Sapient Reschedules Release of First Quarter Financial Results
Provides Preliminary Q1 Results and Q2 Outlook
BOSTON -- May 9, 2013
Sapient (NASDAQ: SAPE) today announced that it will delay the full release of
its first quarter financial results and conference call from Thursday, May 9,
as originally scheduled. The earnings announcement and conference call are now
expected to take place on Wednesday, May 15 after the close of regular market
The earnings release and call are being rescheduled because the company
requires additional time to complete a self-initiated review and analysis of
tax liabilities resulting from cross–border mobility of employees into various
countries in prior periods extending back to 2006. The company estimates the
total of such liabilities for those years to be in the range of $12 million to
$18 million, subject to finalization of the company’s review and evaluation.
In the interest of providing the investment community with relevant
information, the company is providing the following preliminary unaudited
financial results for the first quarter ended March 31, 2013, which are
subject to change:
*Service revenues are expected to be $292.6 million compared to guidance of
$295 million to $300 million. Revenues reflect a slower-than-expected ramp
in client spending in SapientNitro and the adverse effect of movements in
foreign currency exchange rates.
*GAAP operating margin is expected to be 4.1%, which includes a one-time
restructuring charge and impairment of intangible assets totaling
approximately $3.5 million. GAAP operating margin also includes $7.2
million of stock-based compensation, $3.7 million of amortization of
purchased intangible assets and $0.9 million of acquisition costs.
*Non-GAAP operating margin is expected to be 9.3%.
*The effective tax rate for the quarter is expected to be approximately
49%, which reflects quarterly fluctuation similar to that of past years.
*GAAP diluted net income per share is expected to be $0.04. Non-GAAP
diluted net income per share is expected to be $0.12.
*The results above include an estimated impact of $500,000 of net expense
for tax liabilities associated with the review.
The company also provided the following guidance for the second quarter ending
June 30, 2013:
*Service revenues are expected to be in the range of $300 million to $310
million. Both SapientNitro and Sapient Global Markets are expected to grow
sequentially, with the majority of the growth coming from SapientNitro.
*Non-GAAP operating margin is expected to be 12% or higher.
The company is working diligently to resolve the tax review and analysis, and
to file its Form 10-Q on Wednesday, May 15. Because the assessment is ongoing,
the company can give no assurances that the expected timing for the filing of
its Form 10-Q will be met. The company will file with the Securities and
Exchange Commission a Form 12b-25, Notification of Late Filing, on Monday, May
When the assessment is complete and the company files its Form 10-Q, the
financial statements may differ materially from the results disclosed in this
press release. In addition, the assessment may impact prior-period financial
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 The Americas, Europe, and Asia-Pacific.
For more information, visit www.sapient.com.
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 may present service
revenues in constant currency terms, which excludes the effect of currency
fluctuations between the U.S. dollar and the functional currency of the entity
in which the revenue was transacted. 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. 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,
preliminary unaudited financial results for the first quarter 2013; financial
guidance for the second quarter 2013, including expected service revenues,
expected non-GAAP operating margin and expected growth of SapientNitro and
Sapient Global Markets; tax liabilities resulting from cross–border mobility
of employees into various countries; expected timing of earnings announcement
and conference call; and expected filing date of its quarterly report on Form
10-Q for the quarter ended March 31, 2013 — that involve a number of risks and
uncertainties. All forward looking statements are based upon current
expectations and beliefs and various assumptions. Actual results could differ
materially from management's expectations and the forward-looking statements
contained in this release. 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; timely completion of
the company's review and analysis of potential tax liabilities; and other
risks and uncertainties as set forth in the company's filings with the SEC,
including without limitation the most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. Any forward-looking statement speaks only as
of the date on which it is made, and the company undertakes no obligation to
update any forward-looking statements for any reason, including to reflect
events or circumstances after the date on which such statements are made or to
reflect the occurrence of anticipated or unanticipated events or
circumstances, except as required by law.
Sapient is a registered service mark of Sapient Corporation.
Investor Relations Contact:
Dean Ridlon, +1-617-963-1598
Stacy Simpson, +1-914-830-8510
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