Perficient, Inc. (PRFT) Q4 2022 Earnings Call Transcript

Perficient, Inc. (NASDAQ:PRFT) Q4 2022 Earnings Conference Call February 28, 2023 11:00 AM ET

Company Participants

Jeffrey Davis - Chairman and CEO

Paul Martin - CFO

Thomas Hogan - President and COO

Conference Call Participants

Surinder Thind - Jefferies

Mayank Tandon - Needham

Brian Kinstlinger - Alliance Global Partners

Jonathan Lee - Morgan Stanley

Puneet Jain - JP Morgan

Vincent Colicchio - Barrington Research

Kate Cranston - William Blair

Divya Goyal - Scotia Bank

Operator

Good time and convey you for opinionated by. Welcome to nan 2022 Q4 Perficient Earnings Call -- Conference Call. At this time, each participants are successful a listen-only mode. After nan speakers position location will beryllium a question-and-answer session. [Operator Instructions] Please beryllium advised that today's convention is recorded.

I'd for illustration now to manus nan convention complete to our speaker today, Jeffrey Davis, Chairman and CEO. Please spell ahead.

[Technical Difficulty]

I apologize, everyone. We've been experiencing immoderate method difficulties pinch our Perficient call. We're conscionable going to hold 1 2nd present while we make judge that nan telephone is being heard connected nan audio information of nan session.

Jeffrey Davis

Yes. Just to adhd to that, this is Jeff Davis, we will restart present successful conscionable a moment, erstwhile we corroborate that our supplier has everything working. It appears that we do. So I'm conscionable going to spell up and motorboat backmost into this. This is Jeff Davis, Perficient's Chairman and CEO. With maine connected nan call, arsenic usual, is Paul Martin, our CFO; Tom Hogan, our President and COO. I want to convey you for your clip this morning. We person 10 to 15 minutes of prepared comments per usual, but earlier we proceed I’m going to inquire Paul to publication nan safe harbor statement. Again, we apologize for nan method trouble this morning.

Paul Martin

Thanks, Jeff, and bully morning, everyone. Some of nan things we will talk successful today's telephone concerning early institution capacity will beryllium forward-looking statements wrong nan meaning of nan securities laws. Actual results whitethorn materially disagree from those successful these forward-looking statements, and we promote you to mention to nan further accusation contained successful our SEC filings concerning factors that could origin those results to beryllium different than contemplated successful today's discussion.

At times during this call, we will mention to adjusted EPS and adjusted EBITDA. Our net property release, including a reconciliation of definite non-GAAP financial measures to nan astir straight comparable financial measures prepared successful accordance pinch mostly accepted accounting principles aliases GAAP, is posted connected our website astatine www.perficient.com.

We person besides posted a descent platform which includes a reconciliation of definite non-GAAP guidance to nan astir straight comparable financial measurement prepared pinch GAAP connected our website nether Investor Relations. Jeff?

Jeffrey Davis

Thanks, Paul. And again, erstwhile again, I apologize for nan hold this morning. We surely admit your clip arsenic we talk nan 4th fourth and afloat twelvemonth capacity and our continued maturation and profitability.

The 4th fourth capped different coagulated twelvemonth of maturation and accrued profitability astatine Perficient pinch adjusted net per stock up 14% and gross up 8% during nan period. We're, of course, monitoring nan macro environment, and income cycles successful immoderate cases are extended somewhat based connected nan same. But location are a batch of positives of notes, and we're assured that Perficient is good positioned arsenic it's ever been. And our business is performing well, really comparative to immoderate others successful nan space.

Services gross separator was up 30 ground points during nan quarter. Our profitability remains champion of breed. It's a nonstop consequence of our customers' willingness to spot a premium connected nan worth we deliver, mixed pinch our beardown beingness discipline. The ongoing occurrence we're having successful our travel of transforming Perficient into a genuinely unsocial and unparalleled world unit continues. We're delivering much activity offshore than ever earlier and commanding higher rates for that activity than ever before. Rates, successful fact, are materially higher than galore of our competitors, by nan way, again, reflecting nan superiority of our afloat integrated exemplary and talent.

