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Sapient Reports First Quarter 2011 Results. Service Revenues Up 32% Over Q1 2010. Non-GAAP Operating Profit Increases 74% Over Q1 2010


May 6, 2011 - Gurgaon, Haryana, Noida, Uttar Pradesh And Bangalore, Karnataka, India

Sapient (NASDAQ: SAPE) today reported the following financial results for the first quarter ended March 31, 2011:

- Service revenues were $241.3 million compared to $183.2 million in the first quarter of 2010, an increase of 32%. Sequentially, service revenues were up $18.5 million, or 8%, from $222.9 million in the fourth quarter of 2010. On a constant currency basis, revenues increased 30% over the first quarter of 2010 and 8% sequentially.
- GAAP income from operations was $18.5 million, or 7.7% of service revenues, up 105% from $9.0 million, or 4.9% of service revenues, reported in the first quarter of 2010.
- Non-GAAP income from operations was $25.8 million, or 10.7% of service revenues, up 74% from $14.8 million, or 8.1% of service revenues, reported in the first quarter of 2010.
- GAAP diluted net income per share was $0.09, compared to $0.05 in the first quarter of 2010.
- Non-GAAP diluted net income per share was $0.12, compared to $0.07 in the first quarter of 2010.

“We are very pleased with how successfully we’ve started the year, and our people around the world have done a great job executing on our strategy,” said Sapient President and Chief Executive Officer Alan J. Herrick. “Clients are looking to partner with Sapient to help them capitalize on the opportunities being created by the dramatic changes that are happening in their markets. This quarter’s results are further evidence that clients continue to respond to Sapient’s unique combination of capabilities.”

The company used cash from operations of $19.0 million in the first quarter of 2011, compared to a use of $8.0 million in the first quarter of 2010. As of March 31, 2011, the company had cash, cash equivalents and marketable securities of $210.3 million. Days sales outstanding was 73 days for the first quarter of 2011, up from 65 days in the fourth quarter of 2010 and 71 days for the first quarter of 2010.

Outlook

Sapient management provided the following guidance:

- For the second quarter ending June 30, 2011, service revenues are expected to be $249 million to $257 million.
- Second quarter 2011 non-GAAP operating margin is expected to be 11% to 12%.

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 income tax benefits or provisions resulting from changes in the valuation allowance. In addition, the company has presented service revenues in constant currency terms, which excludes the effect of currency fluctuations between the U.S. dollar and the local functional currencies in countries where the company operates. The effect is excluded by translating the current period's local currency service revenues into U.S. dollars using the average local currency exchange rates that were in effect during the prior period of comparison. However, because the company’s reported non-GAAP financial measures are not calculated according to GAAP, these measures are not comparable to GAAP and may not necessarily be comparable to 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 second quarter of 2011 – 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 transform in the areas of business, marketing, and technology. The company operates three divisions that enable clients to gain a competitive advantage and succeed in an increasingly digital world. SapientNitro, Sapient Global Markets and Sapient Government Services fuse insight, creativity and technology to drive innovation and to help clients navigate complex business problems. Our approach is the subject of case studies used by MBA programs at Harvard and Yale. The company has operations in North America, Europe, and Asia-Pacific. For more information, visit www.sapient.com .

Sapient is a registered service mark of Sapient Corporation.

Source: Business Wire India

BusinessWireIndia

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