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PI

PERFICIENT INC (PRFT)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 revenue was $220.8M, down 5% YoY, with GAAP EPS $0.65 and adjusted EPS $0.99; adjusted EBITDA was $46.7M. Management cited “solid fourth quarter bookings” positioning the company for a return to growth in 2H24 .
  • Results came in slightly below the prior Q4 2023 revenue guidance low-end ($221–$226M), while GAAP and adjusted EPS landed within guidance ranges; FY23 revenue was modestly below guided range, but EPS landed within .
  • Wall Street consensus from S&P Global could not be retrieved; third‑party sources indicate Q4 revenue missed by ~$2.93M and adjusted EPS missed by $0.02. Highlighting these small misses and 2H24 growth narrative are likely near-term stock reaction catalysts .
  • Management guided Q1 2024 revenue to $212–$218M, GAAP EPS to $0.31–$0.35, adjusted EPS to $0.74–$0.79; FY 2024 revenue to $925–$965M, GAAP EPS to $2.64–$2.77, adjusted EPS to $4.05–$4.20 .

What Went Well and What Went Wrong

  • What Went Well

    • “Solid fourth quarter bookings have us positioned for a return to growth, particularly in the second half of 2024,” Tom Hogan (President & CEO) .
    • Bookings momentum: management noted 56 deals >$1M in Q4, flat YoY and up sequentially; a multi‑year digital program requiring ~100 colleagues began ramping in Q4 with full ramp expected by early Q2 .
    • Strong cash generation in FY23: operating cash flow $142.97M and ending cash $128.89M, up substantially YoY .

  • What Went Wrong

    • Revenue –5% YoY; Services gross margin compressed (Services Revenues Net of Cost as % of Services Revenues 37.7% vs 40.8% prior year), weighing on adjusted EBITDA margin (21.5% vs 23.8% prior year) .
    • Effective tax rate stepped up in Q4 (29.5% vs 28% prior year), contributing to lower GAAP EPS and net income, per management commentary .
    • Industry mix showed modest softness in Financial Services (20% in Q4 2023 vs 22% in Q4 2022) and Leisure/Media/Entertainment (8% vs 9%), reflecting uneven demand pockets .

Financial Results

MetricQ2 2023Q3 2023Q4 2023
Total Revenues ($USD Millions)$231.105 $223.238 $220.790
GAAP EPS ($)$0.73 $0.63 $0.65
Adjusted EPS ($)$1.00 $0.92 $0.99
Adjusted EBITDA ($USD Millions)$48.155 $45.778 $46.653
Margins and EfficiencyQ2 2023Q3 2023Q4 2023
Adjusted EBITDA Margin (% of Services Revenues)21.1% 20.9% 21.5%
Services Revenues Net of Cost (% of Services Revenues)38.6% 37.3% 37.7%
Industry Mix (% of Total)Q4 2022Q3 2023Q4 2023
Healthcare/Pharma/Life Sciences21% 21% 21%
Financial Services/Banking/Insurance22% 21% 20%
Manufacturing10% 11% 12%
Leisure/Media/Entertainment9% 8% 8%
Automotive/Transportation9% 8% 8%
Other29% 31% 31%
KPIs (Headcount)Q4 2022 (Avg)Q4 2023 (Avg)
Offshore/Nearshore Billable Employees3,385 3,335
Onshore Billable Employees2,463 2,272
Subcontractors364 295
Total Billable Headcount6,212 5,902
SG&A Headcount944 957
Total Headcount7,156 6,859
Versus Estimates (proxy)ConsensusActualBeat/Miss
Revenue ($USD Millions)—$220.79 Miss by ~$2.93M
Adjusted EPS ($)—$0.99 Miss by $0.02