And our civilization and genuinely integrated exemplary is helping america clasp that world talent arsenic well. Our attrition during nan 4th was good successful statement pinch our targets. Overall, 2022 was a remarkably successful twelvemonth successful our world transformation. We realized 68% maturation successful our full offshore gross pinch integrated accounting for half of that full astatine 34%. Tom will speak to bookings specifically successful a minute. The ample woody triumph worth was again beardown during nan quarter, up meaningfully, sequentially and year-over-year. The pipeline remains strong. And while we do not forecast deals not yet closed, we stay successful pursuit of respective that if won could materially alteration nan trajectory of nan year.

As I mentioned earlier, immoderate clients are taking much timeout decisions, but we're assured request for our services will stay robust, and we're poised for different twelvemonth of coagulated growth. In fact, though we saw a humble description of income cycles during nan quarter, we're really seeing much urgency successful position of task clip lines connected ample deals, meaning, those deals are much compressed than they person been historically. And that will really beryllium a use surely successful nan adjacent term.

Customers are much concerned, but location are immoderate title than ever earlier and much eager than ever earlier successful position of moving quickly erstwhile commitments person been made. As we mentioned connected past quarter's call, whether our clients are investing successful maturation aliases seeking to trim costs by leveraging efficiency, Perficient is nan answer.

And a reminder connected our strategy, we expect maturation everywhere, but proceed to judge our non-U.S. beingness will standard disproportionately fast. And that this operation displacement successful nan adjacent word will thief margins, but besides airs a humble headwind to our wide apical statement growth. However, arsenic we move forward, our agelong word -- toward our semipermanent extremity of a 50-50 gross mix, that is, half of our gross delivered domestically and half delivered globally, will scope an inflection constituent wherever nan headwind becomes a tailwind and it accelerates nan gross growth.

With that, I'll move things complete to Paul.

Paul Martin

Thanks, Jeff. Services revenue, excluding reimbursed expenses were $228.8 cardinal successful nan 4th quarter, a 9% summation complete nan anterior year, and year-over-year integrated services maturation was 6%.

Gross separator percent accrued 60 ground points to 39.4% successful nan 4th fourth compared to nan anterior year. And services gross margin, including reimbursable expenses and banal compensation was 40.8% successful nan 4th fourth compared to 40.5% successful nan anterior year.

SG&A disbursal was $43.7 cardinal successful nan 4th fourth compared to $41.7 cardinal successful nan anterior year. SG&A disbursal arsenic a percent of revenues decreased to 18.8% from 19.4% successful nan anterior year. Adjusted EBITDA was $54.3 cardinal aliases 23.4% of revenues successful nan 4th fourth compared to $47.7 cardinal aliases 22.2% of revenues successful nan anterior year.

Amortization disbursal was $6.5 cardinal successful nan 4th fourth compared to $5.8 cardinal successful nan anterior year. The summation successful amortization disbursal was chiefly nan further intangibles from our 2 acquisitions successful 2022.

Net liking disbursal for nan 4th fourth decreased to $0.8 cardinal from $3.9 cardinal successful nan anterior year, chiefly arsenic a consequence of adopting nan caller accounting modular for convertible indebtedness successful nan first quarter. Our effective taxation complaint was 28% successful nan 4th fourth compared to 476.5% successful nan anterior year, nan alteration successful nan effective taxation complaint was chiefly owed to nan convertible indebtedness transactions effect connected nan anterior year.

Net income accrued to $26.5 cardinal for nan 4th fourth from $4.5 cardinal successful nan anterior year, chiefly owed to nan nonaccomplishment from extinguishment of indebtedness of $28.7 cardinal successful nan anterior twelvemonth and improved operating performance.

Diluted GAAP net per stock accrued to $0.74 a stock for nan 4th fourth from $0.13 successful nan anterior year. Adjusted net per stock accrued to $1.14 aliases 14% for nan 4th fourth from $1 successful nan anterior year. You tin spot nan property merchandise for a afloat reconciliation to GAAP earnings.

I'll now move to nan afloat twelvemonth results. Services revenue, excluding reimbursable expenses were $893.1 cardinal for nan twelvemonth ended December 31, 2022, a 19% summation complete nan anterior year. Year-over-year integrated services maturation was 13%.

Gross separator presented for nan twelvemonth ended December 31, 2022, accrued 50 ground points to 38.9% compared to nan anterior year. Services gross margin, excluding reimbursed expenses and banal compensation for nan twelvemonth ended December 31, 2022, was 40.2% compared to 40% successful nan anterior year.

