~ CEO Jeff Davis to Transition to Executive Chairman on October 1, 2023 ~

~ President and COO Tom Hogan Appointed Chief Executive Officer and Joins Board, Each Effective October 1, 2023 ~

Perficient, Inc. (NASDAQ:PRFT) ("Perficient"), the leading global digital consultancy transforming the world's largest enterprises and biggest brands, today reported its financial results for the quarter ended June 30, 2023.

Financial Highlights

For the quarter ended June 30, 2023:

Revenues increased 4% to $231.1 million from $222.7 million in the second quarter of 2022;
Net income remained strong at $26.4 million, but decreased from $27.8 million in the second quarter of 2022;
GAAP earnings per share results on a fully diluted basis decreased 5% to $0.73 from $0.77 in the second quarter of 2022;
Adjusted earnings per share results (a non-GAAP measure; see attached schedule, which reconciles to GAAP earnings per share) on a fully diluted basis decreased 6% to $1.00 from $1.06 in the second quarter of 2022; and
Adjusted EBITDA (a non-GAAP measure; see attached schedule, which reconciles to GAAP net income) decreased 6% to $48.2 million from $51.2 million in the second quarter of 2022.

"While enterprises are proceeding cautiously amidst conflicting macroeconomic signals, Perficient's integrated delivery model that blends great global talent and depth in North America, Latin America and India continues to appeal to the world's leading companies and biggest brands," said Jeffrey Davis, chairman and CEO. "In the second half of the year, we're focused on continuing to deliver best-of-breed margins."

Other Highlights

Among other recent achievements, Perficient:

Announced that effective October 1, 2023, Mr. Davis will transition from CEO to Executive Chairman, and Thomas J. Hogan, Perficient's President and COO, will succeed Mr. Davis as CEO. Mr. Hogan will continue to serve as President, a role he has served in since February 2021. Mr. Hogan joined Perficient in 2008 and began serving as COO in 2018. The Perficient Board of Directors (the "Board") also approved an increase in the size of the Board and appointed Mr. Hogan to fill the newly-created vacancy, effective as of October 1, 2023;
Has added Jill A. Jones, former executive vice president at Brown-Forman Corp. (NYSE:BFA), to its Board of Directors upon her election at the 2023 annual meeting of Perficient's stockholders;
Launched the Perficient Cultural Connections Employee Resource Group (ERG), a global community of colleagues focused on exploring, understanding, and advancing the cultural differences that help shape Perficient's global workforce;
Was named a 2023 Top Workplace USA, recognizing Perficient's collaborative and people-centric work culture. Perficient ranks 12th on the national list, ranking higher than all other listed large digital consultancies;
Received the 2023 Sitecore Partner Award for Excellence in Business Impact, honoring Perficient's outstanding performance in delivering quality solutions using the Sitecore platform that transform business outcomes;
Was recognized with Sunbelt Rentals as the 2023 Adobe Experience Maker Engager Award winner for exceptional achievement in transforming pipeline creation to drive measurable business growth;
Was recognized as a 2023 Microsoft U.S. Partner of the Year finalist for having a track record of building new cloud-native apps and providing outstanding solutions and services in Cloud Native App Development;
For the fourth year in a row, was recognized in Modern Healthcare's annual survey as one of the 10 largest healthcare management consulting firms; and
Was included in Forrester's "Commerce Services Landscape, Q3, 2023" report as a medium-sized consultancy helping companies craft end-to-end commerce strategies and operate total commerce experiences.

Business Outlook

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. See "Safe Harbor Statement" below.

Perficient expects its third quarter 2023 revenue to be in the range of $220 million to $226 million. Third quarter GAAP earnings per share is expected to be in the range of $0.56 to $0.60. Third quarter adjusted earnings per share (a non-GAAP measure; see attached schedule which reconciles to GAAP earnings per share guidance) is expected to be in the range of $0.89 to $0.94.

