Our revenue and profitability depend on the demand for our services and favorable margins, which could be negatively affected by numerous factors, many of which are beyond our control and unrelated to our work product. As described above, volatile, negative or uncertain global economic and political conditions have adversely affected, and could in the future adversely affect, client demand for our services and solutions. In addition, developments in the markets we serve, which may be rapid, could shift demand to services and solutions where we are less competitive, or might require significant investment by us to upgrade, enhance or expand our services and solutions to meet that demand. Companies in the markets we serve sometimes seek to achieve economies of scale and other synergies by combining with or acquiring other companies. If one of our current clients merges or consolidates with a company that relies on another provider for its consulting, systems integration and technology, or outsourcing services, we may lose work from that client or lose the opportunity to gain additional work if we are not successful in generating new opportunities from the merger or consolidation. Many of our consulting contracts are less than 12 months in duration, and often contain 10 to 30 day termination provisions. If a client is dissatisfied with our services and we are unable to effectively respond to its needs, the client might terminate existing contracts, or reduce or eliminate spending on the services and solutions we provide. Additionally, a client could choose not to retain us for additional stages of a project, try to renegotiate the terms of its contract or cancel or delay additional planned work. When contracts are terminated or not renewed, we lose the anticipated revenues, and it may take significant time to replace the lost revenues or we may be unsuccessful in our attempt to recover such revenues. Consequently, our results of operations in subsequent periods could be materially lower than expected. The specific business or financial condition of a client, changes in management and changes in a client’s strategy ~~also~~ are ~~all~~also factors that can result in terminations, cancellations or ~~delays. It~~delays, and in pressure to reduce costs.

The markets in which we operate are highly competitive, and we might not be able to compete effectively.

The markets in which we operate are highly competitive, ever evolving, and subject to rapid technological change. Our competitors include: large multinational providers that offer some or all of the services that we do; offshore service providers in lower-cost locations that offer services similar to those we offer, often at highly competitive prices and on more aggressive contractual terms; niche solution and service providers or local competitors that compete with us in a specific geographic market, industry segment or service area, including companies that provide new or alternative products, service or delivery models; accounting firms that are expanding or building their capabilities to provide certain consulting services, including through acquisitions; and in-house departments of large corporations that use their own resources, rather than engage an outside firm for the types of services we provide.

Many of the larger regional and national information technology consulting firms have substantially longer operating histories, more established reputations and potential vendor relationships, greater financial resources, sales and marketing organizations, market penetration, and research and development capabilities, as well as broader product offerings, greater market presence, and name recognition.

In addition, there are relatively low barriers to entry in this business and therefore new entrants may compete with us in the future. For example, due to the rapid changes and volatility in our market, many well-capitalized companies, including some of our partners that have focused on sectors of the software and services industry that are not competitive with our business may refocus their activities and deploy their resources to be competitive with us.

Our future financial performance is largely dependent upon our ability to compete successfully in the markets we currently serve. If we are unable to compete successfully, we could lose market share and clients to competitors, which could materially adversely affect our results of operations.

In addition, we may face greater competition due to consolidation of companies in the technology sector, through strategic mergers or acquisition. Consolidation activity may result in new competitors with greater scale, a broader footprint, or offerings that are more attractive than ours. We believe that this competition could have a negative effect on our ability to compete for new work and skilled professionals. One or more of our competitors may develop and implement methodologies that result in superior productivity and price reductions without adversely affecting their profit margins. In addition, competitors may win client engagements by significantly discounting their services in exchange for a client’s promise to purchase other goods and services from the competitor, either concurrently or in the future. These activities may potentially force us to lower our prices and suffer reduced operating margins. Any of these negative effects could significantly impair our results of operations and financial condition. We may not be able to compete successfully against new or existing competitors.

Global operations subject us to additional political and economic risks that could have an adverse impact on our business.

We maintain global development centers in Latin America, India, China and Serbia. We also have employees in the United Kingdom and Canada. We are subject to certain risks related to expanding our presence into non-U.S. regions, including risks related to complying with a wide variety of national and local laws, restrictions on the import and export of certain technologies, managing the integration of our various international information systems; and multiple and possibly overlapping tax structures. We may face difficulties in enforcing contractual rights, and our continued operation and expansion outside of the United States, including in developing countries, could increase the risk of contractual violations in the future. In addition, we may face competition from companies that may have more experience with operations in these countries or with global operations generally. We may also face difficulties integrating new facilities in different countries into our existing operations, including difficulties related to language and cultural barriers, as well as integrating employees that we hire in different countries into our existing corporate culture.

Furthermore, there are risks inherent in operating in and expanding into non-U.S. regions, including, but not limited to:

•political and economic instability;

•global health conditions and potential natural disasters;

•unexpected changes in regulatory requirements, including immigration restrictions, tariffs, and other trade barriers and tax regulations, the enforcement of such requirements by applicable governmental authorities and other legal uncertainty;

•limitations on our ability to repatriate cash from our international operations;

•complexities and additional costs in effectively managing our international operations;

•international currency controls and exchange rate fluctuations including as a result of the current inflationary environment;

•reduced protection for intellectual property rights;

•difficulties in enforcing our contractual rights;

•increased potential for corruption; and

•additional vulnerability from terrorist groups targeting U.S. interests abroad.

Any one or more of the factors set forth above could have a material adverse effect on our international operations and, consequently, on our business, financial condition, and operating results. These risks may be amplified in certain emerging markets in which we do business, including India and Latin America.

Our results of operations and ability to grow could be materially negatively affected if we cannot adapt and expand our services and solutions in response to ongoing changes in technology and offerings by new entrants.

Our success depends upon our ability to continue to develop and implement services and solutions that anticipate and respond to rapid and continuing changes in technology and industry developments and offerings by new entrants to serve the evolving needs of our clients. Current areas of significant change include mobility, cloud-based computing, software-as-a-

service solutions, artificial intelligence, machine learning and the processing and analyzing of large amounts of data. Technological developments such as these may materially affect the cost and use of technology by our clients. Our growth strategy focuses on responding to these types of developments by driving innovation for our core business as well as through new business initiatives beyond our core business that will enable us to differentiate our services and solutions. If we do not sufficiently invest in new technology and industry developments, or if we do not make the right strategic investments to respond to these developments and successfully drive innovation, our services and solutions, our results of operations, and our ability to develop and maintain a competitive advantage and continue to grow could be negatively affected.

In addition, we operate in a quickly evolving environment, in which there currently are, and we expect will continue to be, new technology entrants. New services or technologies offered by competitors or new entrants may make our offerings less differentiated or less competitive, when compared to other alternatives, which may adversely affect our results of operations.

Health emergencies and pandemics may materially and adversely affect the Company’s business, operations, financial results and/or stock price.

Health emergencies and pandemics have created significant and widespread volatility, uncertainty and disruptions in the U.S. and global economies, including in the regions in which we operate. The extent to which these emergencies and pandemics ultimately impact our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including but not limited to: their duration and scope; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our services and solutions; our ability to sell and provide our services and solutions, including as a result of travel restrictions and people working from home; the ability of our clients to pay for our services and solutions; any changes to our clients’ payment terms; any closures of our offices and facilities if we transition to working remotely; and any closures of our clients’ offices and facilities because of government orders, recommendations or otherwise. Clients may also slow down decision making, delay planned work or seek to terminate or amend existing agreements in a manner adverse to the Company. Any of these events could cause or contribute to the other risks and uncertainties faced by the Company, as described in this Form 10-K and elsewhere, and could materially adversely affect our business, operations, financial results and/or stock price.

Strategic and Operational Risks

We might not be successful at identifying, acquiring, or integrating other businesses.

We have pursued a disciplined acquisition strategy designed to enhance or add to our offerings of services and solutions, or to enable us to expand in certain markets, both domestically and internationally. Depending upon the opportunities available, we may increase our investment in these acquisitions. In that pursuit, we may not successfully identify suitable acquisition candidates, succeed in completing targeted transactions, or achieve desired results of operations. Furthermore, we face risks in successfully integrating any businesses we acquire. Ongoing business may be disrupted and our management’s attention may be diverted by acquisitions, transition or integration activities. In addition, we might need to dedicate additional management and other resources, and our organizational structure could make it difficult for us to efficiently integrate acquired businesses into our ongoing operations and assimilate and retain employees of those businesses into our culture and operations.

We might fail to realize the expected benefits or strategic objectives of any acquisition we make. We might not achieve our expected return on investment, or we may lose money. We may be adversely impacted by liabilities that we assume from a company we acquire, including from that company’s known and unknown obligations, intellectual property or other assets, terminated employees, current or former clients, or other third parties, and we may fail to identify or adequately assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquisition, which could result in unexpected legal or regulatory exposure, unexpected increases in taxes or other adverse effects on our business and profitability. If we are unable to complete the number and kind of acquisitions for which we plan, or if we are inefficient or unsuccessful at integrating any acquired businesses into our operations, we may not be able to achieve our planned rates of growth or improve our market share, profitability, or competitive position in specific markets or services.

Our results of operations could materially suffer if we are not able to obtain favorable pricing.

If we are not able to obtain favorable pricing for our services, our revenues and profitability could materially suffer. The rates we are able to charge for our services are affected by a number of factors, including, but not limited to:

•general economic and political conditions;

•the competitive environment in our industry, as described below;

•our clients’ desire to reduce their costs;

•our ability to accurately estimate, attain, and sustain contract revenues, margins, and cash flows over the full contract period; and

•procurement practices of clients and their use of third-party advisors.

The competitive environment in our industry affects our ability to obtain favorable pricing in a number of ways, any of which could have a material negative impact on our results of operations. The less we are able to differentiate our services and solutions and/or clearly convey the value of our services and solutions, the more risk we have that they will be seen as commodities, with price being the driving factor in selecting a service provider. In addition, the introduction of new services or products by competitors could reduce our ability to obtain favorable pricing for the services or products we offer. Competitors may be willing, at times, to price contracts lower than us in an effort to enter the market or increase market share. Further, if competitors develop and implement methodologies that yield greater efficiency and productivity, they may be better positioned to offer services similar to ours at lower prices.

If our negotiated fees do not accurately anticipate the cost and complexity of performing our work, then our contracts could be unprofitable.

We negotiate fees with our clients by utilizing a range of pricing structures and conditions, including time and materials and fixed fee contracts. Our fees are highly dependent upon our internal forecasts and predictions about the level of effort and cost necessary to deliver such services and solutions, which might be based on limited data and could turn out to be materially inaccurate. If we do not accurately estimate the level of effort or cost, our contracts could yield lower profit margins than planned, or be unprofitable. We could face greater risk when negotiating fees for our contracts that involve the coordination of operations and workforces in multiple locations and/or utilizing workforces with different skill sets and competencies. There is a risk that we will underprice our contracts, fail to accurately estimate the costs of performing the work, or fail to accurately assess the risks associated with potential contracts. In particular, any increased or unexpected costs, delays or failures to achieve anticipated cost savings, or unexpected risks we encounter in connection with the performance of services, including those caused by factors outside our control such as wage inflation and other marketplace factors, could make these contracts less profitable or unprofitable, which could have an adverse effect on our profit margin.

Our operations are subject to the effects of wage inflation and other marketplace factors, including with respect to our subsidiaries located in Latin America, India, Canada, China, and Europe. If increases in salary and other operating costs exceed our internal forecasts, the hourly rates established under our time-and-materials contracts might not be sufficient to recover those increased operating costs, which would make those contracts unprofitable for us, thereby adversely affecting our results of operations, financial condition and cash flows from operations.

The loss of one or more of our significant software vendors could have a material and adverse effect on our business and results of operations.

We have significant relationships with software vendors including IBM, Red Hat, Adobe, Microsoft, Oracle, Salesforce, MuleSoft and Sitecore. Our business relationships with these companies enable us to reduce our cost of acquiring customers and increase win rates through leveraging our vendors’ marketing efforts and strong vendor endorsements. The loss of one or more of these relationships and endorsements could increase our sales and marketing costs, lead to longer sales cycles, harm our reputation and brand recognition, reduce our revenues, and adversely affect our results of operations. The financial impact of the loss of one or more software vendors is not reasonably estimable.

Our ability to attract and retain business may depend upon our reputation in the marketplace.

We believe the Perficient brand name and our reputation are important corporate assets that help distinguish our services from those of our competitors and also contribute to our efforts to recruit and retain talented employees. However, our corporate reputation is potentially susceptible to material damage by events such as disputes with clients, information technology security breaches or service outages, or other delivery failures. Similarly, our reputation could be damaged by actions or statements of current or former clients, employees, competitors, vendors, as well as members of the investment community and the media. The investment community, our employees and other stakeholders have evidenced an increased focus on ESG factors, issues and initiatives. We have disclosed certain of our efforts with respect to such matters. Our reputation could be damaged if our efforts are, or are deemed to be, unsuccessful or are deemed insufficient relative to our competitors.

There is a risk that negative information could adversely affect our business. Damage to our reputation could be difficult and time-consuming to repair, could make potential or existing clients reluctant to select us for new engagements or cause existing clients to terminate our services, resulting in a loss of business, and could adversely affect our recruitment and

retention efforts. Damage to our reputation could also reduce the value and effectiveness of the Perficient brand name and could reduce investor confidence in us, materially adversely affecting our share price.

Our profitability could suffer if our cost-management strategies are unsuccessful.

Our ability to improve or maintain our profitability is dependent upon our ability to successfully manage our costs including incurred costs from the current inflationary environment and as a result of a competitive labor market. Our cost management strategies include maintaining appropriate alignment between the demand for our services and our resource capacity, optimizing the costs of service delivery and maintaining or improving our sales and marketing and general and administrative costs as a percentage of revenues. These actions and other cost-management efforts may not be successful, our efficiency may not be enhanced and we may not achieve desired levels of profitability. Because of the significant steps taken in the past to reduce costs, we may not be able to continue to deliver efficiencies in our cost management, to the same degree as in the past. If we are not effective in reducing our operating costs in response to changes in demand or pricing, we might not be able to manage significantly larger and more diverse workforces as we increase the number of colleagues and execute our growth strategy, control our costs or improve our efficiency, and our profitability could be negatively affected.

If we do not effectively manage expected future growth, our results of operations and cash flows could be adversely affected.

Our ability to operate profitably with positive cash flows depends partially upon how effectively we manage our expected future growth. In order to create the additional capacity necessary to accommodate an increase in demand for our services, we may need to implement new or upgraded operational and financial systems, procedures and controls, open new offices, and hire additional colleagues. Implementation of these new or upgraded systems, procedures, and controls may require substantial management efforts and our efforts to do so may not be successful. The opening of new offices (including international locations) or the hiring of additional colleagues may result in idle or underutilized capacity. We continually assess the expected capacity and utilization of our offices and colleagues. We may not be able to achieve or maintain optimal utilization of our offices and colleagues. If demand for our services does not meet our expectations, our revenues and cash flows may not be sufficient to offset these expenses and our results of operations and cash flows could be adversely affected.

If we are unable to collect our receivables or unbilled services, our results of operations, financial condition, and cash flows could be adversely affected.