SG&A disbursal for nan twelvemonth ended December 31, 2022 was $171.1 cardinal compared to $152.4 cardinal successful nan anterior year. SG&A disbursal arsenic a percent of revenues decreased to 18.9% from 20% successful nan anterior year.

Adjusted EBITDA for nan twelvemonth ended December 31, 2022, was $205.8 cardinal aliases 22.7% of revenues compared to $162.9 cardinal aliases 21.4% of revenues successful nan anterior year. The twelvemonth ended December 31, 2022, included amortization of $24.5 cardinal compared to $23.5 cardinal successful nan anterior year.

Net liking disbursal for nan twelvemonth ended December 31, 2022, decreased to $3.2 cardinal from $14.1 cardinal successful nan anterior year, again, chiefly arsenic a consequence of adopting nan caller accounting modular for convertible indebtedness astatine nan opening of nan year.

Our effective taxation complaint was 25.9% for nan twelvemonth ended December 31, 2022, compared to 16.6% successful nan anterior year. The summation successful nan effective taxation complaint is chiefly owed to a alteration successful banal compensation deductions and nan alteration successful investigation portion of use compared to nan anterior year.

Net income for nan twelvemonth ended December 31, 2022, was $104.4 cardinal compared to $52.1 cardinal successful nan anterior year, chiefly arsenic a consequence of higher revenues, little costs arsenic a percent of revenues, little liking disbursal and nonaccomplishment from extinguishment of indebtedness of $29 cardinal that was included successful nan anterior year.

Diluted GAAP net per stock accrued to $2.90 for nan twelvemonth ended December 31, 2022, compared to $1.50 successful nan anterior year. Adjusted net per stock accrued to $4.28 for 2022 from $3.50 successful nan anterior year. Our ending world headcount arsenic of December 31, 2022, was 6,321 including 5,944 billable labor and 377 subcontractors. I deliberation SG&A headcount was 949.

Our outstanding indebtedness nett of deferred issuance costs arsenic of December 31, 2022, was $394.6 million. In addition, we person $30.1 cardinal successful rate and rate equivalents arsenic of December 31, 2022, and $199.8 cardinal of unused borrowing capacity connected our in installments facility.

Our equilibrium expanse continues to time off america very good positioned to proceed to execute against our strategical plan.

I'll now move nan telephone complete to Tom Hogan for a small much commentary. Tom?

Thomas Hogan

Thank you, Paul. And bully morning, everybody. We booked 56 deals greater than $1 cardinal during nan 4th fourth of 2022, which compares to 43 successful nan 4th fourth of 2021 and 37 successful nan 3rd 4th of 2022. Again, that's 56 deals greater than $1 cardinal successful nan 4th fourth of 2022 compared to 43 successful nan 4th fourth of 2021 and 37 successful nan 3rd 4th of 2022. We're still winning large deals and we won much of than ever earlier successful Q4.

Our nett pipeline weighted and un- weighted scope very strong. A mates of caller wins to highlight. We're moving pinch a multinational pharmaceutical corp connected a astir $8 cardinal -- excuse me, 8-figure engagement to amended their diligent information flow. Our unified squad of world experts are delivering a civilization built objective information reappraisal and cleaning situation that provides an meticulous real-time position of objective studies, which allows nan endeavor to holistically show advancement and thrust captious decision-making.

We besides expanded our business pinch a starring automotive manufacturer, supporting nan world CRM rollout for their commercialized focused conveyance services and distribution business. As portion of nan engagement, our squad of architects will migrate nan manufacturer's bequest level and developed a world roll-up roadworthy representation that includes their existing commercialized and unit expenses.

We besides precocious launched a caller worker website for nan aforesaid starring car manufacturer. Our world squad worked pinch nan automaker to present a next-generation worker experience, featuring precocious personalization options, threads comments and an updated hunt usability pinch much features planned successful nan coming months. The caller tract now serves much than 180,000 employees, including [indiscernible] and receives much than $1 cardinal business per week. We proceed to stay good diversified from a customer, manufacture and level perspective.

Health attraction and financial services led nan measurement from a gross and bookings perspective. We're peculiarly excited astir nan accelerating momentum we person successful nan financial services industry, wherever our gross has grown materially successful caller years.

Jeff mentioned immoderate lengthening successful income cycles and nan macro certainty, but let's beryllium clear, integer translator is going nowhere. The activity we're delivering for our clients is, successful galore cases, imperative, ngo captious and halfway to their competitory success.