Perficient reduced its full year 2023 revenue guidance to a range of $900 million to $916 million from a range of $945 million to $985 million, reduced its 2023 GAAP earnings per share guidance to a range of $2.73 to $2.84 from a range of $3.24 to $3.40 and reduced its 2023 adjusted earnings per share (a non-GAAP measure; see attached schedule which reconciles to GAAP earnings per share guidance) guidance to a range of $3.93 to $4.05 from a range of $4.60 to $4.75.

Conference Call Details

Perficient will host a conference call regarding second quarter financial results today, July 27, 2023, at 11 a.m. Eastern.

Analysts and investors who wish to ask questions during the Q&A session can register for the call on https://register.vevent.com/register/BIec555ee83c9a4f5c94ff854133b408f2. Registrants will receive confirmation with dial-in details.

A live webcast of the event can be accessed on https://perficient.gcs-web.com/events/event-details/q2-2023-perficient-earnings-conference-call. A replay of the webcast will be available on https://perficient.gcs-web.com/ starting approximately two hours after the event and will be archived on the site for one year.

About Perficient

Perficient is the leading global digital consultancy. We imagine, create, engineer, and run digital transformation solutions that help our clients exceed customers' expectations, outpace competition, and grow their business. With unparalleled strategy, creative, and technology capabilities, we bring big thinking and innovative ideas, along with a practical approach to help the world's largest enterprises and biggest brands succeed. Traded on the Nasdaq Global Select Market, Perficient is a member of the Russell 2000 index and the S&P SmallCap 600 index. For more information, visit www.perficient.com.

Safe Harbor Statement

Some of the statements contained in this news release that are not purely historical statements discuss future expectations or state other forward-looking information related to financial results and business outlook for 2023. 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 management's current intent, belief, expectations, estimates, and projections regarding our company and our industry. You should be aware that those statements only reflect our predictions. 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) those disclosed under the heading "Risk Factors" in our most recently filed annual report on Form 10-K and other securities filings, and the following:

(1)		the possibility that our actual results do not meet the projections and guidance contained in this news release;
(2)		the impact of the general economy and economic and political uncertainty on our business;
(3)		risks associated with potential changes to federal, state, local and foreign laws, regulations, and policies;
(4)		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;
(5)		risks associated with managing growth organically and through acquisitions;
(6)		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;
(7)		legal liabilities, including intellectual property protection and infringement or the disclosure of personally identifiable information; and
(8)		the risks detailed from time to time within our filings with the Securities and Exchange Commission.

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. This cautionary statement is provided pursuant to Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this release are made only as of the date hereof and we undertake no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future.

Perficient, Inc. Unaudited Consolidated Statements of Operations (in thousands, except per share information)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Revenues
Services excluding reimbursable expenses	$	228,573		$	219,835		$	456,957		$	439,310
Reimbursable expenses		2,127			2,428			4,596			4,387
Total services		230,700			222,263			461,553			443,697
Software and hardware		405			475			960			1,152
Total revenues		231,105			222,738			462,513			444,849

Cost of revenues (exclusive of depreciation and amortization, shown separately below)
Cost of services		143,560			134,356			285,248			270,446
Stock compensation		2,608			2,406			5,132			4,834
Total cost of revenues		146,168			136,762			290,380			275,280

Selling, general and administrative		39,390			37,150			78,994			75,926
Stock compensation		4,787			3,710			9,103			7,185
Total selling, general and administrative		44,177			40,860			88,097			83,111

Depreciation		2,224			2,005			4,529			3,878
Amortization		5,523			5,998			11,340			11,977
Acquisition costs		(71	)		61			8			360
Adjustment to fair value of contingent consideration		(2,701	)		(2,487	)		(4,727	)		(3,466	)
Income from operations		35,785			39,539			72,886			73,709

Net interest expense		296			805			801			1,692
Net other expense		387			153			462			386
Income before income taxes		35,102			38,581			71,623			71,631
Provision for income taxes		8,740			10,799			18,461			16,713

Net income	$	26,362		$	27,782		$	53,162		$	54,918

Basic net income per share	$	0.78		$	0.82		$	1.57		$	1.62
Diluted net income per share	$	0.73		$	0.77		$	1.48		$	1.52
Shares used in computing basic net income per share		33,988			33,914			33,951			33,879
Shares used in computing diluted net income per share		36,717			36,785			36,707			36,812