Note: S&P Global (Capital IQ) consensus was unavailable via our tool for PRFT. Third‑party sources are provided as proxies.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
RevenueQ4 2023$221–$226M $220.79M Lower than guided range (slight)
GAAP EPSQ4 2023$0.64–$0.69 $0.65 Maintained (within range)
Adjusted EPSQ4 2023$0.98–$1.03 $0.99 Maintained (within range)
RevenueFY 2023$907–$912M $906.54M Lower than guided range (slight)
GAAP EPSFY 2023$2.74–$2.79 $2.76 Maintained (within range)
Adjusted EPSFY 2023$3.94–$3.99 $3.95 Maintained (within range)
RevenueQ1 2024—$212–$218M (new) New
GAAP EPSQ1 2024—$0.31–$0.35 (new) New
Adjusted EPSQ1 2024—$0.74–$0.79 (new) New
RevenueFY 2024—$925–$965M (new) New
GAAP EPSFY 2024—$2.64–$2.77 (new) New
Adjusted EPSFY 2024—$4.05–$4.20 (new) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2023)Current Period (Q4 2023)Trend
Bookings momentumCautious macro, focus on margins (Q2); improving momentum expected for solid year end (Q3) 56 deals >$1M; multi‑year program ramping; team expected fully up by early Q2 Improving sequential momentum
AI/Technology initiativesNew and expanded generative AI initiatives announced (Q3) Recognized in Forrester “AI Services Landscape, Q1 2024” Building credibility
Leadership transitionCEO succession plan announced (Q2); Hogan CEO effective Oct 1 (Q3) Davis transitions to non‑executive Chairman Mar 1, 2024 Transition completed
Regional capacityGlobal delivery depth in NA/LatAm/India (Q2/Q3) SMEDIX acquisition adds Eastern Europe (Romania) capacity; supports Europe replication Expanding footprint
Tax rate/marginMargin focus in 2H (Q2); margin compression persisted (Q3) Q4 ETR ~29.5%; services margins lower YoY; adjusted EBITDA margin 21.5% Mixed: tax up, margins pressured

Management Commentary

  • “Solid fourth quarter bookings have us positioned for a return to growth, particularly in the second half of 2024.” – Tom Hogan, President & CEO .
  • “We booked 56 deals greater than $1 million during the fourth quarter of 2023… a multiyear program… will require 100 Perficient colleagues… began to ramp in Q4 and we expect the team will be fully up by early second quarter.” – Management remarks .
  • Outlook reaffirmed with Q1 2024 and FY 2024 guidance ranges provided (revenue, GAAP EPS, adjusted EPS), indicating confidence in bookings conversion and 2H24 trajectory .

Q&A Highlights

  • Bookings/large programs: Follow‑ups focused on the scale and timing of the 100‑person program ramp and implications for 1H vs 2H revenue cadence .
  • Demand patterns: Analysts probed vertical strength/weakness (FS softness vs manufacturing up); management pointed to building momentum and pipeline quality .
  • Margin and tax: Clarifications on the effective tax rate increase and services margin compression vs FY targets; management guided adjusted EPS and discussed mix and operating leverage factors .

Estimates Context

  • S&P Global consensus estimates were unavailable via our system for PRFT this quarter; as a proxy, third‑party sources indicate Q4 revenue of $220.79M missed by ~$2.93M and adjusted EPS of $0.99 missed by $0.02. Where estimates differ, analysts may modestly recalibrate near‑term revenue and margin assumptions while acknowledging 2H24 trajectory .

Key Takeaways for Investors

  • Near‑term: Small top‑line and EPS misses plus higher tax rate pressured Q4 prints; however, bookings strength and large program ramp support a positive 2H24 setup. Watch Q1 conversion and deal ramp pace for confirmation .
  • Guidance: Q1 and FY24 ranges are reasonable given momentum; achieving the upper half likely requires continued improvement in Financial Services and further margin stabilization .
  • Mix and margins: Services margin metrics improved sequentially but remain below prior year; monitor utilization, pricing, and mix shifts by industry for EBITDA leverage .
  • Strategic capacity: SMEDIX adds Eastern European capability, potentially improving delivery flexibility and competitiveness in Europe—supporting growth aspirations .
  • AI credibility: Recognition in Forrester’s AI Services Landscape enhances enterprise positioning; cross‑sell into healthcare, transportation, and financial services verticals could be an incremental tailwind .
  • Cash strength: FY23 operating cash flow and ending cash provide ballast for investment and potential capital allocation amidst macro variability .
  • Trading implications: In the short term, narrative revolves around bookings conversion and 2H24 recovery; medium‑term thesis depends on sustainable demand across verticals and margin recapture as programs ramp and utilization improves .