Perficient, Inc.

For Q4 2023, services revenue including reimbursable expenses was $216.5 million, down 5% year over year. Services gross margin, excluding reimbursable expenses and stock compensation, was 37.7% versus 40.8% a year ago. Diluted GAAP EPS was $0.65, down from $0.74, and adjusted EPS was $0.99, down from $1.14. Adjusted EBITDA was $46.7 million, or 21.1% of revenue, versus $54.3 million, or 23.4%, last year. For full-year 2023, services revenue was $892.9 million, essentially flat year over year. Services gross margin was 38% versus 40.2% in the prior year, adjusted EBITDA was $190.7 million, or 21.4% of revenue, and adjusted EPS was $3.95 versus $4.28. For 2024, management guided first-quarter revenue to $212 million to $218 million, GAAP EPS to $0.31 to $0.35, and adjusted EPS to $0.74 to $0.79. Full-year 2024 guidance is revenue of $925 million to $965 million, GAAP EPS of $2.64 to $2.77, and adjusted EPS of $4.05 to $4.20.

Tom Hogan emphasized that the second half of 2023 was difficult because of longer sales cycles and a shift in client buying behavior, but he sounded more constructive on 2024. He pointed to stronger Q4 bookings, the SMEDIX deal, a large multiyear health care program, and growing client interest in AI as reasons for optimism. He repeatedly said visibility is still imperfect, but the tone from customers is improving and discretionary spending appears to be returning.

Paul Martin walked through the quarter's margin pressure and balance sheet strength. He cited Q4 services gross margin of 37.7%, SG&A of $40.3 million, adjusted EBITDA of $46.7 million, net cash interest income of $0.4 million, and net income of $23.2 million; for the year, he noted adjusted EBITDA of $190.7 million, net income of $98.9 million, and operating cash flow of about $143 million. He also highlighted $128.9 million in cash and cash equivalents, $300 million of unused borrowing capacity, and $396.9 million of net debt, saying the balance sheet leaves the company well positioned.

Analysts focused on the credibility of the second-half recovery, visibility into bookings, pricing, utilization, and whether delays seen in 2023 were turning into cancellations. Management said it sees no major cancellations, but rather delayed starts and cautious client onboarding, with Q4 bookings and current pipeline giving support for a second-half ramp. On margins and pricing, management said utilization will be managed around 80%, Q1 margins are seasonally and cost-pressured, and pricing remains disciplined because global offshore teams help offset U.S. pricing pressure. On the SMEDIX acquisition and Europe, management said the deal creates a Central Eastern Europe beachhead and could become a meaningful growth platform, but it is still early.