Net income used in computing diluted net income per share	$	26,935		$	28,332		$	54,295		$	56,088

Perficient, Inc. Condensed Consolidated Balance Sheets (in thousands)

	June 30, 2023 (unaudited)			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	60,471		$	30,130
Accounts receivable, net		186,124			202,298
Prepaid expenses		6,383			6,432
Other current assets		15,652			16,756
Total current assets		268,630			255,616
Property and equipment, net		15,298			17,970
Operating lease right-of-use assets		25,606			27,088
Goodwill		575,173			565,161
Intangible assets, net		79,391			88,937
Other non-current assets		49,594			41,116
Total assets	$	1,013,692		$	995,888

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	16,220		$	24,351
Other current liabilities		62,071			104,780
Total current liabilities		78,291			129,131
Long-term debt, net		395,731			394,587
Operating lease liabilities		19,964			18,528
Other non-current liabilities		45,015			43,515
Total liabilities	$	539,001		$	585,761
Stockholders' equity:
Preferred stock	$	—		$	—
Common stock		53			53
Additional paid-in capital		418,123			403,866
Accumulated other comprehensive loss		(10,142	)		(17,519	)
Treasury stock		(364,768	)		(354,536	)
Retained earnings		431,425			378,263
Total stockholders' equity		474,691			410,127
Total liabilities and stockholders' equity	$	1,013,692		$	995,888

Perficient, Inc. Unaudited Condensed Consolidated Statements of Cash Flow (in thousands)

	Six Months Ended June 30,
		2023			2022
Net income	$	53,162		$	54,918
Adjustments to reconcile net income to net cash provided by operations		18,662			24,901
Changes in operating assets and liabilities, net of business acquisitions		(6,713	)		(45,839	)
Net cash provided by operating activities		65,111			33,980
Net cash used in investing activities		(3,553	)		(6,728	)
Net cash used in financing activities		(31,830	)		(12,250	)
Effect of exchange rate on cash and cash equivalents		613			(544	)
Change in cash and cash equivalents		30,341			14,458
Cash and cash equivalents at beginning of period		30,130			24,410
Cash and cash equivalents at end of period	$	60,471		$	38,868

See the Company's Form 10-Q for the full consolidated statements of cash flows.

About Non-GAAP Financial Information

This news release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), please see the section entitled "About Non-GAAP Financial Measures" and the accompanying tables entitled "Reconciliation of GAAP to Non-GAAP Measures."

About Non-GAAP Financial Measures

Perficient provides non-GAAP financial measures for adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock compensation, loss on extinguishment of debt, acquisition costs, adjustment to fair value of contingent consideration and other acquisition adjustments), adjusted net income, and adjusted earnings per share data as supplemental information regarding Perficient's business performance. Perficient believes that these non-GAAP financial measures are useful to investors because they provide investors with a better understanding of Perficient's past financial performance and future results. Perficient's management uses these non-GAAP financial measures when it internally evaluates the performance of Perficient's business and makes operating decisions, including internal operating budgeting, performance measurement, and the calculation of bonuses and discretionary compensation. Management excludes stock-based compensation related to restricted stock awards, the amortization of intangible assets, amortization of debt issuance costs related to convertible senior notes, loss on extinguishment of debt, acquisition costs, adjustments to the fair value of contingent consideration, other acquisition adjustments, net other income and expense, the impact of other infrequent or unusual transactions, and income tax effects of the foregoing, when making operational decisions.

Perficient believes that providing the non-GAAP financial measures to its investors is useful because it allows investors to evaluate Perficient's performance using the same methodology and information used by Perficient's management. Specifically, adjusted net income is used by management primarily to review business performance and determine performance-based incentive compensation for executives and other employees. Management uses adjusted EBITDA to measure operating profitability, evaluate trends, and make strategic business decisions.

