds from the sales of stock through the Employee Stock Purchase Plan	247		257		765		832
	Stock compensation related to restricted stock vesting and retirement savings plan contributions	6,619		5,715		20,358		17,399
	Issuance of stock in conjunction with acquisition including stock attributed to future compensation	—		3,142		—		3,142







	Cumulative effect of accounting changes (See Note 3)	—		—		—		(51,507)
End of period		424,989		393,101

SEC Form 10-Q filed by Perficient Inc.