Our business depends on our ability to successfully obtain payment from our clients of the amounts they owe us for work performed. We evaluate the financial condition of our clients and usually bill and collect on relatively short cycles. We have established allowances for losses of receivables and unbilled services. Actual losses on client balances could differ from those that we currently anticipate and as a result we might need to adjust our allowances. We might not accurately assess the credit worthiness of our clients. Macroeconomic conditions could also result in ~~pressure~~financial difficulties for our clients, including bankruptcy and insolvency. This could cause clients to ~~reduce~~delay payments to us, request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us. Recovery of client financing and timely collection of client balances also depends upon our ability to complete our contractual commitments and bill and collect our contracted revenues. If we are unable to meet our contractual requirements, we might experience delays in collection of and/or be unable to collect our client balances, and if this occurs, our results of operations and cash flows could be adversely affected. In addition, if we experience an increase in the ~~cost~~time to bill and collect for our services, our cash flows could be adversely affected.

Issues arising during the implementation or upgrade of an enterprise resource planning (“ERP”) system could adversely affect the Company's business, financial condition and results of operations.

The Company is in the process of upgrading and migrating its ERP system to a cloud version to support the Company’s future growth plan and to further integrate processes and geographic locations. Upgrading an ERP system on a widespread basis involves significant changes in business processes and extensive organizational training. In connection with the implementation, the Company may experience temporary business and information technology disruptions that could adversely affect the Company's business, financial condition and results of operations.

Indebtedness and Liquidity Risks

Servicing our debt may require a significant amount of cash. We may not have sufficient cash flow from our business to pay our indebtedness, and we may not have the ability to raise the funds necessary to settle for cash conversions of the

Notes or to repurchase the Notes for cash upon a fundamental change, which could adversely affect our business and results of operations.

In August 2020, we issued $230.0 million in aggregate principal amount of 1.250% Convertible Senior Notes Due 2025 (the “2025 Notes”), of which $23.3 million aggregate principal amount remains outstanding as of December 31, 2022, and in November 2021, we issued $380.0 million in aggregate principal amount of 0.125% Convertible Senior Notes Due 2026 (the “2026 Notes”) in private offerings. The 2025 Notes and 2026 Notes (together, the “Notes”) bear interest at a rate of 1.250% and 0.125% per year, respectively. Interest is payable in cash semi-annually. Our ability to make payments of the principal, to pay interest on or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flows from operations in the future that are sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flows, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

Holders of the Notes have the right to require us to repurchase their notes upon the occurrence of a fundamental change (as defined in the indentures governing the Notes (together, the “Indentures”)) at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. Upon conversion, unless we elect to deliver solely shares of our ~~services.~~common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases in connection with such conversion and our ability to pay may additionally be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase the Notes at a time when the repurchase is required by the Indentures or to pay any cash payable on future conversions as required by the Indentures would constitute a default under the Indentures. A default under the Indentures or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

We are subject to counterparty risk with respect to the Notes Hedges.

In connection with the issuance of the Notes, we entered into privately negotiated convertible note hedge transactions (the “Note Hedges”) with certain of the initial purchasers or their respective affiliates and/or other financial institutions (the “Option Counterparties”). We will be subject to the risk that one or more of the Option Counterparties, as financial institutions, might default under their respective Note Hedges. Our exposure to the credit risk of the Option Counterparties will not be secured by any collateral. Global economic and political conditions could result in the actual or perceived failure or financial difficulties of financial institutions. If any Option Counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with such Option Counterparty.

Our exposure will depend on many factors, but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by any Option Counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the Option Counterparties.

•the business decisions of our clients to begin to curtail or reduce the use of our services, including in response to changes in macroeconomic or political conditions unrelated to our business or general market conditions;

•periodic differences between our clients’ estimated and actual levels of business activity associated with ongoing work, as well as the stage of completion of existing projects and/or their termination or restructuring;

•contract delivery inefficiencies, such as those due to poor delivery or changes in forecasts;

•our ability to transition employees quickly from completed to new projects and maintain an appropriate headcount in each of our workforces;

•acquisition, integration and operational costs related to businesses acquired;

•the introduction of new products or services by us, competitors or partners;

•changes in our pricing or competitors’ pricing;

•our ability to manage costs, including those for our own or subcontracted personnel, travel, support services and severance;

~~our ability to limit and manage the incurrence of pre-contract costs, which must be expensed without corresponding revenues, which are then recognized in later periods without the corresponding costs;~~

•changes in, or the application of changes in, accounting principles or pronouncements under U.S. generally accepted accounting principles, particularly those related to revenue recognition;

•currency exchange rate fluctuations;

•changes in estimates, accruals or payments of variable compensation to our employees;

•global, regional and local economic and political conditions and related risks, including acts of terrorism; and

•seasonality, including number of ~~work days and~~workdays, holidays and summer vacations.

As a result of any of the above factors, or any of the other risks described in this Item 1A, “Risk Factors,” our stock price could be difficult to predict, and our stock price in the past might not be a good indicator of the price of our stock in the future.

~~We may need additional capital in the future, which may not be available to us. The raising of any additional capital may dilute your ownership percentage in our stock.~~

As of December 31, 2017, we had unrestricted cash and cash equivalents totaling $6.3 million and a borrowing capacity of $125.0 million, with $69.7 million unused capacity available, and a commitment from our lenders to increase our borrowing capacity by $75.0 million. Of the $6.3 million of cash and cash equivalents at December 31, 2017, ~~$3.9 million was held by our Canadian, Indian and United Kingdom subsidiaries~~ and is considered to be indefinitely reinvested in those operations. As of December 31, 2017, $1.8 million in cash and cash equivalents was held by our Chinese subsidiary and is not considered indefinitely reinvested. We intend to continue to make investments to support our business growth and may require additional funds if our capital is insufficient to pursue business opportunities and respond to business challenges. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us our ability to continue to support our business growth and to respond to business challenges could be significantly limited.

Our officers, directors, and 5% and greater stockholders own a large percentage of our voting securities and their interests may differ from other stockholders.

Our executive officers, directors, and 5% and greater stockholders beneficially own or control ~~approximately 34%~~approximately30% of the voting power of our common stock. This concentration of voting power of our common stock may make it difficult for our other stockholders to successfully approve or defeat matters that may be submitted for action by our stockholders. It may also have the effect of delaying, deterring, or preventing a change in control of the Company.

It may be difficult for another company to acquire us, and this could depress our stock price.

In addition to the voting securities held by our officers, directors, and 5% and greater stockholders, provisions contained in our certificate of incorporation, bylaws, ~~and~~ Delaware law and certain provisions of the Notes could make it difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. Our certificate of incorporation and bylaws may discourage, delay, or prevent a merger or acquisition that a stockholder may consider favorable by authorizing the issuance of “blank check” preferred stock. In addition, provisions of the Delaware General Corporation Law also restrict some business combinations with interested stockholders. These provisions are intended to encourage potential acquirers to negotiate with us and allow the Board of Directors the opportunity to consider alternative proposals in the interest of maximizing stockholder value. ~~However, these~~Additionally, certain provisions of our Notes could make it more difficult or more expensive for a third party to acquire us. These provisions may also discourage acquisition proposals, or delay or prevent a change in control, which could harm our stock price.


Item 1B.			Unresolved Staff Comments.

None.


Item 2.			Properties.

We have offices in multiple markets throughout the United States, ~~and in China,~~Latin America, India, Canada, China and ~~the United Kingdom.~~Europe. We do not own any real property; all of our office space is leased with varying expiration dates. We believe our facilities are adequate to meet our needs in the near future.


Item 3.			Legal Proceedings.

We are involved from time to time in various legal proceedings arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect any currently pending matters to have a material adverse effect on the financial position, results of operations, or cash flows of the Company.


Item 4.			Mine Safety Disclosures.

Not applicable.

PART II


Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is quoted on The Nasdaq Global Select Market under the symbol ~~“PRFT.” The following table sets forth, for the periods indicated, the high and low sale prices per share of our common stock as reported on The Nasdaq Global Select Market since January 1, 2016.~~

High Low
Year Ending December 31, 2017:
First Quarter $ 19.06 $ 16.80
Second Quarter 19.12 16.20
Third Quarter 19.74 16.70
Fourth Quarter 20.22 17.65

Year Ending December 31, 2016:
First Quarter $ 21.92 $ 15.46
Second Quarter 21.71 19.37
Third Quarter 22.66 17.66
Fourth Quarter 20.14 14.15

~~On February 20, 2018, the last reported sale price of our common stock on The Nasdaq Global Select Market was $19.59 per share.~~“PRFT”. There were approximately ~~359~~488 stockholders of record of our common stock as of February ~~20, 2018,~~16, 2023, including ~~293~~423 restricted account holders.

We have never declared or paid any cash dividends on our common stock. Our credit facility currently restricts the payment of cash dividends. See Note 9, ~~Line of Credit,~~12, Long-term Debt, in the Notes to Consolidated Financial Statementsfor further information regarding the restrictions. Any future determination as to the declaration and payment of dividends will be made at the discretion of our board of directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our ~~board~~Board of ~~directors,~~Directors, including the applicable requirements of the Delaware General Corporation Law.

Information on our Equity Compensation Plan has been included in Part III, Item 12 of this Annual Report on Form 10-K.

Unregistered Sales of Securities

~~None.~~On October 11, 2022, the Company acquired all of the outstanding stock of Ameex. The consideration paid in this transaction included 75,037 unregistered shares of the Company’s common stock with an aggregate value of approximately $5.2 million based on the average closing sales price for the 30 consecutive trading days ending on the date immediately before the acquisition's closing date. We relied on Section 4(a)(2) of the Securities Act, as the basis for exemption from registration for each of these issuances. These shares were issued in privately negotiated transactions and not pursuant to a public solicitation.

Issuer Purchases of Equity Securities

Prior to ~~2018, our~~2022, the Company’s Board of Directors authorized the repurchase of up to ~~$135.0~~$315.0 million of ~~our~~Company common ~~stock.~~stock through a stock repurchase program expiring December 31, 2022. On ~~February 20, 2018, our~~October 25, 2022, the Board of Directors authorized ~~the~~a $60.0 million expansion of ~~our~~the Company’s stock repurchase program ~~by authorizing the repurchase of up to an additional $25.0 million of our common stock~~ for a total repurchase program of ~~$160.0~~$375.0 million and extended the expiration date of the program from December 31, 2022 to December 31, ~~2019.~~2024. The program could be suspended or discontinued at any time, based on market, economic, or business conditions. The timing and amount of repurchase transactions will be determined by ~~our~~ management based on its evaluation of market conditions, share price, and other factors.

~~Since~~From the ~~program’s~~program’s inception on August 11, 2008 through December 31, 2022, we have repurchased approximately ~~$135.0~~$279.8 million ~~(12.4~~(16.3 million shares) of our outstanding common ~~stock~~stock.


Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
Beginning balance as of September 30, 2022	16,263,294	$	16.87	16,263,294	$	40,615,295
October 1-31, 2022	5,000	67.90		5,000	$	100,275,795
November 1-30, 2022	75,000	67.61		75,000	$	95,204,853
December 1-31, 2022	—	—		—	$	95,204,853
Ending balance as of December 31, 2022	16,343,294	$	17.12	16,343,294

(1)Average price paid per share includes commission.

(2)On October 25, 2022, the Company's Board of Directors approved a $60.0 million increase in the share repurchase program.

Comparative Stock Performance

The following graph compares the cumulative five-year total stockholder return on the Common Stock from December 31, 2017 through December 31, ~~2017.~~

Period
Total Number
of Shares Purchased

Average Price
Paid Per Share (1)

Total Number of
Shares Purchased as Part
of Publicly Announced
Plans or Programs

Approximate Dollar Value
of Shares that
May Yet Be Purchased
Under the Plans or Programs

Beginning Balance as of October 1, 2017 11,926,538 $ 10.59 11,926,538 $ 8,666,467
October 1-31, 2017 16,500 19.39 16,500 $ 8,346,459
November 1-30, 2017 260,536 18.69 260,536 $ 3,478,299
December 1-31, 2017 178,995 19.33 178,995 $ 17,691
Ending Balance as of December 31, 2017 12,382,569 $ 10.90 12,382,569

~~(1)~~

~~Average price paid per share includes commission.~~

I~~tem 6.~~

~~Selected Financial Data.~~

2022, with the cumulative total return on (i) the NASDAQ Composite Index, (ii) S&P 500 Index, and (iii) S&P 500 Information Technology Index. The ~~selected financial data presented for,~~comparison assumes the investment of $100 on December 31, 2017, in the Common Stock and ~~as of the end of,~~in each of the ~~years~~indices and, in ~~the five-year period ended December 31, 2017, has been prepared~~each case, assumes reinvestment of all dividends.


	12/31/2017		12/31/2018		12/31/2019		12/31/2020		12/31/2021		12/31/2022
Perficient	$	100.00	$	116.73	$	241.58	$	249.87	$	677.98	$	366.18
NASDAQ Composite Index	100.00		96.12		129.97		186.69		226.63		151.61
S&P 500 Index	100.00		93.76		120.84		140.49		178.27		143.61
S&P 500 Information Technology Index	100.00		98.38		145.65		207.13		276.22		196.37

The stock price performance included in ~~accordance with U.S. generally accepted accounting principles. The financial data presented~~this graph is not ~~directly comparable between periods~~necessarily indicative of future stock price performance.

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our filings under the Securities Act of 1933, as ~~a result of two acquisitions~~amended, or the Exchange Act, except as shall be expressly set forth by specific reference in ~~2017, one acquisition in 2016, and three acquisitions in each of 2015, 2014 and 2013.~~such filing.

The following data should be read in conjunction with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements appearing in Part II, Item 8, and Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Part II, Item 7.

Year Ended December 31,
2017 2016 2015 2014 2013
Income Statement Data: (In thousands, except per share information)
Revenues $ 485,261 $ 486,982 $ 473,621 $ 456,692 $ 373,325
Cost of revenues $ 323,748 $ 335,702 $ 318,411 �� $ 307,357 $ 250,226
Selling, general and administrative $ 108,192 $ 101,264 $ 99,963 $ 90,202 $ 77,601
Depreciation and amortization $ 19,747 $ 18,238 $ 18,315 $ 18,187 $ 11,236
Acquisition costs $ 1,359 $ 1,252 $ 1,235 $ 3,446 $ 2,297
Adjustment to fair value of contingent consideration $ 3,235 $ (1,679 ) $ 445 $ (1,463 ) $ 287
Income from operations $ 28,980 $ 32,205 $ 35,252 $ 38,963 $ 31,678
Net interest expense $ 1,838 $ 1,636 $ 2,085 $ 1,438 $ 293
Net other (income) expense $ (1 ) $ 60 $ 332 $ 5 $ (112 )
Income before income taxes $ 27,143 $ 30,509 $ 32,835 $ 37,520 $ 31,497
Net income $ 18,581 $ 20,459 $ 23,007 $ 23,163 $ 21,432
Basic net income per share $ 0.56 $ 0.60 $ 0.69 $ 0.73 $ 0.71
Diluted net income per share $ 0.55 $ 0.58 $ 0.67 $ 0.70 $ 0.67

As of December 31,
2017 2016 2015 2014 2013
Balance Sheet Data: (In thousands)
Cash and cash equivalents $ 6,307 $ 10,113 $ 8,811 $ 10,935 $ 7,018
Working capital (1) $ 67,935 $ 76,446 $ 83,176 $ 76,276 $ 56,477
Property and equipment, net $ 7,145 $ 8,888 $ 7,891 $ 7,966 $ 7,709
Goodwill and intangible assets, net $ 356,304 $ 320,320 $ 322,791 $ 282,235 $ 218,997
Total assets $ 499,060 $ 456,576 $ 474,364 $ 425,363 $ 324,958
Long-term debt $ 55,000 $ 32,000 $ 56,000 $ 54,000 $ 19,000
Total stockholders’ equity $ 366,351 $ 359,465 $ 348,810 $ 304,728 $ 259,490


Item 6.			[Reserved]

~~(1) Working capital is total current assets less total current liabilities~~


Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following summary together with the more detailed business information and consolidated financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K and in the documents that we

incorporate by reference into this Annual Report on Form 10-K. This Annual Report on Form 10-K may contain certain “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. This information involves risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in “Risk Factors.”