And pinch that, I'll move things backmost complete to Jeff to talk nan first 4th and 2023 afloat twelvemonth outlook.

Jeffrey Davis

Thanks, Tom. All right. Perficient's expects its first 4th 2023 gross to beryllium successful nan scope of $227 cardinal to $233 million. First 4th GAAP net per stock is expected to beryllium successful nan scope of $0.67 to $0.73. First 4th adjusted net per stock is expected to beryllium successful nan scope of $1.01 to $1.06. Perficient expects its afloat twelvemonth 2023 gross to beryllium successful nan scope of $945 cardinal to $985 million, 2023 GAAP net per stock to beryllium successful nan scope of $3.24 to $3.40, and 2023 adjusted net stock to beryllium successful nan scope of $4.60 to $4.75.

And pinch that, operator, we tin unfastened up nan telephone for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility comes from nan statement of Surinder Thind from Jefferies. Go ahead, Surinder.

Surinder Thind

Thank you. I'd for illustration to commencement pinch a high-level mobility of benignant of wherever request sits astatine this constituent successful nan customer decision-making process. If we were to rewind possibly a twelvemonth ago, nan thought was that location was possibly a caller elevated level of request crossed nan industry. So not conscionable for yourselves, but much broadly, including your peers.

Fast guardant to today, it seems for illustration that wasn't rather nan case, right? There's -- obviously, semipermanent request is still intact, but clients are making much short-term decisions. So tin you thief america understand that disconnect aliases what you're seeing astatine clients astatine this constituent and their willingness to push disconnected projects? And if location is simply a further deterioration, should we expect continued weakness, I guess, for nan foreseeable future?

Jeffrey Davis

Yes, it's a bully question. And I'll commencement and inquire Tom to adhd immoderate colour arsenic his spot fit. So obviously, yes, nan twelvemonth didn't ended nan measurement it started, to your point. I deliberation that from what we've seen, nan pipeline arsenic good arsenic caller bookings moreover successful this twelvemonth truthful acold is that -- that seems to beryllium moving down us. In different words, things look to beryllium improving now from wherever they were, say, six months agone successful position of wrong bookings and pipeline. I deliberation location is simply a number of contributing factors to that. Certainly, again, we were overly optimistic connected nan macro environment. And I do deliberation that sentiment shifted, but I had nary crystal ball. But it seems to beryllium improving. And arsenic for Perficient stand-alone, arsenic Tom mentioned and I alluded to connected nan call, we really person rather a number of ample caller opportunities and immoderate successful existing accounts, but possibly much importantly astatine caller accounts, that person nan imaginable to beryllium very, very meaningful for us, moreover wrong nan year.

So I deliberation nan wide environment, while it did benignant of stall aliases slow, seems to beryllium improving. Now nary crystal ball, but I deliberation there's logic for optimism. Tom?

Thomas Hogan

I agree. I deliberation also, arsenic we moved to larger deals that besides compounds [indiscernible]. The marketplace is still very rich | pinch opportunity. There's decidedly immoderate be aware successful buying behavior. However, I'll besides say, nan woody size is larger. So there's decidedly a level of stringency that executives are going done that historically they didn't person to spell done arsenic we proceed to spot larger woody sizes arsenic typical of our Q1 bookings that has had a small spot of a headwind for america specifically, not needfully to nan industry.

Surinder Thind

That's helpful. And past arsenic we benignant of look astatine nan twelvemonth ahead, 2 related questions. One is, it sounds for illustration nan task clip lines themselves are compressing. So I conscionable [indiscernible] understood that remark correctly that clients are still signing connected for work, but they want that magnitude of activity done to beryllium quicker. So that would propose for illustration costs takeout projects? Or is nan attraction materially shifted successful immoderate of nan projects that you're moving on?

And past successful position of conscionable nan guideline itself, is nan immense mostly of nan maturation -- it sounds for illustration its offshore, which it has been successful nan past aliases much precocious arsenic well. What is your outlook for onshore aliases U.S. maturation look like?

Jeffrey Davis

Yes. Good question. So yes, you heard that correctly successful position of nan ample deals, specifically nan ample deals and those compressed clip lines. I would opportunity nan mostly of our activity is really not based connected costs reduction. It's based much connected caller products and services, and clip to marketplace is captious arsenic ever. So I deliberation that's what's driving a batch of that. Some of that besides is -- they're catching up now, right? So wherever -- immoderate of these deals I'm talking astir are from clients who were successful that slow income cycle. But past erstwhile they sewage done that, made that commitment, they're like, okay, we're down now, truthful what tin we do to accelerate this, right? So I deliberation nan mostly of it is coming from that primarily. And -- what was nan different question?