Non-GAAP financial measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of discretionary judgment as to which charges are excluded from the non-GAAP financial measure. However, Perficient's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted EBITDA, adjusted net income, and adjusted earnings per share. In addition, some items that are excluded from adjusted net income and adjusted earnings per share can have a material impact on cash. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. Perficient has historically provided non-GAAP financial measures to the investment community as a supplement to its GAAP results to enable investors to evaluate Perficient's business performance in the way that management does. Perficient's definition may be different from similar non-GAAP financial measures used by other companies and/or analysts.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Amortization

Perficient has incurred expense on amortization of intangible assets primarily related to various acquisitions. Management excludes these items for the purposes of calculating adjusted EBITDA, adjusted net income, and adjusted earnings per share. Perficient believes that eliminating this expense from its non-GAAP financial measures is useful to investors because the amortization of intangible assets can be inconsistent in amount and frequency, and is significantly impacted by the timing and magnitude of Perficient's acquisition transactions, which also vary substantially in frequency from period to period.

Acquisition Costs

Perficient incurs transaction costs related to merger and acquisition-related activities which are expensed in its GAAP financial statements. Management excludes these items for the purposes of calculating adjusted EBITDA, adjusted net income, and adjusted earnings per share. Perficient believes that excluding these expenses from its non-GAAP financial measures is useful to investors because these are expenses associated with each transaction and are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult.

Adjustment to Fair Value of Contingent Consideration

Perficient is required to remeasure its contingent consideration liability related to acquisitions each reporting period until the contingency is settled. Any changes in fair value are recognized in earnings. Management excludes these items for the purposes of calculating adjusted EBITDA, adjusted net income, and adjusted earnings per share. Perficient believes that excluding these adjustments from its non-GAAP financial measures is useful to investors because they are related to acquisitions and are inconsistent in amount and frequency from period to period.

Amortization of Debt Issuance Costs

On November 9, 2021, Perficient issued $380.0 million aggregate principal amount of 0.125% Convertible Senior Notes due 2026, and on August 14, 2020, Perficient issued $230.0 million aggregate principal amount of 1.250% Convertible Senior Notes due 2025 (the "2026 Notes," and "2025 Notes," respectively, and collectively, the "Notes") in private placements to qualified institutional purchasers. Issuance costs attributable to the Notes, in addition to issuance costs related to Perficient's credit agreement, are being amortized to interest expense over their respective terms. Perficient believes that excluding these non-cash expenses from its non-GAAP financial measures is useful to investors because the expenses are not reflective of Perficient's business performance.

Foreign Exchange Loss (Gain)

Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in net other expense (income) in our consolidated statements of operations. As our operations expand into countries outside of the United States, foreign exchange gains and losses have and will become increasingly material. Perficient believes that excluding these gains and losses from its non-GAAP financial measures is useful to investors because foreign exchange gains and losses will vary as the underlying currencies fluctuate, which makes it difficult to compare current and historical results.

Stock Compensation

Perficient incurs stock-based compensation expense under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation. Perficient excludes stock-based compensation expense and the related tax effects for the purposes of calculating adjusted EBITDA, adjusted net income, and adjusted earnings per share because stock-based compensation is a non-cash expense, which Perficient believes is not reflective of its business performance. The nature of stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions, and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expense may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods. Perficient believes that non-GAAP measures of profitability, which exclude stock-based compensation, are widely used by analysts and investors.

Dilution Offset from Convertible Note Hedge Transactions

It is Perficient's current intent to settle conversions of the Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of our common stock. Perficient excludes the shares that are issuable upon conversions of the Notes because Perficient expects that the dilution from such shares will be offset by the convertible note hedge transactions entered into in November 2021 and August 2020 in connection with the issuance of the Notes.