Overview

~~We are an information technology~~Perficient is a global digital consultancy transforming how the world’s biggest brands connect with customers and ~~management consulting firm serving Forbes Global 2000® and other large enterprise companies with a primary focus on the United States.~~grow their businesses. We help clients, primarily focused in North America, gain competitive advantage by using digital technology to: make their businesses more responsive to market opportunities; strengthen relationships with customers, suppliers, and partners; improve productivity; and reduce information technology costs. ~~Our~~With unparalleled strategy, creative and technology capabilities, across industries, our end-to-end digital consulting services help our clients drive faster speed-to-market capabilities and stronger, more compelling experiences for consumers. We go to market with six primary service categories – strategy and transformation, customer experience ~~business optimization~~ and ~~industry~~design, innovation and product development, platforms and technology, data and intelligence, and optimized global delivery. Within each service category, and collectively, we deliver a deep and broad portfolio of solutions enable these benefits by developing, integrating, automating, and extending business processes, technology infrastructure and software applications end-to-end within an organization and with key partners, suppliers, and customers. Our solutions include analytics, custom applications, management consulting, commerce, content management, business integration, customer relationship management, portals and collaboration, platform implementations, and business process management, among others. Our solutionsthat enable our clients to operate a real-time enterprise that dynamically adapts business processes and the systems that support them to meet the changing demands of ~~an increasingly~~a global ~~Internet-driven,~~ and competitive marketplace.

Services Revenues

Services revenues are derived from professional services that include developing, implementing, integrating, automating and extending business processes, technology infrastructure, and software applications. Professional services revenues are recognized over time as services are rendered. Most of our projects are performed on a time and materials basis, while a portion of our revenues is derived from projects performed on a fixed fee ~~basis.~~ ~~Fixed fee engagements represented approximately 8% of our services revenues for the year ended December 31, 2017 compared to 11% for each of the years ended December 31, 2016 and 2015. The decrease in~~or fixed fee ~~revenues is primarily attributable to an organic decrease in fixed fee engagements overall.~~percent complete basis. For time and material projects, revenues are recognized and billed by multiplying the number of hours our professionals expend in the performance of the project by the ~~established billing~~hourly rates. For fixed fee contracts, revenues are recognized and billed by multiplying the established fixed rate per time period by the number of time periods elapsed. For fixed fee percent complete projects, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours. ~~Amounts invoiced~~Fixed fee percent complete engagements represented 6% of our services revenues for the year ended December 31, 2022 compared to 6% and collected in excess of revenues recognized are classified as deferred revenues. In conjunction with services provided, we occasionally receive referral fees under partner programs. These referral fees are recognized when earned8% for the years ended December 31, 2021 and ~~recorded within services revenues.~~2020, respectively. On most projects, we are ~~also~~ reimbursed for out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of ~~revenues.~~the transaction price of the respective professional services contract. The aggregate amount of reimbursed expenses will fluctuate depending on the location of our clients, the total number of our projects that require travel, the impact of travel restrictions imposed as a result of health emergencies and pandemics, and whether our arrangements with our clients provide for the reimbursement of such expenses. In conjunction with services provided, we occasionally receive referral fees under partner programs. These referral fees are recognized at a point in time when earned and recorded within services revenues.

Software and Hardware Revenues

Software and hardware revenues are derived from sales of third-party software and hardware resales, in which we are considered the agent, and sales of internally developed software, ~~and hardware.~~in which we are considered the principal. Revenues from sales of third-party software and hardware are ~~generally~~recorded on a net basis, while revenues from internally developed software sales are recorded on a gross ~~basis provided that we act as a principal in the transaction. Revenues from sales of third-party software-as-a-service arrangements where we are not the primary obligor are recorded on a net~~ basis. Software and hardware revenues are expected to fluctuate depending on our clients’ demand for these ~~products.~~products, which may be impacted by health emergencies and pandemics.

If we enter into contracts for the sale of services and software or hardware, management evaluates whether each element should be accounted for separately by considering the following criteria: (1) whether the deliverables have value to the client on a stand-alone basis; and (2) whether delivery or performance of the undelivered item or items is considered probable and substantially in our control (only if the arrangement includes a general right of return related to the delivered item). Further, for sales of software and services, management also evaluates whether the services are essential to the functionality of the software and whether there is fair value evidence for each deliverable. If management concludes that the separation criteria are met, then it accounts for each deliverable in the transaction separately, based on the relevant revenue recognition policies. Generally, all deliverables of our multiple element arrangements meet these criteria and are accounted for separately, with the arrangement consideration allocated among the deliverables using vendor specific objective evidence of the selling price. As a result, we generally recognize software and hardware sales upon delivery to the customer and services consistent with the policies described herein.

Further, delivery of software and hardware sales, when sold contemporaneously with services, can generally occur at varying times depending on the specific client project arrangement. Delivery of services generally occurs over a period of time consistent with the timeline as outlined in the client contract.

There are no significant cancellation or termination-type provisions for our software and hardware sales. Contracts for our professional services provide for a general right, to the client or us, to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract.

Cost of Revenues

Cost of revenues consists of cost of services, ~~software and hardware costs, and reimbursable expenses. Cost of services consists~~ primarily ofrelated to cash and non-cash compensation and benefits (including bonuses and non-cash compensation related to equity awards), costs associated with subcontractors, reimbursable expenses and other ~~unreimbursed~~ project-related expenses. Cost of revenues does not include depreciation of assets used in the production of revenues which are primarily personal computers, servers, and other information technology related equipment. In accordance with Accounting Standards Codification (“ASC”) Topic 606, sales of third-party software and hardware are presented on a net basis, and as such, third-party software and hardware costs are not presented within cost of revenues.

Our cost of services as a percentage of services revenues is affected by the utilization rates of our professionals (defined as the percentage of our professionals’ time billed to clients divided by the total available hours in the respective period), the salaries we pay our professionals, and the average billing rate we receive from our clients. If a project ends earlier than scheduled, we retain professionals in advance of receiving project assignments, or demand for our services declines, our utilization rate will decline and adversely affect our cost of services as a percentage of services revenues. Software and hardware costs as a percentage of software and hardware revenues (excluding internally developed software) are typically higher than cost of services as a percentage of services revenues, and the mix of services and software and hardware for a particular period can significantly impact our total combined cost of revenues as a percentage of total revenues for such period. In addition, software and hardware costs as a percentage of software and hardware revenues can fluctuate due to pricing and other competitive pressures.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses are primarily composed of sales-related costs, general and administrative salaries, stock compensation expense, office costs, recruiting expense, variable compensation costs, marketing costs and other miscellaneous expenses. We have access to sales leads generated by our software vendors ~~most notably IBM, Oracle and Microsoft,~~ whose products we use to design and implement solutions for our clients. These relationships enable us to optimize our selling costs and sales cycle times and increase win rates through leveraging our partners’ marketing efforts and endorsements.

Plans for Growth and Acquisitions

Our goal is to continue to build one of the leading information technology consulting firms by expanding our relationships with existing and new clients and through the continuation of our disciplined acquisition strategy. Our future growth plan includes expanding our business with a primary focus on customers in the United States, both organically and through acquisitions. We also intend to further leverage our existing offshore and nearshore capabilities to support our future growth and provide our clients flexible options for project delivery. Our ability to continue to implement our growth plan may be negatively affected by the impact of health emergencies and pandemics on our operations, and our ability to evaluate potential acquisitions.

When analyzing revenue growth by base business compared to acquired companies in the Results of Operations section below, revenue attributable to base business includes revenue from an acquired company that has been owned for a full four quarters after the date of acquisition.

16Recent Health Emergencies and Pandemics

In response to recent health emergencies and pandemics, the United States ~~Tax Reform~~

~~The 2017 Tax Act was signed into law on December 22, 2017. The law includes~~and various foreign, state and local governments have, among other actions, imposed travel and business restrictions and required or advised communities in which we do business to adopt stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. While certain of these restrictions and guidelines have been lifted or relaxed, they may be reinstituted in response to continuing effects of health emergencies and pandemics. Health emergencies and pandemics and the various governments’ response have caused, and may continue to cause, significant ~~changes to~~and widespread uncertainty, volatility and disruptions in the U.S. ~~corporate income tax system,~~and global economies, including ~~a federal corporate tax rate reduction from 35% to 21%, limitations on~~in the ~~deductibility of interest expense and executive compensation, and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. This change may result~~regions in ~~a U.S. tax liability on those earnings~~ which we operate.

Through December 31, 2022, we have not ~~previously been repatriated~~experienced a material impact to ~~the U.S., with future foreign earnings potentially not subject to U.S. income taxes when repatriated. See Note 10,~~ ~~Income Taxes~~, in the Notes to Consolidated Financial Statements for a discussion of the Company’s repatriation of earnings from the Company’s Chinese subsidiary. The majority of the provisions will have an impact on Perficient beginning in fiscal years 2018 and 2019. However, there are certain transitional impacts of the 2017 Tax Act which affected the Company’s tax provision during the fourth quarter of 2017. As part of the transition to the new territorial tax system, the 2017 Tax Act imposed a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries, which produced a $1.1 million tax expense payable over eight years. As a result, a $0.1 million current liability and a $1.0 million non-current liability were recorded in the Company’s consolidatedour business, operations or financial statements during the fourth quarter of 2017. The reduction of the federal corporate tax rate caused the Company to adjust its U.S. deferred tax assets and liabilities to the lower federal base rate of 21%. The reduction in the corporate tax rate resulted in a provisional net tax credit of $3.3 million for the fourth quarter of 2017. In addition,results as a result of ~~the 2017 Tax Act, changes to the net tax cost of certain China dividends repatriated during 2017 created a $1.6 million tax credit during the fourth quarter of 2017.~~

~~There were no specific impacts of the 2017 Tax Act~~health emergencies and pandemics. However, in future periods, we may experience weaker customer demand, requests for discounts or extended payment terms, customer bankruptcies, supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could ~~not~~negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of health emergencies and pandemics or the related impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, ~~which~~but it could be material.

We continue to monitor closely the ~~Company accounted for under prior tax law. However,~~Company’s financial health and liquidity and the ~~SEC has issued rules that would allow for a measurement period~~impact of ~~up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related tax impacts. Based on a continued analysis of the estimates~~health emergencies and ~~further guidance~~pandemics on the ~~application~~Company. We have been able to serve the needs of our customers while taking steps to protect the ~~law, it is anticipated that additional revisions may occur throughout~~health and safety of our employees, customers, partners, and communities. Among these steps, we have increased the ~~allowable measurement period. We currently anticipate finalizing~~amount of work performed remotely and ~~recording any resulting adjustments within~~minimized travel, which has not resulted in a ~~year of the enactment date. See Note 10,~~ ~~Income Taxes,~~ ~~in the Notes~~material disruption to the ~~Consolidated Financial Statements~~Company’s operations. We have reopened our offices in a manner that protects the safety and well-being of our Perficient colleagues, while complying with federal, state and local government and health regulations. See “Part I – Item 1A – Risk Factors” of this Form 10-K for additional information regarding the ~~2017 Tax Act.~~

~~Revenue Recognition Standard Adopted January 1, 2018~~

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers~~, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 replaced most existing revenue recognition guidance in U.S. GAAP. In 2015, the FASB deferred the effective date of ASU No. 2014-09 by one year. In 2016, the FASB issued ASU No. 2016-08, ~~Principal versus Agent Considerations, ASU No. 2016-10,~~ ~~Identifying Performance Obligations and Licensing, ASU No. 2016-12,~~ ~~Narrow-Scope Improvements and Practical Expedients~~ ~~and ASU No. 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~, all of which further amended ASU No. 2014-09. The Company adopted the standard on January 1, 2018 using the modified retrospective method, which requires a cumulative-effect adjustment to the opening balance of retained earnings within stockholders’ equity, as will be fully presented in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018. The Company has determined that the most significant impact upon adoption is to third-party software and hardware revenue, which has primarily been recorded on a gross basis as the principal in the transaction through December 31, 2017 and will be presented on a net basis as the agent as of January 1, 2018. Had the Company historically presented third-party software and hardware revenues on a net basis, software and hardware revenues would have been $5.3 million, $6.4 million, and $5.5 million for the years ended December 31, 2017, 2016, and 2015, respectively. As the Company adopted ASU No. 2014-09 using the modified retrospective method, the gross versus net presentation will not impact the historical presentation, but will impact the 2018 presentation. Additionally, as the agent, revenue from multi-year sales of third-party software and support will be recognized upfront as the performance obligation is fulfilled, rather than annually as invoiced to the customer. The impact from this timing change is expected to be immaterial. Variable consideration related to service contracts, such as volume discounts and holdbacks, may be recognized earlier under the new standard, and the Company is currently evaluating thepotential impact of ~~this change~~health emergencies and pandemics on contracts that are open as of December 31, 2017. The adoption of ASU No. 2014-09 and its amendments will also result in additional disclosures around the nature and timing of performance obligations, contract costs, and deferred revenue, as well as significant judgments and practical expedients used by the Company.

Results of Operations

The following table summarizes our results of operations as a percentage of total revenues:

Revenues: 2017 2016 2015
Services revenues 89.5 % 85.9 % 86.9 %
Software and hardware revenues 8.0 10.3 9.8
Reimbursable expenses 2.5 3.8 3.3
Total revenues 100.0 100.0 100.0
Cost of revenues (depreciation and amortization, shown separately below):
Cost of services 57.3 56.2 55.2
Software and hardware costs 6.9 8.9 8.7
Reimbursable expenses 2.5 3.8 3.3
Total cost of revenues 66.7 68.9 67.2
Selling, general and administrative 22.3 20.8 21.1
Depreciation and amortization 4.1 3.7 3.9
Acquisition costs 0.3 0.3 0.3
Adjustment to fair value of contingent consideration 0.7 (0.3 ) 0.1
Income from operations 6.0 6.6 7.4
Net interest expense 0.4 0.3 0.4
Net other expense 0.0 0.0 0.1
Income before income taxes 5.6 6.3 6.9
Provision for income taxes 1.8 2.1 2.0
Net income 3.8 % 4.2 % 4.9 %


	Year Ended December 31,
	2022		2021		2020
Total revenues	100.0	%	100.0	%	100.0	%
Total cost of revenues (cost of services, exclusive of depreciation and amortization, shown separately below)	61.1		61.6		62.2
Selling, general and administrative	18.9		20.0		22.0
Depreciation and amortization	3.7		3.9		4.6
Acquisition costs	0.4		0.5		0.6
Adjustment to fair value of contingent consideration	—		—		1.6
Income from operations	15.9		13.9		9.0
Net interest expense	0.3		1.8		1.7
Loss on extinguishment of debt	—		3.8		0.7
Net other expense	—		0.1		—
Income before income taxes	15.6		8.2		6.6
Income tax provision	4.1		1.4		1.7
Net income	11.5	%	6.8	%	4.9	%

A discussion of changes in our financial condition and results of operations during the year ended December 31, 2021 compared to the year ended December 31, 2020 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022, which is available free of charge on the SEC’s website at www.sec.gov and on our investor relations website at www.perficient.com.

