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Sapient Reports Second Quarter 2009 Results
Posted by: gurufocus (IP Logged)
Date: August 6, 2009 04:33PM

Press Release: Sapient Reports Second Quarter 2009 Results

BOSTON--(BUSINESS WIRE)--Sapient (NASDAQ: SAPE) today reported the following financial results for the second quarter ended June 30, 2009:

  • Service revenues were $147.5 million, compared to $165.8 million in the second quarter of 2008, a decrease of 11%. Sequentially, service revenues were up $5.1 million, or 4%, from $142.4 million in the first quarter of 2009. On a constant currency basis, revenues decreased 4% over the prior year’s quarter and increased 1% sequentially.
  • GAAP income from operations was $8.5 million, or 5.7% of service revenues, down from the $12.2 million, or 7.3% of service revenues, reported in the second quarter of 2008. GAAP income from operations in the second quarter of 2009 reflects $1.0 million of acquisition costs related to the Nitro Group acquisition.
  • Non-GAAP income from operations was $14.2 million, or 9.6% of service revenues (excluding stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets , acquisition costs and other related charges). This compared to non-GAAP income from operations of $17.3 million, or 10.4% of service revenues, in the second quarter of 2008.
  • GAAP diluted net income per share was $0.06, compared to $0.09 in the second quarter of 2008.
  • Non-GAAP diluted net income per share was $0.10, compared to $0.13 in the second quarter of 2008.

“We’re pleased with our revenue growth and profitability this quarter, given the current economic environment,” said Sapient President and Chief Executive Officer Alan J. Herrick. “The opportunities we are seeing give us confidence in our ability to forecast continued growth.”

“We completed the acquisition of Nitro Group in early July and client reaction has been very favorable,” added Herrick. “Our combined value proposition includes integrated advertising, digital commerce, marketing technology and social media to help clients create superior brand experiences that drive business results.”

The Company generated cash from operations of $30.4 million in the second quarter of 2009, compared to $22.0 million of cash in the second quarter of 2008. As of June 30, 2009, the Company had cash, cash equivalents and marketable securities of $194.9 million. Days sales outstanding was 75 days for the second quarter of 2009 compared to 78 days in the first quarter of 2009 and 63 days for the second quarter of 2008.

Outlook

Sapient management provided the following guidance:

  • For the third quarter ended September 30, 2009, service revenues are expected to be in the range of $159 to $163 million, including revenue related to the Nitro Group.
  • Third quarter non-GAAP operating margin is expected to be 10% or higher.

Webcast and Conference Call

Sapient will host a discussion of its first quarter results at 4:30 p.m. (EDT) today, which will be broadcast live on the Internet. The dial-in information for the conference call is:

U.S.: (888) 713-4217

International: (617) 213-4869

Passcode: 31227574

Please use the following link to pre-register for the conference call:

[www.theconferencingservice.com]

Please use the following link to access the live webcast of this event as well as an archive of the webcast:

[phx.corporate-ir.net]

The link to the webcast will also be posted at:

:a037:http://www.sapient.com/about+us/Investors.htm:/a037:.

In addition, a re-broadcast of the conference call will be available from August 6 at 7:30 p.m. (EDT) through August 13 at 11:59 p.m. (EDT). The replay information is as follows:

U.S.: (888) 286-8010

International: (617) 801-6888

Passcode: 40394366

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 expense relating to the stock-based compensation review and restatement. However, because the Company’s reported non-GAAP financial measures are not calculated according to GAAP, these measures may not necessarily be comparable to GAAP or 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 of 2009 – that involve a number of risks and uncertainties. Actual results could differ materially from management’s expectations. 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 risk factors set forth in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as filed with the SEC.

About Sapient

Sapient is a global services company that helps clients compete, evolve and grow in an increasingly complex marketplace. Sapient’s offerings include a strategy-led marketing services group that – through its best-of-breed digital marketing services and world-class traditional advertising and brand strategy – is enabling leading brands to create immersive consumer experiences through multi-channel marketing and multi-channel commerce. In addition, Sapient’s business and technology services offering provides a broad range of services that enable companies to optimize their business processes, drive efficiencies, and achieve greater profit growth.

