Perficient(PRFT) - 2022 Q4 - Annual Report

Revenue Growth - Total revenues increased by 19% to $905.1 million for the year ended December 31, 2022, compared to $761.0 million for the year ended December 31, 2021[142]. - Services revenues rose by 19% to $902.4 million, with $84.6 million attributed to base business resources and $59.1 million from acquired companies[143]. Cost and Expenses - Total cost of revenues increased by 18% to $552.7 million, with services costs as a percentage of services revenues decreasing to 61.2% from 61.8%[145]. - Selling, general and administrative (SG&A) expenses increased by 12% to $171.1 million, with SG&A as a percentage of revenues decreasing from 20% to 19%[146]. - Salary expenses within SG&A rose by 16% to $61.9 million, while variable compensation expenses decreased by 43% to $8.6 million[147]. - Depreciation expense increased by 33% to $8.5 million, representing 0.9% of total revenues for the year ended December 31, 2022[147]. - Amortization expense rose by 5% to $24.5 million, accounting for 2.7% of total revenues, primarily due to intangibles from acquisitions[148]. Strategic Plans - The company aims to expand its relationships with existing and new clients and continue a disciplined acquisition strategy for future growth[135]. - The company plans to leverage offshore and nearshore capabilities to support growth and provide flexible project delivery options[135]. Acquisition and Costs - Acquisition-related costs for 2022 were $3.7 million, slightly down from $3.8 million in 2021, primarily related to acquisitions of Inflection Point and Ameex[149]. Financial Performance - Net interest expense decreased significantly to $3.2 million in 2022 from $14.1 million in 2021, attributed to the adoption of ASU 2020-06[151]. - The effective income tax rate increased to 25.9% in 2022 from 16.6% in 2021, mainly due to reduced stock compensation deductions and research credit benefits[153]. - Net cash provided by operating activities rose to $118.1 million in 2022, compared to $84.9 million in 2021, driven by a net income of $104.4 million[156]. - Cash and cash equivalents as of December 31, 2022, were $30.1 million, up from $24.4 million in 2021[154]. - The company used $71.9 million for acquisitions in 2022, down from $108.8 million in 2021[157]. - The stock repurchase program was expanded to $375.0 million, with approximately $279.8 million repurchased since inception[164]. - Total debt increased to $394.6 million as of December 31, 2022, from $326.1 million in 2021[167]. - The company had $199.8 million of unused borrowing capacity under its credit facility as of December 31, 2022[162]. - The company believes its available funds and cash flows will be sufficient to meet working capital requirements for the next 12 months[173]. Revenue Recognition - The company's revenues consist of services and software and hardware sales, recognized when control is transferred to clients[175]. - Professional services revenues are recognized over time, with most projects billed on a time and materials basis[178]. - Revenues from third-party software and hardware sales are recorded on a net basis, while revenues from internally developed software sales are recorded on a gross basis[182]. - The company estimates variable consideration based on historical experience and forecasted sales, including it in the transaction price[179]. - The company structures its professional services arrangements to recover the cost of reimbursable expenses without a markup[181]. Tax and Financial Position - The company evaluates uncertain tax positions and adjusts related tax assets and liabilities each quarter based on changing facts and circumstances[193]. - For the year ended December 31, 2022, key unobservable inputs for acquisitions included revenue growth rates ranging from 16% to 43%[186]. - The company had unrestricted cash and cash equivalents totaling $30.1 million at December 31, 2022, up from $24.4 million at December 31, 2021[200]. - As of December 31, 2022, there was no outstanding balance and $199.8 million of available borrowing capacity under the credit facility[198]. - The fair value of the 2025 Notes and 2026 Notes was approximately $33.8 million and $295.5 million, respectively, as of December 31, 2022[199].