Year Ended December 31, ~~2017~~2022 Compared to Year Ended December 31, ~~2016~~2021

Revenues. Total revenues ~~decreased less than 1%~~increased 19% to ~~$485.3~~$905.1 million for the year ended December 31, ~~2017~~2022 from ~~$487.0~~$761.0 million for the year ended December 31, ~~2016.~~2021.


	Financial Results							Explanation for Increases (Decreases) Over Prior Year Period						Financial Results (in thousands)								Explanation for Increases Over Prior Year Period (in thousands)
	(in thousands)							(in thousands)						Year Ended December 31,				Total Increase Over Prior Year Period				Increase Attributable to Revenue Delivered by Resources of Acquired Companies				Increase Attributable to Revenue Delivered by Base Business Resources
	For the Year Ended December 31, 2017		For the Year Ended December 31, 2016		Total Increase (Decrease) Over Prior Year Period			Increase Attributable to Acquired Companies		Decrease Attributable to Base Business				2022		2021
Services Revenues	$	434,253	$	418,589	$	15,664		$	33,607	$	(17,943	)	Services Revenues	$	902,421	$	758,722	Total Increase Over Prior Year Period		$	143,699			$	59,146			$	84,553
Software and Hardware Revenues		38,642		49,954		(11,312	)		-		(11,312	)	Software and Hardware Revenues	2,641		2,305		336				3				333
Reimbursable Expenses		12,366		18,439		(6,073	)		440		(6,513	)
Total Revenues	$	485,261	$	486,982	$	(1,721	)	$	34,047	$	(35,768	)	Total Revenues	$	905,062	$	761,027	$	144,035			$	59,149			$	84,886

Services revenues increased 4%19% to ~~$434.3~~$902.4 million for the year ended December 31, ~~2017~~2022 from ~~$418.6~~$758.7 million for the year ended December 31, ~~2016.~~ ~~The increase in services revenues was primarily due to acquisitions.~~2021. Services revenues ~~attributable to our~~delivered by base business ~~decreased~~ ~~$17.9~~resources increased $84.6 million, ~~while services~~primarily driven by increased demand for our services. Services revenues ~~attributable to~~delivered by resources of acquired ~~companies~~companies was ~~$33.6~~$59.1 million, resulting in a total increase of ~~$15.7~~$143.7 million.

Software and hardware revenues ~~decreased 23%~~increased 15% to ~~$38.6~~$2.6 million for the year ended December 31, ~~2017~~2022 from ~~$50.0~~$2.3 million for the year ended December 31, ~~2016~~ ~~primarily due~~2021.

Total Cost of Revenues (cost of services, exclusive of depreciation and amortization, discussed separately below). Total cost of revenues increased 18% to ~~a decrease in initial and renewal software license sales.~~ ~~Reimbursable expenses decreased 33% to $12.4~~$552.7 million for the year ended December 31, ~~2017~~2022 from ~~$18.4~~$468.8 million for the year ended December 31, ~~2016~~ 2021 primarily ~~as a result of a~~due to higher ~~mix of projects performed~~headcount in ~~our offices~~response to higher services revenues and ~~lower media buy expenses passed through to customers of $2.6 million. We do not realize any profit on reimbursable expenses.~~

~~Cost of Revenues (exclusive of depreciation and amortization, discussed separately below).~~ ~~Cost of revenues decreased 4% to $323.7 million for the year ended December 31, 2017 from $335.7 million for the year ended December 31, 2016.~~ The decrease in cost of revenues is primarily related to software and hardware costs which decreased 24% to $33.3 million for the year ended December 31, 2017 from $43.6 million for the year ended December 31, 2016, as a result of the decrease in software license sales. Software and hardware costs as a percentage of software and hardware revenues was 86.2% for the year ended December 31, 2017 and 87.2% ~~for the year ended~~ ~~December 31, 2016~~. ~~Services revenue costs increased 2% to $278.1 million for the year ended December 31, 2017 from $273.7 million~~ ~~for the year ended December 31, 2016 due to an increase in service revenue as noted above~~. acquisitions.Services costs as a percentage of services revenues decreased to ~~64.0%~~61.2% for the year ended December 31, ~~2017~~2022 from ~~65.4%~~ 61.8% for the year ended December 31, 2016 primarily driven by improvements in the North American average bill rate and utilization, as well as a $1.0 million cost reduction related to labor incentives earned by the Company’s Louisiana and China operations. The average bill rate for our professionals decreased to $126 per hour for the year ended December 31, 2017 from $127 per hour for the year ended December 31, 2016 primarily due to the impact of a higher mix of lower bill rate offshore resources.2021.

Selling, General and Administrative. SG&A expenses increased 7%12% to ~~$108.2~~$171.1 million for the year ended December 31, ~~2017~~2022 from ~~$101.3~~$152.4 million for the year ended December 31, ~~2016~~ 2021 primarily due to ~~acquisitions completed during the first half of 2017~~ increased salary expense and ~~the fluctuations in expenses as detailed in the following table.~~sales-related costs. SG&A expenses, as a percentage of ~~total~~ revenues, ~~increased to 22.3%~~were 19% and 20% for the ~~year~~years ended December 31, ~~2017 from 20.8% for the year ended December 31, 2016.~~2022 and 2021, respectively.

Selling, General and Administrative Expense (in millions)
For the Year Ended
December 31, 2017

For the Year Ended
December 31, 2016
Increase (Decrease) Percentage Change
Sales-related costs $ 30.3 $ 28.4 $ 1.9 7 %
Salary expense 26.3 25.3 1.0 4
Stock compensation expense 9.3 8.9 0.4 4
Office costs 9.2 8.9 0.3 3
Marketing expense 5.9 5.6 0.3 5
Variable compensation expense 5.2 2.0 3.2 160
Recruiting expense 5.1 5.7 (0.6 ) (11 )
Bad debt expense 0.9 1.1 (0.2 ) (18 )
Other 16.0 15.4 0.6 4
Total $ 108.2 $ 101.3 $ 6.9 7 %


Selling, General and Administrative Expense	Year Ended December 31,				Increase (Decrease)		Percentage Change
(in millions)	2022		2021
Salary expense	$	61.9	53.3		$	8.6	16	%
Sales-related costs	21.5		19.0		2.5		13	%
Office costs	15.2		15.1		0.1		1	%
Stock compensation expense	14.9		13.7		1.2		9	%
Variable compensation expense	8.6		15.2		(6.6)		(43)	%
Travel & entertainment	2.6		0.8		1.8		225	%
Benefits expense	10.1		8.4		1.7		20	%
IT/Infrastructure	10.7		8.9		1.8		20	%
Bad debt expense	3.6		1.8		1.8		100	%
Other	22.0		16.2		5.8		36	%
Total	$	171.1	$	152.4	$	18.7	12	%

Depreciation. Depreciation expense ~~decreased 3%~~increased 33% to ~~$4.7~~$8.5 million for the year ended December 31, ~~2017~~2022 from ~~$4.9~~$6.4 million for the year ended December 31, ~~2016.~~ ~~The decrease in depreciation expense is primarily attributable to certain property and equipment becoming fully depreciated.~~ 2021. Depreciation expense as a percentage of ~~total~~ revenues was ~~1.0%~~0.9% for ~~each of~~ the ~~years~~year ended December 31, ~~2017~~2022 and ~~2016.~~0.8% for the year ended December 31, 2021.

Amortization. Amortization expense increased ~~12%~~5% to ~~$15.0~~$24.5 million for the year ended December 31, ~~2017~~2022 from ~~$13.4~~$23.5 million for the year ended December 31, ~~2016.~~ The increase in amortization expense was due to the addition of intangible assets from the 2016 and 2017 acquisitions, partially offset by intangible assets from previous acquisitions becoming fully amortized.2021. Amortization expense as a percentage of total revenues was 2.7% for the year ended December 31, 2022 and 3.1% for the year ended December 31, ~~2017 and 2.7%~~ ~~for~~2021. The increase in amortization expense was primarily due to the ~~year ended December 31, 2016~~.addition of intangibles from our two acquisitions in 2022.

Acquisition Costs. Acquisition-related costs of ~~$1.4~~$3.7 million were incurred during ~~2017~~2022 primarily related to the acquisitions of Inflection Point and Ameex compared to ~~$1.3~~$3.8 million during ~~2016.~~2021 primarily related to the acquisitions of Talos LLC, Talos Digital LLC, Talos Digital SAS and TCOMM SAS (“Talos”) and Izmul S.A. (“Overactive”). Costs were incurred for legal, accounting, tax, investment bank and advisor fees, and valuation services performed by third parties in connection with merger and acquisition-related activities.

Adjustment to Fair Value of Contingent Consideration. An ~~unfavorable~~ adjustment of ~~$3.2~~$0.3 million was recorded during the year ended December 31, ~~2017~~ 2022 which represents the net impact of the fair market value adjustments to the ~~Clarity, RAS,~~Talos and ~~Bluetube~~Overactive revenue and earnings-based contingent consideration liabilities, ~~in addition to the accretion of the fair value estimate for the revenue and earnings-based contingent consideration related to the acquisition of Bluetube and Clarity.~~ ~~A favorable~~as well as accretion. An adjustment of ~~$1.7~~$0.2 million was recorded during the year ended December 31, ~~2016~~ 2021 which represents the net impact of the fair market value adjustments to the ~~Enlighten~~MedTouch LLC (“Medtouch”), Catalyst Networks, Inc. (“Brainjocks”), and Productora de Software S.A.S. (“PSL”) revenue and earnings-based contingent consideration liability partially offset by the accretion of the fair value estimate for the revenue and earnings-based contingent consideration related to the acquisition of Zeon, Market Street, Enlighten and Bluetube.liabilities, as well as accretion.

~~Provision for Income Taxes~~. ~~We provide for federal, state, and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses. The effective income tax rate~~Net Interest Expense. Net interest expense decreased to ~~31.5% for the year ended December 31, 2017 from 32.9% for the year ended December 31, 2016.~~ The decrease in the effective rate is primarily due to the effects of certain foreign withholding taxes, a foreign toll charge on historic foreign earnings, and a revaluation of ending deferred income tax caused by passage of the 2017 Tax Act. These favorable items were partially offset by an increase in our unrecognized tax benefits. See Note 10, ~~Income Taxes, in the Notes to the Consolidated Financial Statements for additional information regarding the 2017 Tax Act.~~

~~Year Ended December 31, 2016 Compared to Year Ended December 31, 2015~~

~~Revenues.~~ ~~Total revenues increased 3% to $487.0~~$3.2 million for the year ended December 31, ~~2016~~2022 from ~~$473.6~~$14.1 million for the year ended December 31, ~~2015.~~2021. The decrease in net interest expense was primarily due to the adoption of Accounting Standards Update (“ASU”) 2020-06. Prior period amounts have not been adjusted due to the adoption of ASU 2020-06 under the modified retrospective method.

Financial Results Explanation for Increases (Decreases) Over Prior Year Period
(in thousands) (in thousands)

For the Year Ended
December 31, 2016
For the Year Ended December 31, 2015 Total Increase Over Prior Year Period
Increase Attributable to
Acquired Companies

Decrease Attributable
to Base Business

Services Revenues $ 418,589 $ 411,469 $ 7,120 $ 16,405 $ (9,285 )
Software and Hardware Revenues 49,954 46,622 3,332 4,226 (894 )
Reimbursable Expenses 18,439 15,530 2,909 4,427 (1,518 )
Total Revenues $ 486,982 $ 473,621 $ 13,361 $ 25,058 $ (11,697 )

~~Services revenues increased 2% to $418.6 million for~~Loss on Extinguishment of Debt. During the year ended December 31, ~~2016 from $411.5 million for~~2021, the year ended December 31, 2015. The increase in services revenues was primarily due to acquisitions. Services revenues attributable to our base business decreased $9.3 million while services revenues attributable to acquired companies was $16.4 million,Company repurchased the remaining portion of the outstanding Convertible Senior Notes Due 2023 (“2023 Notes”) and a portion of the outstanding 2025 Notes, resulting in a ~~total increase~~loss of ~~$7.1 million.~~$29.0 million.

Software and hardware revenues increased 7% to $50.0 million for the year ended December 31, 2016 from $46.6 million for the year ended December 31, 2015 primarily due to acquisitions. Reimbursable expenses increased 19% to $18.4 million for the year ended December 31, 2016 from $15.5 million for the year ended December 31, 2015. The increase in reimbursable expenses is primarily due to the acquisition of Enlighten in which media buy expenses are passed through to customers. We do not realize any profit on reimbursable expenses.

~~Cost of Revenues (exclusive of depreciation and amortization, discussed separately below).~~ Cost of revenues increased 5% to $335.7 million for the year ended December 31, 2016 from $318.4 million for the year ended December 31, 2015. The increase in cost of revenues is primarily related to costs associated with services revenues which increased 5% to $273.7 million for the year ended December 31, 2016 from $261.7 million for the year ended December 31, 2015 due to an increase in revenue as noted above. Services costs as a percentage of services revenues increased to 65.4% for the year ended December 31, 2016 from 63.6% for the year ended December 31, 2015 primarily driven by a decrease in the average bill rate of our professionals, in addition to higher salaries and subcontractor costs. The average bill rate decreased to $127~~per hour for the year ended December 31, 2016 from $134 per hour for the year ended December 31, 2015~~ primarily due to the impact of a higher mix of lower bill rate offshore resources combined with a 1% reduction in the North American employee bill rate. Software and hardware costs increased 6% to $43.6 million for the year ended December 31, 2016 from $41.2 million for the year ended December 31, 2015, as a result of the increase in software license sales. Software and hardware costs as a percentage of software and hardware revenues was 87.2% for the year ended December 31, 2016 and 88.3% ~~for the year ended December 31, 2015.~~

~~Selling, General and Administrative.~~ SG&A expenses increased 1% to $101.3 million for the year ended December 31, 2016 from $100.0 million for the year ended December 31, 2015 primarily due to acquisitions completed during the second half of 2015 and October 2016 and the fluctuations in expenses as detailed in the following table. SG&A expenses, as a percentage of total revenues, decreased to 20.8% for the year ended December 31, 2016 from 21.1% for the year ended December 31, 2015.

Selling, General and Administrative Expense (in millions)
For the Year Ended
December 31, 2016

For the Year Ended
December 31, 2015
Increase (Decrease) Percentage Change
Sales-related costs $ 28.4 $ 29.1 $ (0.7 ) (2 )%
Salary expense 25.3 23.9 1.4 6
Stock compensation expense 8.9 8.7 0.2 2
Office costs 8.9 8.2 0.7 9
Recruiting expense 5.7 6.0 (0.3 ) (5 )
Marketing expense 5.6 5.6 0.0 0
Variable compensation expense 2.0 3.4 (1.4 ) (41 )
Bad debt expense 1.1 0.4 0.7 175
Other 15.4 14.7 0.7 5
Total $ 101.3 $ 100.0 $ 1.3 1 %

~~Depreciation~~. Depreciation expense increased 8% to $4.9 million for the year ended December 31, 2016 from $4.5 million for the year ended December 31, 2015. The increase in depreciation expense is primarily attributable to an increase in capital expenditures to support our growth. Depreciation expense as a percentage of total revenues was 1.0% and 0.9% for the years ended December 31, 2016 and 2015, respectively.