Surinder Thind

Growth rates onshore.

Jeffrey Davis

Growth rates, for sure, are going to beryllium greater offshore conscionable for illustration they person been. Onshore, our wide guidance is beautiful conservative, arsenic you tin see. So that would see we implying level to somewhat up U.S. aliases onshore-based resources and a batch of that maturation coming, arsenic you pointed out, from offshore.

Operator

Thank you. Our adjacent mobility comes from nan statement of Mayank Tandon from Needham. Go ahead.

Mayank Tandon

Thank you, Jeff and Paul. I conscionable wanted to first talk astir nan linearity of nan year. So your guidance fundamentally reflects, I think, level to somewhat down gross sequentially based connected nan guidance. How should we expect nan twelvemonth to build? Are you looking astatine possibly much of a 2nd half rebound? Or should we expect a much linear trajectory complete nan people of 2023?

Jeffrey Davis

Yes, I deliberation it's going to beryllium a small spot happier successful nan 2nd half, for sure. So I deliberation you're correct connected nan Q1 guide, which by nan way, it seems for illustration a beautiful communal successful nan manufacture for nan year, everybody benignant of sees a stronger backmost half.

And I deliberation we spot nan aforesaid thing, and I would underscore that pinch my comments earlier connected nan pipeline of bookings -- nan bookings, I think, benignant of troughed out, if you will, successful Q3, and we're experiencing that from a gross standpoint, fundamentally now. [indiscernible] relationship facet betwixt free bookings and gross for us. And it's not that precocious because it tends to beryllium somewhat lumpy, but nan highest relationship is astir a 5 period rolling average. So literally, if you look 5 months retired from a benignant of a weaker Q3 bookings, past you're seeing that now.

Bookings were stronger successful nan 4th fourth and they're starting stronger successful nan first quarter. So again, we would expect to spot nan use of that much towards nan second portion of Q2 aliases astatine nan opening of nan 2nd half.

Mayank Tandon

That's helpful. And past conscionable much successful position of housekeeping items. I wanted to inquire you connected nan offshore. In position of nan resistance connected nan growth, what person you built successful to your expectations? And connected nan flip side, I'm assuming it's going to thief margins. So possibly could you conscionable quantify nan use connected margins and nan resistance connected gross based connected your guidance?

Jeffrey Davis

Yes. It's astir apt 3% aliases 4%. It's benignant of difficult to -- 3 aliases 4 points. It's benignant of difficult to predict, it's a 3.5:1 ratio. So you tin benignant of backmost into it from nan guidance that we put retired location based connected offshore -- historical offshore and near-shore growth, is what I would show you connected that. And the...

Paul Martin

From a separator perspective, Mayank. Obviously, there's a batch of things going connected pinch wages arsenic well. And we've modeled conscionable humble gross separator improvement, and that's different 1 wherever hopefully arsenic nan request picks up that could beryllium to beryllium conservative.

Jeffrey Davis

Keep successful mind that's our strategy. The full constituent of endeavoring organically and done M&A and offshore and near-shore is to bring our rates down to accelerate yet apical statement growth. And beryllium much competitory pinch nan -- against nan integer translator firms that we tally into. So we'll beryllium observant astir leveraging each that arsenic separator and really putting a batch of it into much attractive, much competitory rates.

Operator

All right. Thank you. Our adjacent mobility comes from nan statement of Brian Kinstlinger from Alliance Global Partners. Go ahead, Brian.

Brian Kinstlinger

Hi, guys. Thanks for taking my questions. Jeff, you mentioned a fewer ample deals that if you triumph could importantly alteration nan gross trajectory of nan company. Is that captured successful nan high-end of gross guidance? Or is this much a 2024 driver fixed agelong income cycles and therefore, possibly not contemplated successful this year's guidance?

Jeffrey Davis

It's not contemplated. As you mentioned earlier, we really are very cautious astir trying to cook successful thing that's not yet booked. But I would opportunity this is rare, but if each of those deals close, I deliberation that would correspond upside to nan guidance for nan year. Again, that's astir apt an improbable arena but it's possible. But certainly, moreover without that, I deliberation you're spot connected that it's going to beryllium much of an parameter and a boost to surely nan second portion of this twelvemonth but besides 2024.

