Perficient CEO: ‘Still On The Hunt’ For Potential Acquisitions

The St. Louis solution provider acquired South American-based companies Overactive in October 2021, Talos Digital in September 2021 and PSL Corp in June 2020.

Perficient CEO and Chairman Jeff Davis said the company “is still on the hunt” for potential acquisitions.

Davis told financial analysts during the company’s first fiscal quarter 2022 analyst conference call Thursday the St. Louis-based solution provider and digital consultancy has a “good pipeline” of deals. “There’s a lot of competition out there at the moment,” he said in a response to a question from an analyst. “And valuations remain pretty high. We’re undeterred based on that. That’s not really the issue, with a couple of exceptions by the way that really got kind of got nutty from my perspective. But we’re still on the hunt. We‘ve got a good pipeline. There’s still a lot of opportunities.”

Perficient acquired Uruguay-based software development firm Overactive in October 2021, Colombia-based Talos Digital in September 2021 and Colombia-based PSL Corp. in June 2020.

The decision made a few years ago to become a globally integrated solution provider has paid off for Perficient, which reported solid revenue and earnings growth despite the current economic environment.

Davis said that as word of customer experience spreads between accounts and markets, existing customers are offering Perficient new opportunities while new customers are asking the company to close on new projects.

[Related: Perficient CEO: Cloud Strategy And Migration Services Driving Major Growth]

As a result, organic revenue grew 49 percent during the quarter last year, while offshore revenue overall grew 111 percent, Davis said during his prepared remarks.

“Our fully integrated global delivery model continues to resonate with clients who value the combination of our local and global approach,” he said. “In fact, it's that fully integrated global delivery model that is the primary catalyst behind our performance.”

Transforming Perficient into a global company is part of a long-term plan, Davis said.

“A few years back, we began to articulate our intentions to transform Perficient into a truly global entity to bring the world's best technology talent to the strong client relationships we’d forged via a long-standing and ubiquitous domestic presence,” he said. “We’ve done just that, and it’s paying real dividends. Our clients now benefit from a seamless, blended experience where skilled colleagues a world away support them collaboratively with other Perficient experts who are just down the street.”

This approach is enabling Perficient to expand existing accounts while driving new accounts, Davis said.

“Our customers are increasingly willing to pay more for both our domestic and our global resources. ... We believe we've built a true competitive advantage, and one that’s sustainable because it's difficult to replicate,” he said.

Davis said that it’s remarkable that Perficient’s sales pipeline continues to replenish even as its bookings move into record numbers.

“In fact, right now, we’re pursuing nearly 200 seven-figure deals,” he said. “Our talent acquisition function continues to shine, rapidly hiring new talent into new roles to support our aggressive growth. And [this] is enabling us to offset wage increases despite the tight labor market.”

During the question and answer period of the conference call following prepared remarks, Davis responded to an analyst’s question about the company’s organic growth by saying Perficient's organic growth in the first fiscal quarter was 23 percent, with both second fiscal quarter and full fiscal year organic growth expected to be 17 percent at the midpoint or just below 20 percent at the maximum.

When asked by an analyst how Perficient will find the talent it needs to meet increased demand, Davis said the company has a strong talent acquisition team that itself is growing.

“And they've a great job of recruiting against, really, this unprecedented demand in what’s been obviously a pretty tight market. ... Within India, we have a decent presence, but nothing close to saturation,” he said. “So we're actually looking at expanding more within India and within Latin America. We’re still exploring acquisitions, also, that might be able to contribute in that regard. Europe is a possibility, but given the uncertainty there right now, we're kind of holding on that.”

When asked about headcount growth, Davis said Perficient has added several hundred employees over the last year, and is expecting a surge in the second fiscal quarter. He declined to give specific number of recruits planned, but said the company can recruit into “the high hundreds” in any given quarter.

For its first fiscal quarter 2022, which ended March 31, Perficient reported revenue of $222.1 million, up a significant 31 percent from the $169.3 million the solution provider reported for its first fiscal quarter 2021.

Revenue beat analyst expectations by $2.4 million, according to Seeking Alpha.

That included services revenue of $221.4 million, up from $168.7 million, and software and hardware revenue of $677 million, up from $611 million.

Net income for the quarter on a GAAP basis was $27.1 million, or 75 cents per share, up significantly from last year’s $13.6 million, or 41 cents per share. On a non-GAAP basis, the company reported net income of $33.6 million, or 98 cents per share, up from last year’s $24.3 million, or 75 cents per share.

The non-GAAP earnings per share beat analyst expectations by 3 cents, according to Seeking Alpha.

Looking forward, Perficient expects its second fiscal quarter 2022 revenue to be in the range of $224 million to $230 million, GAAP earnings to be in the range of 71 cents to 74 cents per share, and non-GAAP earnings to be in the range of $1.04 to $1.07 per share.

Perficient is also raising its full fiscal year 2022 revenue guidance to a range of $917 million to $942 million, GAAP earnings to a range of $3.08 to $3.19 per share, and non-GAAP earnings to a range of $4.24 to $4.36 per share.