~~Amortization.~~ Amortization expense decreased 3% to $13.4 million for the year ended December 31, 2016 from $13.8 million for the year ended December 31, 2015. The decrease in amortization expense was due to intangible assets related to previous acquisitions becoming fully amortized partially offset by the addition of intangible assets from the 2015 and 2016 acquisitions. Amortization expense as a percentage of total revenues was 2.7% for the year ended December 31, 2016 and 2.9% for the year ended December 31, 2015.

~~Acquisition Costs.~~ Acquisition-related costs of $1.3 million were incurred during 2016 compared to $1.2 million during 2015. Costs were incurred for legal, accounting, tax, investment bank and advisor fees, and valuation services performed by third parties in connection with merger and acquisition-related activities.

~~Adjustment to Fair Value of Contingent Consideration.~~ A favorable adjustment of $1.7 million was recorded during the year ended December 31, 2016 which represents the net impact of the fair market value adjustments to the Enlighten revenue and earnings-based contingent consideration liability partially offset by the accretion of the fair value estimate for the revenue and earnings-based contingent consideration related to the acquisition of Zeon, Market Street, Enlighten and Bluetube. An adjustment of $0.4 million was recorded during the year ended December 31, 2015 for the accretion of the fair value estimate for the revenue and earnings-based contingent consideration related to the acquisitions of the Zeon, Market Street, and Enlighten.

Provision for Income ~~Taxes.~~Taxes. We provide for federal, state, and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses. The effective income tax rate increased to ~~32.9%~~25.9% for the year ended December 31, ~~2016~~2022 from ~~29.9%~~16.6% for the year ended December 31, ~~2015.~~2021. The increase in the effective rate is primarily due to ~~an additional~~a decrease in stock compensation deductions and a decrease in research ~~and development tax~~ credit ~~recorded during the year ended December 31, 2015 related~~benefit compared to the finalization of the Company’s 2014 research and development tax assessment. The increase in the effective rate year ended December 31, 2016 was partially offset by an incremental research and development tax credit related to the current year and a favorable impact related to the early adoption of ASU No. 2016-09. ~~See Note 2,~~ ~~Summary of Significant Accounting Policies-Recent Accounting Pronouncements, in the Notes to Consolidated Financial Statements for additional information regarding the adoption of ASU No. 2016-09.~~prior year.

Liquidity and Capital Resources

Selected measures of liquidity and capital resources are as follows (in millions):


	As of December 31,							December 31,
	2017		2016		2015			2022		2021		2020
Cash and cash equivalents (1)	$	6.3	$	10.1	$	8.8	Cash and cash equivalents (1)	$	30.1	$	24.4	$	83.2
Working capital (including cash and cash equivalents) (2)	$	67.9	$	76.4	$	83.2	Working capital (including cash and cash equivalents) (2)	$	126.5	$	94.8	$	97.6
Amounts available under credit facilities	$	69.7	$	93.0	$	69.0	Amounts available under credit facilities	$	199.8	$	199.8	$	124.8

(1)The balance at December 31, ~~2017~~2022 includes ~~$3.9~~ $7.9 million held by ~~our Canadian, Indian and United Kingdom~~certain foreign subsidiaries which is not available to fund domestic operations unless deemed repatriated. We currently do not plan or foresee a need to repatriate such funds. The balance also includes ~~$1.8~~$7.8 million in cash held ~~in our Chinese subsidiary. During the year ended~~ by certain other foreign subsidiaries which is available to fund domestic operations. The balance at December 31, ~~2017, the Company determined that the Chinese subsidiary’s earnings were no longer permanently reinvested and repatriated a total of approximately $9.6~~2021 includes $6.1 million held by certain foreign subsidiaries which is not available to fund domestic operations unless deemed repatriated. The balance also includes $5.2 million in cash held by certain other foreign subsidiaries which is available to ~~the U.S. parent~~fund domestic operations. The balance at December 31, 2020 includes $5.1 million held by certain foreign subsidiaries which is not available to fund domestic operations unless deemed repatriated. The balance also includes $7.9 million in ~~the second and third quarters of 2017. See Note 10,~~ ~~Income Taxes, in the Notes~~cash held by certain other foreign subsidiaries which is available to ~~Consolidated Financial Statements for a discussion of the Company’s repatriation of earnings from the Company’s Chinese subsidiary.~~fund domestic operations.

(2)Working capital is total current assets less total current ~~liabilities~~liabilities.

Net Cash Provided Byby Operating Activities

Net cash provided by operating activities for the year ended December 31, ~~2017~~2022 was ~~$55.2~~$118.1 million compared to ~~$63.3 million and $44.7~~$84.9 million for the ~~years~~year ended December 31, ~~2016 and 2015, respectively.~~2021. For the year ended December 31, ~~2017,~~2022, the components of operating cash flows were net income of ~~$18.6~~$104.4 million plus ~~net~~net non-cash charges of ~~$33.2~~$51.5 million and ~~reductions in~~ net operating ~~assets~~asset investments of ~~$3.5~~$37.8 million. The ~~primary~~ primary components of operating cash flows for the year ended December 31, ~~2016~~2021 were net income of ~~$20.5~~$52.1 million plus net non-cash charges of ~~$34.9~~$79.0 million and ~~reductions in~~ net operating ~~assets~~asset investments of $7.9 million, primarily driven by reductions in accounts receivable. The primary components of operating cash flows for the year ended December 31, 2015 were net income of $23.0 million plus net non-cash charges of $31.9 million and investments in net operating assets of $10.2$46.2 million.

Net Cash Used in Investing Activities

During the year ended December 31, ~~2017,~~2022, we used ~~$37.9~~$71.9 million for acquisitions and ~~$4.3~~$9.9 million to purchase property and equipment and to develop software. During the year ended December 31, ~~2016,~~2021, we used ~~$7.5~~$108.8 million for acquisitions and ~~$6.1~~$10.2 million to purchase property and equipment and to develop software. During the year ended December 31, 2016, we also purchased and subsequently sold short-term investments of $0.9 million and settled $2.8 million of Company-owned life insurance (“COLI”) policies, the proceeds of which were used to fund new COLI policies. software.

Net Cash Used in Financing Activities

For the year ended December 31, ~~2015,~~2022, we ~~used $37.8 million for acquisitions (net of cash acquired) and $4.4 million to purchase property and equipment and to develop software.~~

~~Net Cash Provided By Financing Activities~~

~~For the year ended December 31, 2017, we received proceeds of $275.0~~drew down $69.0 million from our line of credit, ~~and $0.1 million in proceeds from the sales of stock through the Employee Stock Purchase Plan. In 2017, we made payments of $252.0~~repaid $69.0 million on our line of credit, used ~~$32.6~~$18.5 million to repurchase shares of our common stock through the stock repurchase program, and used ~~$4.2~~$11.7 million to remit taxes withheld as part of a net share settlement of restricted stock vesting. We also ~~used $3.3 million to settle the contingent consideration for the purchase of Market Street, Enlighten and Bluetube and paid $0.4 million in fees related to our credit facility.~~ ~~For the year ended December 31, 2016, we~~ received proceeds ~~of $208.5 million~~ from ~~our line of credit and $0.2 million in proceeds from the~~ sales of stock through the Employee Stock Purchase ~~Plan. In 2016,~~Plan of $1.1 million. For the year ended December 31, 2021, we ~~made payments~~received $369.5 million of ~~$232.5~~proceeds from the issuances of the 2026 Notes, net of issuance costs, received $23.4 million of proceeds from the sales of net-share-settled warrants and paid $66.1 million for privately negotiated convertible note hedge transactions. We also used $368.7 million to repurchase a portion of the 2023 Notes and a portion of the 2025 Notes, received $381.3 million related to the sale of privately negotiated convertible hedge transactions for the 2023 Notes and 2025 Notes, and paid $303.9 million for the repurchase of net-share-settled warrants related to the 2023 Notes and 2025 Notes. We drew down $74.0 million from our line of credit, repaid $74.0 million on our line of credit, used ~~$18.0~~$21.7 million to repurchase shares of our common stock through the stock repurchase program, and used $3.7 million to remit taxes withheld as part of a net share settlement of restricted stock vesting. We also used $2.1 million to settle the contingent consideration for the purchase of Zeon and paid $0.2 million in fees related to our credit facility. For the year ended December 31, 2015, we received proceeds of $266.5 million from our line of credit and we realized a tax benefit of $1.4 million related to the vesting of stock awards and stock option exercises plus $0.3 million in proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan. In 2015, we made payments of $264.5 million on our line of credit, used $5.0$13.5 million to remit taxes withheld as part of a net share settlement of restricted stock vesting, ~~used $2.8~~$24.1 million to ~~repurchase shares~~settle contingent consideration for the purchase of ~~our common~~MedTouch, Brainjocks, and PSL, and paid $0.6 million for credit facility financing fees. We also received proceeds from sales of stock through the ~~stock repurchase program and paid $0.2 million in fees related to our credit facility.~~Employee Stock Purchase Plan of $0.6 million.

Availability of Funds from Credit Facility

On ~~June 9, 2017, we~~May 7, 2021, the Company entered into aan Amended and Restated Credit Agreement ~~as amended~~ (the ~~“Credit~~“2021 Credit Agreement”), with Wells Fargo Bank, National Association, as administrative agent and the other lenders parties thereto. The Credit Agreement replaces the Second Amended and Restated Credit Agreement dated as of July 31, 2013 between the Company, Silicon Valley Bank and the other lenders and signatories thereto (the “Prior Credit Agreement”). The new credit facility was used to repay amounts due under the Prior Credit Agreement and will be used for working capital and general corporate purposes. In connection with the new agreement, the Company wrote off $0.2 million in unamortized credit facility fees associated with the Prior Credit Agreement, which was included in “Net interest expense” on the Consolidated Statements of Operations during the year ended December 31, 2017. The2021 Credit Agreement provides for revolving credit borrowings up to a maximum principal amount of ~~$125.0~~$200.0 million, subject to a commitment increase of $75.0 ~~million.~~million. All outstanding amounts owed under the 2021 Credit Agreement become due and payable no later than the final maturity date of ~~June 9,~~May 7, 2026. As of December 31, 2022 and 2021, there were no outstanding

balances under the 2021 Credit Agreement. The Company incurred $0.6 million of deferred finance fees as a result of the 2021 Credit Agreement during the twelve months ended December 31, 2021. The Company did not incur any additional deferred finance fees during the twelve months ended December 31, 2022.

The 2021 Credit Agreement also allows for the issuance of letters of credit in the aggregate amount of up to $10.0 million at any one time; outstanding letters of credit reduce the credit available for revolving credit borrowings. As of December 31, ~~2017,~~2022, the Company had ~~one~~two outstanding ~~letter~~letters of credit for ~~$0.3~~$0.2 million. Substantially all of the Company’s assets are pledged to secure the credit facility.

Borrowings under the 2021 Credit Agreement bear interest at the Company’s option ofof the prime rate ~~(4.50%~~(7.50% on December 31, ~~2017)~~2022) plus a margin ranging from 0.00% to ~~0.50%~~1.00% or one-month LIBOR ~~(1.56%~~(4.39% on December 31, ~~2017)~~2022) plus a margin ranging from 1.00% to ~~1.75%~~2.00%. The Company incurs an annual commitment fee of 0.15% to 0.20% on the unused portion of the line of credit. The additional margin amount and annual commitment fee are dependent on the level of outstanding borrowings. As of December 31, ~~2017,~~2022, the Company had ~~$69.7~~$199.8 million of unused borrowing capacity.

At December 31, ~~2017,~~2022, we were in compliance with all covenants under the 2021 Credit Agreement.

Stock Repurchase Program

Prior to ~~2018, our~~2022, the Company’s Board of Directors authorized the repurchase of up to ~~$135.0~~$315.0 million of ~~our~~Company common ~~stock.~~stock through a stock repurchase program expiring December 31, 2022. On ~~February 20, 2018, our~~October 25, 2022, the Board of Directors authorized ~~the~~a $60.0 million expansion of ~~our~~the Company’s stock repurchase program ~~by authorizing the repurchase of up to an additional $25.0 million of our common stock~~ for a total repurchase program of ~~$160.0~~$375.0 million and extended the expiration date of the program from December 31, 2022 to December 31, ~~2019.~~ The2024. The program could be suspended or discontinued at any time, based on market, economic, or business conditions. The timing and amount of repurchase transactions will be determined by ~~our~~ management based on its evaluation of market conditions, share price, and other factors. Since the program’s inception on August 11, 2008, the Company has repurchased approximately $279.8 million (16.3 million shares) of outstanding common stock through December 31, 2022.

From time to time, we establish a written trading plan in accordance with Rule 10b5-1 of the Exchange Act, pursuant to which we make a portion of our stock repurchases. Additional repurchases will be at times and in amounts as the Company deems appropriate and will be made through open market transactions in compliance with Rule 10b-18 of the Exchange Act, subject to market conditions, applicable legal requirements, and other factors.

~~Since the program’s inception on August 11, 2008, we have repurchased approximately $135.0 million (12.4 million shares) of our outstanding common stock~~ ~~through December 31, 2017.~~

Cash Requirements from Contractual Obligations

For the year ended December 31, ~~2017,~~2022, there were no material changes outside the ordinary course of business in lease obligations or other contractual obligations. See Note ~~12,~~ ~~Commitments and Contingencies,~~16, Leases, in the Notes to Consolidated Financial Statements for further description of our contractual obligations.

~~As of December 31,~~ ~~2017, there was $55.0 million~~There were no balances outstanding under the ~~Credit Agreement as compared to $32.0 million outstanding under the Prior~~2021 Credit Agreement as of December 31, ~~2016~~. 2022 and 2021. As of December 31, 2022, there were in aggregate $394.6 million of outstanding Notes, net of unamortized debt discount and issuance costs, compared to $326.1 million as of December 31, 2021. The amounts ~~under the Credit Agreement~~ are classified as “~~Long-term debt~~”“Long-term debt” within the Consolidated Balance Sheets as of December 31, 2022 and 2021. The 2026 Notes will become due and payable no later than the final maturity date of ~~June 9, 2022.~~November 15, 2026. The 2025 Notes will become due and payable no later than the final maturity date of August 1, 2025.

We have incurred commitments to make future payments under contracts such as leases, the 2021 Credit Agreement and the ~~Credit Agreement.~~ Notes, as well as noncancellable purchase obligations, which primarily relate to multi-year third-party software sales and internally used software, all of which have some inherent uncertainty as to the amount and timing of payments and were reflected on our Consolidated Balance Sheet as of December 31, 2022. Maturities under these contracts are set forth in the following table as of December 31, ~~2017~~2022 (in thousands):

Payments Due by Period
Contractual Obligations Total
Less Than
1 Year

1-3
Years

3-5
Years

More Than
5 Years

Operating lease obligations $ 29,484 $ 6,535 $ 12,611 $ 7,368 $ 2,970
Software license purchase obligation 835 835 - - -
Total debt 55,000 - - 55,000 -
Total $ 85,319 $ 7,370 $ 12,611 $ 62,368 $ 2,970


	Payments Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Operating lease obligations	$	30,993	$	8,151	$	13,486	$	6,267	$	3,089
Total debt (1)	403,258		—		23,258		380,000		—
Purchase obligations	9,207		4,008		4,887		312		—
Estimated fair value of contingent consideration liability (Note 9)	32,702		32,702		—		—		—
Total	$	476,160	$	44,861	$	41,631	$	386,579	$	3,089

(1)Debt obligations include the principal amount of the Notes, but exclude interest payments to be made under the Notes.