Sapient’s passion for client success – evidenced by its ability to foster collaboration, drive innovation and solve challenging problems – is the subject of case studies on leadership and organizational behavior used by MBA students at both Harvard and Yale. Headquartered in Boston, Sapient operates across North America, Europe, Asia and Australia. For more information, please visit www.sapient.com.

Sapient is a registered service mark of Sapient Corporation.

Sapient Corporation
Consolidated Unaudited Condensed Statements of Operations
  Three Months Ended June 30,   Six Months Ended June 30,
2009   2008 2009   2008
 
(in thousands, except per share amounts)
Revenues:
Service revenues $ 147,534 $ 165,826 $ 289,893 $ 320,057
Reimbursable expenses   6,070   4,498     13,023   10,801
Total gross revenues   153,604   170,324     302,916   330,858
Operating expenses:
Project personnel expenses 101,939 110,674 202,117 217,581
Reimbursable expenses   6,070   4,498     13,023   10,801
Total project personnel expenses and reimbursable expenses 108,009 115,172 215,140 228,382
Selling and marketing expenses 7,274 10,498 14,416 21,351
General and administrative expenses 27,764 32,155 54,118 62,196
Restructuring and other related charges (benefits) 158 (136 ) 2,303 7
Amortization of purchased intangible assets 898 473 1,765 960
Acquisition costs and other related charges   1,035   -     1,673   -
Total operating expenses 145,138 158,162 289,415 312,896
       
Income from operations 8,466 12,162 13,501 17,962
 
Interest and other income, net   809   1,584     1,815   4,354
 
Income before income taxes 9,275 13,746 15,316 22,316
 
Provision for income taxes   1,679   2,172     3,222   3,626
 
Net income $ 7,596 $ 11,574   $ 12,094 $ 18,690
 
Basic net income per share $ 0.06 $ 0.09   $ 0.10 $ 0.15
Diluted net income per share $ 0.06 $ 0.09   $ 0.09 $ 0.15
 
Weighted average common shares 127,066 125,544 126,995 125,787
Weighted average dilutive common share equivalents   3,759   3,101     3,275   3,013

Weighted average common shares and dilutive common share equivalents

  130,825   128,645     130,270   128,800

Sapient Corporation
Consolidated Unaudited Condensed Balance Sheets
   
 
June 30, 2009 December 31, 2008
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 173,632 $ 169,340
Marketable securities, current portion 980 3,462
Restricted cash, current portion 246 372
Accounts receivable, less allowance for doubtful accounts 94,636 88,930
Unbilled revenues 47,706 43,665
Prepaid expenses and other current assets   22,282   20,223
Total current assets 339,482 325,992
 
Marketable securities, net of current portion 17,954 17,267
Restricted cash, net of current portion 2,054 2,139
Property and equipment, net 29,544 32,397
Purchased intangible assets, net 8,629 9,644
Goodwill 60,455 51,711
Other assets   12,999   13,120
 
Total assets $ 471,117 $ 452,270
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 9,297 $ 6,977
Accrued compensation 36,397 55,605
Accrued restructuring costs, current portion 2,915 3,123
Deferred revenues, current portion 12,903 15,143
Other current liabilities   56,512   47,082
Total current liabilities 118,024 127,930
Accrued restructuring costs, net of current portion 3,574 4,799
Deferred revenues, net of current portion 145 289
Other long-term liabilities   18,564   17,305
Total liabilities 140,307 150,323
 
Stockholders\' equity   330,810   301,947
 
Total liabilities and stockholders’ equity $ 471,117 $ 452,270



Stocks Discussed: SAPE,
Sapient Corporation
Consolidated Unaudited Statements of Cash Flows
               
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
 
(in thousands)
 
Cash flows from operating activities:
Net income $ 7,596 $ 11,574 $ 12,094 $ 18,690
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) loss recognized on disposition of fixed assets (141 ) 60 (102 ) 90
Unrealized loss on financial instruments 315 3 543 62
Unrealized gain on marketable securities and put right, net (164 ) - (87 ) -
Depreciation and amortization expense 4,861 4,626 9,607 9,624
Deferred income taxes 171 (71 ) 1,515 (535 )
(Recovery of) provision for doubtful accounts, net (25 ) (47 ) 540 (340 )
Stock-based compensation expense 3,659 4,404 7,146 8,889
Changes in operating assets and liabilities, net of acquisition and disposition:
Accounts receivable (7,871 )
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