Perficient, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
GAAP Net Income	$	26,362		$	27,782		$	53,162		$	54,918
Adjustments:
Provision for income taxes		8,740			10,799			18,461			16,713
Amortization		5,523			5,998			11,340			11,977
Acquisition costs		(71	)		61			8			360
Adjustment to fair value of contingent consideration		(2,701	)		(2,487	)		(4,727	)		(3,466	)
Amortization of debt issuance costs		631			608			1,239			1,215
Foreign exchange loss		382			158			471			373
Stock compensation		7,395			6,116			14,235			12,019
Adjusted Net Income Before Tax		46,261			49,035			94,189			94,109
Adjusted income tax (1)		11,843			12,700			24,207			24,186
Adjusted Net Income	$	34,418		$	36,335		$	69,982		$	69,923

GAAP Earnings Per Share (diluted)	$	0.73		$	0.77		$	1.48		$	1.52
Adjusted Earnings Per Share (diluted)	$	1.00		$	1.06		$	2.04		$	2.03

Shares used in computing GAAP Earnings Per Share (diluted)		36,717			36,785			36,707			36,812
Dilution offset from convertible note hedge transactions		(2,430	)		(2,431	)		(2,430	)		(2,431	)
Shares used in computing Adjusted Earnings Per Share (diluted)		34,287			34,354			34,277			34,381

Net income used in computing GAAP Earnings Per Share (diluted)	$	26,935		$	28,332		$	54,295		$	56,088

(1)

The estimated adjusted effective tax rate of 25.6% and 25.9% for the three months ended June 30, 2023 and 2022, respectively, and 25.7% for both the six months ended June 30, 2023 and 2022, has been used to calculate the provision for income taxes for non-GAAP purposes.

Perficient, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
GAAP Net Income	$	26,362		$	27,782		$	53,162		$	54,918
Adjustments:
Provision for income taxes		8,740			10,799			18,461			16,713
Net interest expense		296			805			801			1,692
Net other expense		387			153			462			386
Depreciation		2,224			2,005			4,529			3,878
Amortization		5,523			5,998			11,340			11,977
Acquisition costs		(71	)		61			8			360
Adjustment to fair value of contingent consideration		(2,701	)		(2,487	)		(4,727	)		(3,466	)
Stock compensation		7,395			6,116			14,235			12,019
Adjusted EBITDA (1)	$	48,155		$	51,232		$	98,271		$	98,477

(1)

Adjusted EBITDA is a non-GAAP performance measure and is not intended to be a performance measure that should be regarded as an alternative to or more meaningful than either GAAP operating income or GAAP net income. Adjusted EBITDA measures presented may not be comparable to similarly titled measures presented by other companies.

Perficient, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

	Q3 2023						Full Year 2023
	Low end of adjusted goal			High end of adjusted goal			Low end of adjusted goal			High end of adjusted goal
GAAP EPS	$	0.56		$	0.60		$	2.73		$	2.84
Non-GAAP adjustment (1):
Non-GAAP reconciling items		0.44			0.44			1.57			1.57
Tax effect of reconciling items		(0.11	)		(0.10	)		(0.37	)		(0.36	)
Adjusted EPS	$	0.89		$	0.94		$	3.93		$	4.05

(1)

Non-GAAP adjustment represents the impact of amortization expense, stock compensation, amortization of debt issuance costs, foreign exchange gains and losses, acquisition costs and adjustments to fair value of contingent consideration, net of the tax effect of these adjustments, divided by adjusted fully diluted shares. Perficient currently expects its Q3 2023 and full year 2023 GAAP effective income tax rate to be approximately 30% and 27%, respectively. Perficient currently expects its Q3 2023 and full year 2023 estimated adjusted effective income tax rate to be approximately 29% and 27%, respectively. Perficient's estimates of GAAP and adjusted fully diluted shares for 2023 are included in the following table. These estimates could be affected by share repurchases, shares issued in conjunction with future acquisitions, changes in share price and the potential impact from the conditional conversion features of our debt.

(in millions)	Q3 2023		Full Year 2023
GAAP Fully Diluted Shares	36.9		36.8
Non-GAAP adjustment (2):
Dilution offset from convertible note hedge transactions	(2.4	)	(2.4	)
Adjusted Fully Diluted Shares	34.5		34.4

(2)

Non-GAAP adjustment represents the exclusion of shares that are issuable upon conversion of our convertible notes due to the expectation that shares relating to the principal amount of our convertible notes will be paid in cash and any excess will be offset by the convertible note hedge transactions entered into in August 2020 and November 2021.

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Perficient Reports Second Quarter 2023 Results