Conclusion

If our capital is insufficient to fund our activities in either the short- or long-term, we may need to raise additional funds. In the ordinary course of business, we may engage in discussions with various persons in connection with additional financing. If we raise additional funds through the issuance of equity securities, our existing stockholders’ percentage ownership will be diluted. These equity securities may also have rights superior to our common stock. Additional debt or equity financing may not be available when needed or on satisfactory terms. If adequate funds are not available on acceptable terms, we may be unable to expand our services, respond to competition, pursue acquisition opportunities, or continue our operations.

Of the total cash and cash equivalents reported on the Consolidated Balance Sheet as of December 31, ~~2017~~2022 of ~~$6.3~~$30.1 million, approximately ~~$3.9~~$7.9 million was held by certain foreign subsidiaries where the ~~Company’s Canadian, Indian and United Kingdom subsidiaries and is~~Company has considered the earnings to be indefinitely reinvested in those operations. The Company is able to fund its liquidity needs outside of these subsidiaries, primarily through cash flows generated by domestic operations and our credit facility. Therefore, the Company has no current plans to repatriate cash from these foreign subsidiaries in the foreseeable future. As of December 31, ~~2017,~~2022, the aggregate unremitted earnings of the Company’s foreign subsidiaries for which a deferred income tax liability has not been recorded was approximately ~~$4.9~~$19.8 million, and the unrecognized deferred tax liability on unremitted earnings was approximately ~~$0.2~~$2.1 million. ~~See Note 10,~~ ~~Income Taxes~~As of December 31, 2022, ~~in the Notes to Consolidated Financial Statements for a discussion~~$7.8 million of the ~~Company’s repatriation of~~total cash and cash equivalents was held by certain other foreign subsidiaries where the Company has determined that the earnings from ~~the Company’s Chinese subsidiary.~~these subsidiaries are not permanently reinvested and may repatriate available earnings from these subsidiaries from time to time.

We believe that ~~the~~our currently available funds, access to capital from our credit facility, and cash flows generated from operations will be sufficient to meet our working capital requirements and other capital needs for the next 12 months.

However, while the Company did not experience a material impact on the business, operations or financial results from health emergencies and pandemics during the year ended December 31, 2022, health emergencies and pandemics may materially and adversely affect our business, operations and financial results, including our cash flows, in the future as a result of, among other things, weaker customer demand, requests for discounts or extended payment terms, customer bankruptcies, supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors. Given the uncertain duration and scope of health emergencies and pandemics and the related impact on economic and financial markets, we cannot reliably predict or estimate the impact on our business, operations or financial results. See “Part I – Item 1A – Risk Factors” of this Form 10-K for additional information regarding the potential impact of health emergencies and pandemics on the Company.

Critical Accounting Policies and Estimates

Our accounting policies are fully described in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements. We believe our most critical accounting policies include revenue recognition, purchase accounting and related fair value measurements, convertible debt, and income taxes.

Revenue Recognition

The Company’s revenues consist of services and ~~Allowance~~software and hardware sales. In accordance with ASC Topic 606, Revenue from Contracts with Customers, revenues are recognized when control of services or goods are transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for ~~Doubtful Accounts~~those services or goods.

~~Service~~Services revenues are primarily ~~derived from~~comprised of professional services ~~provided~~that include developing, implementing, automating and extending business processes, technology infrastructure, and software applications. The Company’s professional services

span multiple industries, platforms and solutions; however, the Company has remained relatively diversified and does not believe that it has significant revenue concentration within any single industry, platform or solution.

Professional services revenues are recognized over time as services are rendered. Most projects are performed on a time and materials basis, while a portion of revenues is derived from projects performed on a fixed fee or fixed fee percent complete basis. For time and material contracts, ~~service~~ revenues are generally recognized and ~~billed~~invoiced by multiplying the number of hours expended in the performance of the contract by the ~~established billing~~hourly rates. For fixed fee ~~projects, service~~contracts, revenues are generally recognized and invoiced by multiplying the fixed rate per time period established in the contract by the number of time periods elapsed. For fixed fee percent complete contracts, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated ~~hours. Amounts invoiced~~hours, and collected in excess of revenues recognized are classified as deferred revenues. In conjunction with services provided, the Company occasionally receives referral fees under partner programs. These referral fees are recognized when earned and recorded within service revenues. Revenues from software and hardware sales are generally recorded on a gross basis considering the Company’s role as a principal in the transaction. Revenues from sales of third-party software-as-a-service arrangements where the Company is not the primary obligor are recorded on a net basis. On many projects the Company is also reimbursed for out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of revenues. We did not realize any profit on reimbursable expenses.

Clients are typically billed monthly for services provided during that month, but can be billed on a more or less frequent basis as determined by the contract. If the time ~~and expenses are worked/incurred~~is worked and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as ~~unbilled~~ revenue once the Company verifies all other revenue recognition criteria have been ~~met.~~

~~Revenues~~met, and the amount is classified as a receivable as the right to consideration is unconditional at that point. Amounts invoiced in excess of revenues recognized are ~~recognized when the following criteria~~contract liabilities, which are met: (1) persuasive evidence of the customer arrangement exists; (2) fees are fixed and determinable; (3) delivery and acceptance have occurred; and (4) collectability is deemed probable. The Company’s policy for revenue recognition in instances where multiple deliverables are sold contemporaneously to the same customer is in accordance with the FASB Accounting Standards Codification (“ASC”) Subtopic 985-605, ~~Software – Revenue Recognition,~~ ~~ASC Subtopic 605-25,~~ ~~Revenue Recognition – Multiple-Element Arrangements, and ASC Section 605-10-S99 (Staff Accounting Bulletin Topic 13,~~ ~~Revenue Recognition~~). Specifically, if the Company enters into contracts for the sale of services and software or hardware, then the Company evaluates whether each element should be accounted for separately by considering the following criteria: (1) whether the deliverables have value to the client on a stand-alone basis; and (2) whether delivery or performance of the undelivered item or items is considered probable and substantiallyclassified as deferred revenues in the ~~control of the Company (only if the arrangement includes a general right of return related to the delivered item). Further, for sales of software~~Consolidated Balance Sheet. The term between invoicing and services, the Company also evaluates whether the services are essential to the functionality of the software and if it has fair value evidence for each deliverable. If the Company has concluded that the separation criteria are met, then it accounts for each deliverable in the transaction separately, based on the relevant revenue recognition policies. Generally, all deliverables of the Company’s multiple element arrangements meet these criteria and are accounted for separately, with the arrangement consideration allocated among the deliverables using vendor specific objective evidence of the selling price. As a result, the Company generally recognizes software and hardware sales upon delivery to the customer and services consistent with the policies described herein.

~~There are no significant cancellation or termination-type provisions for the Company’s software and hardware sales.~~payment due date is not significant. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract.

~~The Company~~ Certain contracts may ~~provide multiple services under the terms of an arrangement and is required to assess whether one~~include volume discounts or ~~more units of accounting~~holdbacks, which are ~~present. Service fees are typically~~ accounted for as ~~one unit~~variable consideration, but are not typically significant. The Company estimates variable consideration based on historical experience and forecasted sales and includes the variable consideration in the transaction price.

Other services revenues are comprised of ~~accounting,~~hosting fees, partner referral fees, maintenance agreements, training and internally developed software-as-a-service (“SaaS”) sales. Revenues from hosting fees, maintenance agreements, training and internally developed SaaS sales are generally recognized over time using a time-based measure of progress as ~~fair value evidence~~services are rendered. Partner referral fees are recorded at a point in time upon meeting specified requirements to earn the respective fee.

On many professional service projects, the Company is also reimbursed for ~~individual tasks~~out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of the transaction price of the respective professional services contract and are invoiced as the expenses are incurred. The Company structures its professional services arrangements to recover the cost of reimbursable expenses without a markup.

Software and hardware revenues are comprised of third-party software and hardware resales, in which the Company is considered the agent, and sales of internally developed software, in which the Company is considered the principal. Third-party software and hardware revenues are recognized and invoiced when the Company fulfills its obligation to arrange the sale, which occurs when the purchase order with the vendor is executed and the customer has access to the software or ~~milestones~~the hardware has been shipped to the customer. Internally developed software revenues are recognized and invoiced when control is transferred to the customer, which occurs when the software has been made available to the customer and the license term has commenced. 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. There are no significant cancellation or termination-type provisions for the Company’s software and hardware sales, and the term between invoicing and payment due date is not ~~available. The Company follows~~significant.

Arrangements with clients may contain multiple promises such as delivery of software, hardware, professional services or post-contract support services. These promises are accounted for as separate performance obligations if they are distinct. For arrangements with clients that contain multiple performance obligations, the ~~guidelines discussed above in determining revenues; however, certain judgments~~transaction price is allocated to the separate performance obligations based on estimated relative standalone selling price, which is estimated by the expected cost plus a margin approach, taking into consideration market conditions and ~~estimates~~competitive factors. Because contracts that contain multiple performance obligations are ~~made and used~~typically short term due to ~~determine revenues recognized in any accounting period. If estimates are revised, material differences may result in~~ the ~~amount and timing~~contract cancellation provisions, the allocation of ~~revenues recognized for~~the transaction price to the separate performance obligations is not considered a ~~given period.~~significant estimate.

Revenues are presented net of taxes assessed by governmental authorities. Sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate.

Allowance for doubtful accounts is based upon specific identification of likely and probable losses. Each accounting period, accounts receivable is evaluated for risk associated with a client’s inability to make contractual payments, historical experience and other currently available information. Billed and unbilled receivables that are specifically identified as being at risk are provided for with a charge to revenue or bad debts as appropriate in the period the risk is identified. Considerable judgment is used in assessing the ultimate realization of these receivables, including reviewing the financial stability of the client, evaluating the successful mitigation of service delivery disputes, and gauging current market conditions. If the evaluation of service delivery issues or a client’s ability to pay is incorrect, future reductions to revenue or bad debt expense may be incurred.

Purchase Accounting and Related Fair Value Measurements

The Company allocates the purchase price, including contingent consideration, of our acquisitions to the assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the date of acquisition. Such fair market value assessments are primarily based on third-party valuations using assumptions developed by management that require significant judgments and estimates that can change materially as additional information becomes available. The purchase price allocated to intangibles is based on unobservable factors, including but not limited to, projected revenues, expenses, customer attrition rates, royalty rates, a weighted average cost of capital, among others. The weighted average cost of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the ~~risk~~risks inherent in the cash flows. The approach to valuing the initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected revenues and expenses over the term of the contingent earn-out period, discounted for the period over which the contingent consideration is ~~measured.~~measured, and volatility rates. Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation. The Company finalizes the purchase price allocation ~~within 12 months of the acquisition date as~~once certain initial accounting valuation estimates are ~~finalized.~~

finalized, and no later than 12 months following the acquisition date.

For acquisitions during the year ended December 31, 2022, key unobservable inputs included revenue growth rates, which ranged from 16% to 43%, and volatility rates, which were 9% for revenue and ranged from 22% to 23% for earnings. For acquisitions during the year ended December 31, 2021, key observable inputs included revenue growth rates, which ranged from 36% to 76%, and volatility rates, which ranged from 5% to 6% for revenue and were 17% for earnings. An increase in future revenue and earnings may result in a higher estimated fair value while a decrease in future revenue and earnings may result in a lower estimated fair value of the contingent consideration liabilities. Remeasurements to fair value are recorded in adjustment to fair value of contingent consideration in the Consolidated Statements of Operations. Refer to Note 7, Balance Sheet Components, for the estimated fair value of the contingent consideration liabilities as of December 31, 2022 and 2021.

Convertible Debt

In accordance with accounting for debt with conversion and other options prior to the adoption of ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), the Company bifurcated the principal amount of the Notes into liability and equity components. The initial liability component of the Notes was valued based on the contractual cash flows discounted at an appropriate comparable market non-convertible debt borrowing rate at the date of issuance. The equity component representing the conversion option and calculated as the residual amount of the proceeds was recorded as an increase in additional paid-in capital within stockholders’ equity, partially offset by the associated deferred tax effect. The amount recorded within additional paid-in capital is not to be remeasured as long as it continues to meet the conditions for equity classification. Prior to 2022, the resulting debt discount was being amortized to interest expense using the effective interest method over the period from the issuance date through the contractual maturity date. Prior to 2022, the Company utilized the treasury stock method to calculate the effects of the Notes on diluted earnings per share.

In connection with the issuance of the Notes, the Company entered into the Notes Hedges with the Option Counterparties. The Notes Hedges provide the Company with the option to acquire, on a net settlement basis, shares of common stock equal to the number of shares of common stock that notionally underlie the Notes and corresponds to the conversion price of the Notes. If the Company elects cash settlement and exercises the Notes Hedges, the aggregate amount of cash received from the Option Counterparties will cover the aggregate amount of cash that the Company would be required to pay to the holders of the Notes, less the principal amount thereof. The Notes Hedges do not meet the criteria for separate accounting as a derivative as they are indexed to the Company’s stock and are accounted for as freestanding financial instruments. The Notes Hedges were recorded as a reduction in additional paid-in capital within stockholders’ equity, partially offset by the associated deferred tax effect.

Additionally, in connection with the issuance of the Notes, the Company sold the Notes Warrants in privately negotiated transactions with the Option Counterparties. The strike price of the Notes Warrants is subject to certain adjustments under the terms of the Notes Warrants. As a result of the Notes Warrants and related transactions, the Company is required to recognize incremental dilution of earnings per share to the extent the average share price is over the strike price of the Notes Warrants for any fiscal quarter. The Notes Warrants may be settled in net shares of common stock or net cash at the Company’s election. The Notes Warrants were recorded as an increase in additional paid-in capital within stockholders’ equity.

During the year ended December 31, 2021, the Company repurchased the remaining portion of the outstanding 2023 Notes, which met the criteria to be accounted for as a debt extinguishment, and repurchased a portion of the outstanding 2025 Notes, which met the criteria to be accounted for as a debt extinguishment with an inducement charge. The consideration paid for the repurchases was allocated to the liability and equity components of the 2023 Notes and 2025 Notes based on the fair

value of the liability component, which was determined utilizing an estimated discount rate for a similar liability with the same maturity, but without the conversion option. The consideration allocated to the equity component was calculated by deducting the fair value of the liability component from the aggregate consideration, excluding interest. The Company subsequently compared the allocated consideration with the carrying value of the liability component to record a loss on extinguishment, which included the proportionate amounts of unamortized debt discount and the remaining unamortized debt issuance costs. An inducement charge representing the difference between the fair value of the consideration delivered to the holders of the repurchased 2025 Notes and the fair value of the consideration issuable under the original conversion terms is included in Loss on extinguishment of debt in the accompanying Consolidated Statements of Operations.

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-06, which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for the exception. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods. The ASU allows entities to use a modified or full retrospective transition method. Under the modified approach, entities will apply the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. Under the full retrospective method, entities will apply the guidance to all outstanding financial instruments for each prior reporting period presented. The Company adopted this ASU on January 1, 2022 under the modified retrospective method of transition. Upon adoption, the Company recorded a $2.1 million cumulative-effect adjustment that increased the opening balance of retained earnings on the consolidated balance sheet, largely due to the reduction in non-cash interest expense associated with the historical separation of debt and equity components for the Company's convertible senior notes. The Company also recorded an increase to long-term debt, net of $66.2 million, a net change in the deferred tax balance of $16.8 million, and a decrease to additional paid-in capital of $51.5 million due to no longer separating the embedded conversion feature of the Notes. Upon adoption, the Company's interest expense recognized has been reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. This adoption did not have a material impact on the consolidated statement of cash flows. Upon adoption, the Company prospectively utilized the if-converted method to calculate the impact of convertible instruments on diluted earnings per share.