Brian Kinstlinger

Great. And past wellness attraction is little year-over-year and sequentially. You've talked astir stronger request successful nan 2nd half of 2023. And I deliberation you've besides -- astatine nan 2nd half of nan year, knowledgeable a ample programme winding down. So tin you stock pinch america for this vertical, are location immoderate indicators of stronger request trends successful wellness care?

Jeffrey Davis

Yes. We're seeing -- astatine slightest for us, we're seeing surely affirmative location -- stronger -- I don't cognize that nan request is that overmuch stronger, but we person yet shed that relationship that we've been talking about. So that relationship represented complete $30 cardinal of gross successful 2021 and was still complete $10 cardinal past year. It's fundamentally zero now. So we've lapped that. And I deliberation we'll spot a maturation betterment past successful wellness care. I deliberation that was nan biggest resistance successful wellness attraction for us. At nan aforesaid clip -- astatine nan aforesaid time, I was going to opportunity financial services is increasing tremendously fast, which, of course, has a dilutive effect arsenic a percent of gross connected wellness care.

Operator

Thank you. Our adjacent mobility comes from nan statement of Jonathan Lee from Morgan Stanley. Your statement is open, Jonathan.

Jonathan Lee

Hi. Thanks for taking my mobility guys. I wanted to talk done engagement type of pricing conscionable fixed nan macro. Have location been immoderate notable changes to that successful nan 4th conscionable fixed what we're proceeding crossed nan macro situation aliases possibly shifting of delivery?

Jeffrey Davis

I'm sorry, you're talking astir pricing?

Jonathan Lee

Yes. Like, wherever are you seeing, if any, notable changes to engagement type aliases pricing successful nan quarter, fixed immoderate of nan macro related concerns?

Jeffrey Davis

Other than arsenic we mentioned immoderate existent compression, which is simply a positive, pricing has been [solid] (ph). We've really managed to move ABR up. And again, arsenic I mentioned before, we will beryllium cautious astir that, because nan full constituent of nan offshore is to beryllium arsenic competitory arsenic it tin connected pricing. And we've a bully pricing power. And I think, arsenic I mentioned successful nan script, nan -- and I deliberation Tom alluded to aliases mentioned arsenic well, that speaks, I think, rather a batch for nan worth of nan clients spot connected our services.

That said, we request to beryllium doing -- we've sewage nan aforesaid skills, aforesaid capability, aforesaid spot and acquisition offshore than we do onshore. And we request to beryllium leveraging it much and more, and we are, and that's wherever you're seeing nan maturation differential.

Jonathan Lee

Got it. And connected nan hiring front, tin you supply an update connected what you're seeing successful nan hiring marketplace crossed your geographies? Where are you seeing it's easier to prosecute versus tougher to higher?

Jeffrey Davis

I'm going to fto Tom [indiscernible] conscionable opportunity thing existent quickly astir attrition, and I'll fto Tom return nan recruiting question. I deliberation he is [indiscernible] talent acquisition. But we mentioned earlier that nan attrition rates were good wrong our range. So nan awesome resignation seems to person moved down us. So that evidently bodes good for talent acquisition. But I'm going to fto Tom remark much specifically connected that.

Thomas Hogan

Yes. The talent we're looking for easy is [indiscernible]used, but we decidedly person a multi-tenant attack to nan measurement successful which we bring talent to nan organization. We've progressive assemblage hiring programs globally, awesome occurrence successful India and Latin America arsenic good arsenic nan United States. We're perpetually making judge we person nan correct worth proposition for our team. Quite honestly, awesome talent erstwhile you activity pinch awesome talent. So our competitory advantage of environments, task work, and nan measurement successful which we nonstop civilization here, we haven't seen immoderate challenges connected hiring individuals. And pinch a multi-tenant attack and a multi-geography approach, there's not 1 circumstantial area wherever it's "easier" to find talent. Across nan board, we compete rather nicely against nan manufacture peers for talent.

Operator

Thank you. Our adjacent mobility comes from nan statement of Puneet Jain from JPMorgan.

Puneet Jain

Hi. Thanks for taking my question. I for illustration to inquire astir what does for illustration nan EPS guidance connote for -- presume for EBITDA margins this year? And what do you expect for utilization and pricing passim this year?

Jeffrey Davis

So EPS, nan guidance for EPS is -- arsenic it relates to margins would beryllium perchance a humble summation to EBITDA. As we've discussed earlier, we're looking to support gross margins level not down, but not up materially either, truthful that we tin support that competitory pricing. But I do deliberation that adjusted EBITDA arsenic an example, we'll person immoderate description this year, though I deliberation it will beryllium humble arsenic we've guided to a small spot little than normal growth. So until we get backmost to that higher maturation level, I deliberation adjusted net aliases adjusted EBITDA will beryllium humble successful position of description .

But again, not negative, but expecting humble description . And past utilization will support and has consistently maintained complete nan mean of nan twelvemonth astatine astir 80%. So we're -- that's still our goal, and we'll beryllium driving that this year. And again, historically, complete nan past astatine slightest 3 aliases 4 years, we've had really awesome occurrence pinch that. We expect much of nan same.

Paul Martin

And Puneet, pinch respect to measure rates, et cetera, we're looking -- obviously, there's costs ostentation arsenic we talked about, and we're looking to notionally offset those. Having nan world transportation capacity successful our portfolio is allowing america to negociate wherever nan deliveries [indiscernible] to offset costs increases pinch complaint increases.

Puneet Jain

Right. And is location a measurement to estimate nan use from higher offshore mix, for illustration nan deals aliases nan caller business that's coming your way? Something that you wouldn't beryllium eligible to compete for a fewer years ago. So is location a measurement to estimate for illustration really overmuch that accrued offshore operation is helping thrust caller wins for you?

Jeffrey Davis

Yes, absolutely. Including an existing accounts and existing relationships. We've sewage a number of ample awesome semipermanent relationships that conscionable a fewer years ago, arsenic you constituent out, we’re already doing a batch of offshore activity aliases near-shore activity that we really couldn't prosecute because we didn't person nan capacity aliases moreover nan capability. Now that we do, we're really taking rather a batch of shares. So a batch of nan maturation that we're enjoying from offshore and near-shore is not only caller relationships, clients, which almost ever impact immoderate level of offshore correct connected nan gate, correct astatine nan beginning, but besides really successful existing accounts, and relationships that we've had 10, 15 years, we've really been capable to return stock distant from immoderate of nan larger offshore competitors.

Paul Martin

And Puneet, conscionable to springiness you immoderate perspective, we've doubled nan percent of revenues done offshore successful nan past 2 years. And arsenic Jeff said, we're connected a travel to 50-plus percent.

Jeffrey Davis

Operator?

Operator

All right. Our adjacent telephone comes from nan statement of Vincent Colicchio from Barrington Research. Go ahead, Vincent.

Vincent Colicchio

Yes. Jeff, are location immoderate vendor aliases solution categories that person importantly weakened since past quarter?

Jeffrey Davis

Yes, I wouldn't opportunity that exactly. There's nary guidelines out. I deliberation it's -- we saw a benignant of slowdown crossed nan board. But -- our gross tends not to beryllium -- if each benignant of 4th goes on, we're little and little coupled to circumstantial technology. Certainly, there's a batch of disruption, I can't comment, connected nan package side, but we pivoted astir that. But I would say, complete nan past six months aliases so, there's been a awesome displacement pinch immoderate peculiar exertion aliases vendor.

Vincent Colicchio

Okay. Thanks. One much for me. Is customer consolidation an rumor presently fixed nan pressures these companies are under? And if so, is it much of an opportunity aliases a threat for you?

Jeffrey Davis

It's proven to beryllium an opportunity. We are -- that car shaper that Tom gave a small spot [indiscernible] successful nan prepared statements, long-time client. We're now 1 of only six Tier 1 world suppliers pinch them. And that communicative is repeated complete and complete and over. So moreover erstwhile location is simply a benignant of a reconciliation aliases rationalization, we almost ever emerged arsenic a cardinal player.

Operator

Thank you. Our adjacent statement comes from nan statement of Kate Cranston from William Blair. Go ahead, Kate.

Kate Cranston

Hi, everyone. Thanks for taking my question. This is Kate Cranston connected for Maggie Nolan. My first mobility I wanted to touch connected was, tin you guys supply nan nonstop percent of gross correct now that is offshore based? And past erstwhile do you expect you'll beryllium capable to scope that 50-50 gross operation that you touched connected astatine nan opening of nan call?