Income Taxes

The Company calculates and provides for income taxes in each jurisdiction in which it operates. Deferred tax assets and liabilities, measured using enacted tax rates, are recognized for the future tax consequences of temporary differences between financial reporting and tax bases of assets and liabilities. A valuation allowance reduces the deferred tax assets to the amount that is more likely than not to be realized. The Company has established liabilities or reduced assets for uncertain tax positions when it believes those tax positions are not more likely than not of being sustained if challenged. The Company evaluates these uncertain tax positions and adjusts the related tax assets and liabilities in light of changing facts and circumstances each quarter.On December 22, 2017, the U.S. government enacted the 2017 Tax Act. The 2017 Tax Act significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. See Note 10, ~~Income Taxes,~~ ~~in the Notes to the Consolidated Financial Statements for additional information regarding the 2017 Tax Act.~~

Recent Accounting Pronouncements

Recent accounting pronouncements are fully described in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements.

~~Off-Balance Sheet Arrangements~~

~~We have no off-balance sheet arrangements, except operating lease commitments as disclosed in Note 12,~~ ~~Commitments and Contingencies,~~ ~~in the Notes to Consolidated Financial Statements.~~


Item 7A.			Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks related to changes in foreign currency exchange rates and interest rates. We believe our exposure to market risks is immaterial.

Exchange Rate Sensitivity

We are exposed to market risks associated with changes in foreign currency exchange rates because we generate a portion of our revenues and incur a portion of our expenses in currencies other than the U.S. dollar. As of December 31, ~~2017,~~2022, we were exposed to changes in exchange rates between the U.S. dollar and ~~the Canadian dollar, Chinese Yuan, Indian Rupee, British Pound, and Euro.~~ eleven other currencies. We hedge material foreign currency exchange rate exposures when feasible using forward contracts. These instruments are subject to fluctuations in foreign currency exchange rates and credit risk. Credit risk is managed through careful selection and ongoing evaluation of the

financial institutions utilized as ~~counter parties.~~counterparties. Refer to Note ~~11,~~ ~~Financial Instruments~~14, Derivatives, in the Notes to Consolidated Financial Statements for further discussion.

Interest Rate Sensitivity

As of December 31, ~~2017,~~2022, there was ~~$55.0 million~~no outstanding balance and ~~$69.7~~$199.8 million of available borrowing capacity under our credit facility. ~~Our~~To the extent we have outstanding borrowings under the credit facility, our interest expense will fluctuate as the interest rate for the line of credit floats based, at our option, on the prime rate plus a margin or the one-month LIBOR rate plus a margin.

During the third quarter of 2020 and the fourth quarter of 2021, we issued the 2025 Notes and the 2026 Notes, respectively, which have a fixed interest rate of 1.250% and 0.125%, respectively. The fair value of the Notes may increase or decrease for various reasons, including fluctuations in the market price of our common stock, fluctuations in market interest rates and fluctuations in general economic conditions. Based onupon the ~~$55.0 million outstanding on the line of credit~~quoted market price as of December 31, ~~2017, an increase in~~2022, the ~~interest rate~~fair value of ~~100 basis points would add $550,000 of interest expense per year, which is not considered material to our financial position or results of operations.~~the 2025 Notes and 2026 Notes was approximately $33.8 million and $295.5 million, respectively.

We had unrestricted cash and cash equivalents totaling ~~$6.3~~$30.1 million at December 31, ~~2017~~2022 and ~~$10.1~~$24.4 million at December 31, ~~2016.~~2021. The unrestricted cash and cash equivalents are primarily held for working capital ~~purposes.~~purposes and acquisitions. We do not enter into investments for trading or speculative purposes.


Item 8.			Financial Statements and Supplementary Data.

PERFICIENT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)


	December 31,							December 31,
	2017			2016				2022		2021
ASSETS	(In thousands, except share information)						ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	6,307		$	10,113		Cash and cash equivalents	$	30,130	$	24,410
Accounts receivable, net		112,194			103,702		Accounts receivable, net	202,298		177,602
Prepaid expenses		4,470			3,353		Prepaid expenses	6,432		5,400
Other current assets		6,237			5,331		Other current assets	16,756		7,296
Total current assets		129,208			122,499		Total current assets	255,616		214,708
Property and equipment, net		7,145			8,888		Property and equipment, net	17,970		14,747
Operating lease right-of-use assets							Operating lease right-of-use assets	27,088		33,353
Goodwill		305,238			275,205		Goodwill	565,161		515,229
Intangible assets, net		51,066			45,115		Intangible assets, net	88,937		81,277
Other non-current assets		6,403			4,869		Other non-current assets	41,116		23,258
Total assets	$	499,060		$	456,576		Total assets	$	995,888	$	882,572

LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	23,196		$	18,416		Accounts payable	$	24,351	$	26,074
Other current liabilities		38,077			27,637		Other current liabilities	104,780		93,877
Total current liabilities		61,273			46,053		Total current liabilities	129,131		119,951
Long-term debt		55,000			32,000
Long-term debt, net							Long-term debt, net	394,587		326,126
Operating lease liabilities							Operating lease liabilities	18,528		23,898
Other non-current liabilities		16,436			19,058		Other non-current liabilities	43,515		47,832
Total liabilities	$	132,709		$	97,111		Total liabilities	$	585,761	$	517,807

Commitments and contingencies (see Note 12)
Commitments and contingencies (see Note 17)							Commitments and contingencies (see Note 17)

Stockholders’ equity:							Stockholders’ equity:
Common stock (par value $.001 per share; 100,000,000 shares authorized and 47,370,945 shares issued and 33,249,665 shares outstanding as of December 31, 2017; 50,000,000 shares authorized and 45,895,086 shares issued and 33,865,688 shares outstanding as of December 31, 2016)	$	47		$	46
Preferred stock (par value $0.001 per share; 8,000,000 authorized; no shares issued or outstanding as of December 31, 2022 and December 31, 2021)							Preferred stock (par value $0.001 per share; 8,000,000 authorized; no shares issued or outstanding as of December 31, 2022 and December 31, 2021)	$	—	$	—
Common stock (par value $0.001 per share; 100,000,000 authorized; 53,082,010 shares issued and 34,071,750 shares outstanding as of December 31, 2022; 52,534,967 shares issued and 33,881,196 shares outstanding as of December 31, 2021)							Common stock (par value $0.001 per share; 100,000,000 authorized; 53,082,010 shares issued and 34,071,750 shares outstanding as of December 31, 2022; 52,534,967 shares issued and 33,881,196 shares outstanding as of December 31, 2021)	53		53
Additional paid-in capital		403,906			379,094		Additional paid-in capital	403,866		423,235
Accumulated other comprehensive loss		(1,822	)		(2,743	)	Accumulated other comprehensive loss	(17,519)		(5,843)
Treasury stock, at cost (14,121,280 shares as of December 31, 2017; 12,029,398 shares as of December 31, 2016)		(163,871	)		(126,442	)
Treasury stock, at cost (19,010,260 shares as of December 31, 2022; 18,653,771 shares as of December 31, 2021)							Treasury stock, at cost (19,010,260 shares as of December 31, 2022; 18,653,771 shares as of December 31, 2021)	(354,536)		(324,412)
Retained earnings		128,091			109,510		Retained earnings	378,263		271,732
Total stockholders’ equity		366,351			359,465		Total stockholders’ equity	410,127		364,765
Total liabilities and stockholders’ equity	$	499,060		$	456,576		Total liabilities and stockholders’ equity	$	995,888	$	882,572

See accompanying notes to consolidated financial statements.

PERFICIENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,
2017 2016 2015
Revenues: (In thousands, except per share information)
Services $ 434,253 $ 418,589 $ 411,469
Software and hardware 38,642 49,954 46,622
Reimbursable expenses 12,366 18,439 15,530
Total revenues 485,261 486,982 473,621
Cost of revenues (exclusive of depreciation and amortization, shown separately below):
Cost of services 278,087 273,682 261,711
Software and hardware costs 33,295 43,581 41,170
Reimbursable expenses 12,366 18,439 15,530
Total cost of revenues 323,748 335,702 318,411

Selling, general, and administrative 108,192 101,264 99,963
Depreciation 4,722 4,867 4,496
Amortization 15,025 13,371 13,819
Acquisition costs 1,359 1,252 1,235
Adjustment to fair value of contingent consideration 3,235 (1,679 ) 445
Income from operations 28,980 32,205 35,252

Net interest expense 1,838 1,636 2,085
Net other (income) expense (1 ) 60 332
Income before income taxes 27,143 30,509 32,835
Provision for income taxes 8,562 10,050 9,828

Net income $ 18,581 $ 20,459 $ 23,007

Basic net income per share $ 0.56 $ 0.60 $ 0.69
Diluted net income per share $ 0.55 $ 0.58 $ 0.67
Shares used in computing basic net income per share 33,016 34,023 33,408
Shares used in computing diluted net income per share 34,066 35,001 34,324

~~See accompanying notes to consolidated financial statements.~~

~~PERFICIENT, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

(In ~~thousands)~~thousands, except per share information)


	Year Ended December 31,
	2022		2021		2020

Revenues	$	905,062	$	761,027	$	612,133

Total cost of revenues (cost of services, exclusive of depreciation and amortization, shown separately below)	552,703		468,813		380,723
Selling, general, and administrative	171,128		152,419		134,675
Depreciation	8,518		6,398		5,430
Amortization	24,518		23,453		22,857
Acquisition costs	3,653		3,814		3,675
Adjustment to fair value of contingent consideration	267		198		9,519
Income from operations	144,275		105,932		55,254

Net interest expense	3,154		14,052		10,128
Loss on extinguishment of debt	—		28,996		4,537
Net other expense	160		401		260
Income before income taxes	140,961		62,483		40,329
Income tax provision	36,569		10,392		10,148

Net income	$	104,392	$	52,091	$	30,181

Basic net income per share	$	3.08	$	1.62	$	0.95
Diluted net income per share	$	2.90	$	1.50	$	0.93
Shares used in computing basic net income per share	33,869		32,202		31,793
Shares used in computing diluted net income per share	36,731		34,670		32,516

Year Ended December 31,
2017 2016 2015
Net income $ 18,581 $ 20,459 $ 23,007
Other comprehensive income (loss), net of reclassification adjustments:
Foreign benefit plan 88 (34 ) -
Foreign currency translation adjustment 833 (834 ) (1,224 )
Comprehensive income $ 19,502 $ 19,591 $ 21,783

See accompanying notes to consolidated financial statements.

PERFICIENT, INC.

CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME

(In thousands)


	Year Ended December 31,
	2022		2021		2020
Net income	$	104,392	$	52,091	$	30,181
Other comprehensive (loss) income, net of reclassification adjustments and income taxes
Foreign benefit plan, net of tax	(307)		(188)		(149)
Foreign currency translation adjustment, net of tax	(11,369)		(9,401)		6,545
Comprehensive income	$	92,716	$	42,502	$	36,577

See accompanying notes to consolidated financial statements.

PERFICIENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015~~

(In thousands)


		Year Ended December 31,
		2022		2021		2020


Common Stock
Beginning of period		$	53	$	50	$	49
	Stock compensation related to restricted stock vesting and retirement savings plan contributions	—		3		1
End of period		53		53		50
Additional Paid-in Capital
Beginning of period		423,235		459,866		455,465
	Proceeds from the sales of stock through the Employee Stock Purchase Plan	1,081		631		310
	Stock compensation related to restricted stock vesting and retirement savings plan contributions	23,524		20,401		18,514
	Issuance of stock in conjunction with acquisitions including stock attributed to future compensation	7,533		6,822		10,184
	Equity component of issuance of convertible notes, net of tax	—		49,332		36,386
	Debt issuance costs of convertible notes allocated to equity, net of tax	—		(1,394)		(1,147)
	Purchase of hedges related to issuance of convertible notes, net of tax	—		(49,308)		(36,387)
	Proceeds from issuance of warrants related to issuance of convertible notes	—		23,408		22,218
	Equity component of repurchase of convertible notes, net of tax	—		(407,084)		(52,711)
	Proceeds from sale of hedges related to repurchase of convertible notes	—		381,290		50,062
	Purchases of warrants related to repurchase of convertible notes	—		(303,896)		(43,028)
	Shares issued upon extinguishment of 2025 convertible notes	—		243,167		—
	Cumulative effect of accounting changes (See Note 2)	(51,507)		—		—
End of period		403,866		423,235		459,866
Accumulated Other Comprehensive (Loss) Income
Beginning of period		(5,843)		3,746		(2,650)
	Foreign benefit plan, net of tax	(307)		(188)		(149)
	Foreign currency translation adjustment, net of tax	(11,369)		(9,401)		6,545
End of period		(17,519)		(5,843)		3,746
Treasury Stock
Beginning of period		(324,412)		(289,225)		(261,624)
	Purchases of treasury stock and buyback of shares for taxes	(30,124)		(35,187)		(27,601)
End of period		(354,536)		(324,412)		(289,225)
Retained Earnings
Beginning of period		271,732		219,641		189,775
	Cumulative effect of accounting changes (See Note 2)	2,139		—		(315)
	Net income	104,392		52,091		30,181
End of period		378,263		271,732		219,641
Total Stockholders’ Equity		$	410,127	$	364,765	$	394,078

Common Stock
Shares

Common Stock
Amount

Additional
Paid-in Capital

Accumulated Other
Comprehensive Loss
Treasury Stock Retained Earnings
Total
Stockholders’ Equity

Balance at December 31, 2014 32,855 $ 43 $ 334,645 $ (651 ) $ (95,353 ) $ 66,044 $ 304,728
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan 26 - 337 - - - 337
Net tax benefit from stock option exercises and restricted stock vesting - - 1,335 - - - 1,335
Stock compensation related to restricted stock vesting and retirement savings plan contributions 893 - 13,110 - - - 13,110
Purchases of treasury stock and buyback of shares for taxes (411 ) - - - (7,844 ) - (7,844 )
Issuance of stock for acquisitions 1,031 2 15,359 - - - 15,361
Net income - - - - - 23,007 23,007
Foreign currency translation adjustment - - - (1,224 ) - - (1,224 )
Balance at December 31, 2015 34,394 $ 45 $ 364,786 $ (1,875 ) $ (103,197 ) $ 89,051 $ 348,810
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan 10 - 197 - - - 197
Stock compensation related to restricted stock vesting and retirement savings plan contributions 753 1 13,973 - - - 13,974
Purchases of treasury stock and buyback of shares for taxes (1,213 ) - - - (21,746 ) - (21,746 )
Surrender of stock in conjunction with net working capital settlement (86 ) - - - (1,499 ) - (1,499 )
Issuance of stock for acquisitions 8 - 138 - - - 138
Net income - - - - - 20,459 20,459
Foreign benefit plan - - - (34 ) - - (34 )
Foreign currency translation adjustment - - - (834 ) - - (834 )
Balance at December 31, 2016 33,866 $ 46 $ 379,094 $ (2,743 ) $ (126,442 ) $ 109,510 $ 359,465
Proceeds from the sales of stock through the Employee Stock Purchase Plan 8 - 135 - - - 135
Stock compensation related to restricted stock vesting and retirement savings plan contributions 784 - 14,096 - - - 14,096
Purchases of treasury stock and buyback of shares for taxes (2,058 ) - - - (36,797 ) - (36,797 )
Surrender of stock in conjunction with net working capital settlement (34 ) - - - (632 ) - (632 )
Issuance of stock in conjunction with acquisitions including stock attributed to future compensation 684 1 10,581 - - - 10,582
Net income - - - - - 18,581 18,581
Foreign benefit plan - - - 88 - - 88
Foreign currency translation adjustment - - - 833 - - 833
Balance at December 31, 2017 33,250 $ 47 $ 403,906 $ (1,822 ) $ (163,871 ) $ 128,091 $ 366,351

See accompanying notes to consolidated financial statements.