Jeffrey Davis

So nan -- I'll reply nan 2nd portion of that, and past Paul tin reside nan first part. But our extremity would beryllium astir 3 years connected that 50-50. That's what we're moving difficult towards. I don't cognize if that's going to beryllium fierce aliases not, but if we support nan gait of maturation that we have, I deliberation that's very doable. And 1 point I want to constituent retired is that, we surely -- I do deliberation 50-50 is simply a really cardinal pivot constituent for nan business. But of course, nan full thesis is linear, right? So arsenic we activity towards that 50-50, nan headwind that nan offshore represents go little and little on nan way. So it's not a step measurement function. But I deliberation that will beryllium nan captious constituent wherever things really displacement to a tailwind and accelerate.

Paul Martin

Yes. And Katie, pinch respect to nan percent of revenues, arsenic I said [indiscernible] a small spot before, it was astir 13% successful nan 4th fourth of 2020, and it's astir double that today. And I deliberation it will proceed to accelerate into 2023.

Kate Cranston

Great. That's each very helpful. Thank you. And past 1 last mobility for me. Within nan 56 deals that are greater than $1 million, are astir of these short-term deals? Or are these deals that person nan imaginable to turn arsenic longer-term transformational deals?

Thomas Hogan

Definitely person nan expertise to proceed to grow. As Jeff mentioned, nan compression arsenic acold arsenic nan magnitude of nan backlog -- it is aggregate phases wrong this work. So it should proceed to build upon itself successful nan coming quarters.

Kate Cranston

Okay. Great. Thank you all.

Jeffrey Davis

Thank you.

Operator

And our adjacent mobility comes from Divya Goyal from Scotia Bank.

Divya Goyal

Good morning, everyone. Jeff, I had a speedy mobility connected nan broader technological facet of nan company. So fixed nan title retired there, nan gait astatine which exertion is changing, what are immoderate of nan things that Perficient is doing successful bid to enactment connected apical of nan gait benignant of nan title person much woody wins? And past really is your M&A strategy aligned pinch this?

Jeffrey Davis

I'll return it astatine a precocious level. We've sewage a group of strategists that not only thief clients, but besides Tom and I trust on, and of course, nan full guidance team, to thief america navigate that and pivot astir what we deliberation are going to beryllium bully opportunities for us. Not each excessively caller exertion astatine slightest early on, is needfully a large services opportunity because not everybody adopts it correct away. We return a adjacent oculus connected that. We've sewage a squad that focuses specifically connected that. And I'm going to fto Tom adhd -- I'll mention nan M&A arsenic well, I'm sorry. We do person M&A successful nan pipeline. We consciously benignant of put that connected clasp really for nan 4th quarter.

We closed 1 woody successful nan 4th quarter, arsenic you know. And we benignant of slow things down a small bit, we want to spot what nan macro situation was like. And besides wanted to springiness nan valuations a chance to drawback up pinch nan nationalist markets because we weren't seeing that then. Things do look to beryllium improving now. And truthful we're going to beryllium getting backmost successful nan crippled apt successful nan 2nd quarter.

Thomas Hogan

Just to return connected that a small bit. So our squad globally, is simply a bunch of explorers astir technology, really looking astatine nan adjacent thing. So arsenic an example, gendered AI. So we person liking groups astir nan world, not needfully conscionable wrong our strategy team, each our strategy squad looking astatine nan adjacent top technologies to come. We really past put together liking groups astir nan world, individuals from Latin America, India, Serbia, China, nan United States, moving together collectively connected newer technologies astir usage cases, really clients tin utilize them.

You're astir apt acquainted pinch Chat GPT which is simply a gendered AI tool. We person clients moving pinch america regarding really tin they leverage technology, not conscionable for america to play with, but for them to really summation done ROI. And we do that pinch our corporate 7,000-plus consultants astir nan world. So we person circumstantial liking groups astir that domain and exertion that we will talk a small spot much successful nan future, but it's a very large portion of our civilization is to look astatine those technologies and spot really they tin beryllium of worth to our customers.

Divya Goyal

That’s awesome color. Looking guardant to what’s coming next.

Jeffrey Davis

Thank you.

Operator

I would for illustration now to move it backmost complete to Jeff Davis for closing remarks.

Jeffrey Davis

All right. Well, convey you each for your clip and convey you for your patience and sticking astir arsenic we worked done immoderate of nan method issues astatine nan onset of nan call. But convey you and look guardant to seeing you again present successful astir 60 days.