		Year Ended December 31,
		2022	2021	2020
Common Stock, shares
Beginning of period		33,881	32,074	31,687
	Sales of stock through the Employee Stock Purchase Plan	12	9	9
	Stock compensation related to restricted stock vesting and retirement savings plan contributions	411	522	678
	Purchases of treasury stock and buyback of shares for taxes	(356)	(431)	(637)
	Issuance of stock in conjunction with acquisition including stock attributed to future compensation	124	67	337
	Issuance of shares for repurchase of convertible notes	—	1,640	—
End of period		34,072	33,881	32,074

~~PERFICIENT, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Year Ended December 31,
2017 2016 2015
OPERATING ACTIVITIES (In thousands)
Net income $ 18,581 $ 20,459 $ 23,007
Adjustments to reconcile net income to net cash provided by operations:
Depreciation 4,722 4,867 4,496
Amortization 15,025 13,371 13,819
Deferred income taxes (4,140 ) 4,390 1,497
Non-cash stock compensation and retirement savings plan contributions 14,096 13,974 13,110
Tax benefit from stock option exercises and restricted stock vesting - - (1,432 )
Adjustment to fair value of contingent consideration for purchase of business 3,235 (1,679 ) 445
Write-off unamortized credit facility fees 246 - -

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (3,003 ) 16,905 3,512
Other assets (1,775 ) (467 ) (448 )
Accounts payable 4,780 (377 ) (3,242 )
Other liabilities 3,454 (8,142 ) (10,043 )
Net cash provided by operating activities 55,221 63,301 44,721

INVESTING ACTIVITIES
Purchase of property and equipment (3,361 ) (4,087 ) (3,356 )
Capitalization of internally developed software costs (961 ) (1,964 ) (1,035 )
Purchase of short-term investments - (869 ) -
Proceeds from sale of short-term investments - 853 -
Proceeds from settlement of company-owned life insurance - 2,792 -
Payments to fund company-owned life insurance - (2,792 ) -
Purchase of businesses, net of cash acquired (37,886 ) (7,464 ) (37,848 )
Net cash used in investing activities (42,208 ) (13,531 ) (42,239 )

FINANCING ACTIVITIES
Proceeds from line of credit 275,000 208,500 266,500
Payments on line of credit (252,000 ) (232,500 ) (264,500 )
Payments for credit facility financing fees (355 ) (194 ) (193 )
Payment of contingent consideration for purchase of business (3,258 ) (2,144 ) -
Tax benefit from stock option exercises and restricted stock vesting - - 1,432
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan 135 197 337
Purchases of treasury stock (32,601 ) (18,023 ) (2,840 )
Remittance of taxes withheld as part of a net share settlement of restricted stock vesting (4,196 ) (3,723 ) (5,004 )
Net cash used in financing activities (17,275 ) (47,887 ) (4,268 )
Effect of exchange rate on cash and cash equivalents 456 (581 ) (338 )
Change in cash and cash equivalents (3,806 ) 1,302 (2,124 )
Cash and cash equivalents at beginning of period 10,113 8,811 10,935
Cash and cash equivalents at end of period $ 6,307 $ 10,113 $ 8,811

Supplemental disclosures:
Cash paid for income taxes $ 9,074 $ 5,038 $ 9,944
Cash paid for interest $ 1,551 $ 1,487 $ 2,005
Non-cash activities:
Stock issued for purchase of businesses (including settlement of contingent consideration) $ 9,429 $ 96 $ 15,361
Stock surrendered by sellers in conjunction with net working capital settlement $ 572 $ 1,499 $ -
Liability incurred for purchase of property, plant and equipment $ - $ 1,671 $ -

See accompanying notes to consolidated financial statements.

PERFICIENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year Ended December 31,
	2022		2021		2020
OPERATING ACTIVITIES
Net income	$	104,392	$	52,091	$	30,181
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	8,518		6,398		5,430
Amortization	24,518		23,453		22,857

Loss on extinguishment of debt	—		28,996		4,537
Deferred income taxes	(7,945)		(12,662)		(1,588)
Non-cash stock compensation and retirement savings plan contributions	24,068		21,554		19,146
Amortization of debt issuance costs and discounts	2,431		11,014		6,855
Adjustment to fair value of contingent consideration for purchase of business	267		198		9,519
Other	(373)		—		—

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(16,824)		(34,451)		8,237
Other assets	(7,426)		(3,475)		1,821
Accounts payable	(2,737)		56		861
Other liabilities	(10,821)		(8,256)		10,104
Net cash provided by operating activities	118,068		84,916		117,960

INVESTING ACTIVITIES
Purchase of property and equipment	(8,955)		(9,244)		(5,266)
Capitalization of internally developed software costs	(944)		(960)		(1,465)




Purchase of businesses, net of cash acquired	(71,851)		(108,848)		(91,883)
Net cash used in investing activities	(81,750)		(119,052)		(98,614)

FINANCING ACTIVITIES
Proceeds from issuance of convertible notes	—		380,000		230,000
Payment for convertible notes issuance costs	—		(10,540)		(7,253)
Purchase of hedges related to issuance of convertible notes	—		(66,120)		(48,944)
Proceeds from issuance of warrants related to issuance of convertible notes	—		23,408		22,218
Payments for repurchase of convertible notes	(46)		(368,664)		(180,420)
Proceeds from sale of hedges related to repurchase of convertible notes	11		381,290		50,062
Repurchase of warrants related to repurchase of convertible notes	—		(303,896)		(43,028)
Payment for credit facility financing fees	—		(633)		—
Proceeds from line of credit	69,000		74,000		28,000
Payments on line of credit	(69,000)		(74,000)		(28,000)

Payment of contingent consideration for purchase of business	—		(24,128)		(2,820)
Proceeds from the sale of stock through the Employee Stock Purchase Plan	1,081		631		310
Purchases of treasury stock	(18,462)		(21,724)		(19,573)
Remittance of taxes withheld as part of a net share settlement of restricted stock vesting	(11,662)		(13,463)		(8,028)
Net cash used in financing activities	(29,078)		(23,839)		(7,476)
Effect of exchange rate on cash and cash equivalents	(1,520)		(819)		606
Change in cash and cash equivalents	5,720		(58,794)		12,476
Cash and cash equivalents at beginning of period	24,410		83,204		70,728
Cash and cash equivalents at end of period	$	30,130	$	24,410	$	83,204

Supplemental disclosures:
Cash paid for income taxes	$	39,974	$	16,122	$	5,256
Cash paid for interest	$	1,034	$	3,988	$	3,411
Non-cash activities:
Stock issued for purchase of businesses	$	7,168	$	6,244	$	8,729
Issuance of shares for repurchase of convertible notes	$	—	$	243,167	$	—
Liability incurred for purchase of property and equipment	$	3,765	$	144	$	503

See accompanying notes to consolidated financial statements.

PERFICIENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2017~~2022

1. Description of Business and Principles of Consolidation

Perficient, Inc. (the “Company”) is ~~an information technology consulting firm. The Company helps its~~a global digital consultancy. Perficient’s work enables clients, ~~use Internet-based technologies~~primarily focused in North America, to ~~make their businesses~~deliver experiences that surpass customer expectations; become more ~~responsive to market opportunities~~human-centered, authentic, and ~~threats;~~trusted; innovate through digital technologies; outpace competition; grow and strengthen relationships with customers, suppliers, and partners; ~~improve productivity;~~ and reduce ~~information technology~~ costs. ~~The~~

Through December 31, 2022, the Company ~~designs, builds,~~had not experienced a material impact to its business, operations or financial results as a result of health emergencies and ~~delivers~~pandemics. However, the Company’s operating results for the year ended December 31, 2022 are not necessarily indicative of future results, particularly in light of the health emergencies and pandemics and the related effects on domestic and global economies. To limit the spread of health emergencies and pandemics, governments have imposed, and may continue to impose, among other things, travel and business operation restrictions and stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. While certain of these restrictions and guidelines have been lifted or relaxed, they may be reinstituted in response to continuing effects of health emergencies and pandemics. These disruptions and restrictions could adversely affect our operating results due to, among other things, reduced demand for our services and solutions, using a core set of middleware software products developed by third-party vendors. The Company’s solutions enable its clients to meet the changing demands of an increasingly global, Internet-driven, and competitive marketplace.requests for discounts or extended payment terms, or customer bankruptcies.

The Company is incorporated in Delaware. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and such differences could be material to the financial statements.

Revenue Recognition

~~Service~~The Company recognizes revenues are primarily derived from professional services provided on a time and materials basis. For time and material contracts, service revenues are recognized and billed by multiplying the number of hours expended in the performance of the contract by the established billing rates. For fixed fee projects, service revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours. Amounts invoiced and collected in excess of revenues recognized are classified as deferred revenues. In conjunction with services provided, the Company occasionally receives referral fees under partner programs. These referral fees are recognized when earned and recorded within service revenues. Revenues from software and hardware sales are generally recorded on a gross basis considering the Company’s role as a principal in the transaction. Revenues from sales of third-party software-as-a-service arrangements where the Company is not the primary obligor are recorded on a net basis. On many projects the Company is also reimbursed for out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of revenues. We did not realize any profit on reimbursable expenses.

Unbilled revenues represent the project time and expenses that have been incurred, but not yet billed to the client, prior to the end of the fiscal period. For time and materials projects, the client is invoiced for the amount of hours worked multiplied by the billing rates as stated in the contract. For fixed fee arrangements, the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract. Clients are typically billed monthly for services provided during that month, but can be billed on a more or less frequent basis as determined by the contract. If the time and expenses are worked/incurred and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as unbilled revenue once the Company verifies all other revenue recognition criteria have been met.

Revenues are recognized when the following criteria are met: (1) persuasive evidence of the customer arrangement exists; (2) fees are fixed and determinable; (3) delivery and acceptance have occurred; and (4) collectability is deemed probable. The Company’s policy for revenue recognition in instances where multiple deliverables are sold contemporaneously to the same customer is in accordance with ~~the FASB~~ Accounting Standards Codification (“ASC”) ~~Subtopic 985-605,~~ ~~Software –~~Topic 606, Revenue ~~Recognition,~~ ~~ASC Subtopic 605-25,~~ ~~Revenue Recognition – Multiple-Element Arrangements, and ASC Section 605-10-S99 (Staff Accounting Bulletin Topic 13,~~ ~~Revenue Recognition). Specifically, if~~from Contracts with Customers. See Note 3, Revenues, for information regarding the Company’s revenue recognition accounting policies.

Allowance for Credit Losses

As of January 1, 2020, the Company ~~enters into contracts~~estimates its allowance for credit losses in accordance with ASC Topic 326, Financial Instruments - Credit Losses. See Note 8, Allowance for Credit Losses, for information regarding the sale of services and software or hardware, then the Company evaluates whether each element should be accounted for separately by considering the following criteria: (1) whether the deliverables have value to the client on a stand-alone basis; and (2) whether delivery or performance of the undelivered item or items is considered probable and substantially in the control of the Company (only if the arrangement includes a general right of returnCompany’s accounting policies related to the delivered item). Further, for sales of software and services, the Company also evaluates whether the services are essential to the functionality of the software and if it has fair value evidence for each deliverable. If the Company has concluded that the separation criteria are met, then it accounts for each deliverable in the transaction separately, based on the relevant revenue recognition policies. Generally, all deliverables of the Company’s multiple element arrangements meet these criteria and are accounted for separately, with the arrangement consideration allocated among the deliverables using vendor specific objective evidence of the selling price. As a result, the Company generally recognizes software and hardware sales upon delivery to the customer and services consistent with the policies described herein.

There are no significant cancellation or termination-type provisions for the Company’s software and hardware sales. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 ~~to 30 days’ notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract.~~

The Company may provide multiple services under the terms of an arrangement and is required to assess whether one or more units of accounting are present. Service fees are typically accounted for as one unit of accounting, as fair value evidence for individual tasks or milestones is not available. The Company follows the guidelines discussed above in determining revenues; however, certain judgments and estimates are made and used to determine revenues recognized in any accounting period. If estimates are revised, material differences may result in the amount and timing of revenues recognized for a given period.

~~Allowance for Doubtful Accounts~~

An allowance for ~~doubtful accounts is based upon specific identification of likely and probable~~credit losses. ~~Each accounting period, accounts receivable is evaluated for risk associated with a client’s inability to make contractual payments, historical experience, and other currently available information.~~

Stock-Based Compensation

~~The fair value of restricted stock awards are based on the value of the Company’s common stock on the date of the grant.~~ Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation. Under this guidance, the Company recognizes share-based compensation ratably using the straight-line attribution method over the requisite service period, which is generally three years. ~~In addition, pursuant to ASU No. 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~,The fair value of restricted stock awards is based on the ~~Company has continued to elect to estimate~~value of the ~~amount~~Company’s common stock on the date of ~~expected forfeitures when calculating share-based compensation, instead of accounting for forfeitures as they occur.~~the grant.

Income Taxes

The Company accounts for income taxes in accordance with ASC Subtopic 740-10, Income Taxes (“ASC Subtopic 740-10”), and ASC Section 740-10-25, Income Taxes – Recognition (“ASC Section 740-10-25”). ASC Subtopic 740-10 prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined

based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are subject to tests of recoverability. A valuation allowance is provided for such deferred tax assets to the extent realization is not judged to be more likely than not. ASC Section 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Section 740-10-25 also provides guidance on derecognition, classification, treatment of interest and penalties, and disclosure of such positions.On December 22, 2017, the U.S. government enacted the 2017 Tax Act. The 2017 Tax Act significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. See Note 10, ~~Income Taxes,~~ ~~for additional information regarding the 2017 Tax Act.~~

Cash and Cash Equivalents

Cash and cash equivalents consist of all cash balances and liquid investments with original maturities of three months or less.

Property and Equipment

Property and equipment are recorded at cost. Depreciation of property and equipment is computed using the straight-line method over the useful lives of the assets (generally one year to seven years). Leasehold improvements are amortized over the shorter of the life of the lease or the estimated useful life of the assets.

Goodwill and Intangible Assets

Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other (“ASC Topic 350”), the Company performs an annual impairment review in the fourth quarter and more frequently if events or changes in circumstances indicate that goodwill might be impaired. The Company has one reporting unit for purposes of the goodwill impairment review. ASC Topic 350 permits an assessment of qualitative factors to determine whether it is more likely than not that the fair value is less than the carrying amount of the Company before applying the quantitative goodwill impairment test. If it is more likely than not that the fair value is less than the carrying amount of the Company, the quantitative goodwill impairment test will be conducted to detect and measure any impairment. Based upon the ~~Company~~’sCompany’s qualitative assessment, it is more likely than not that the fair value of the Company is greater than its carrying amount. No impairment charges were recorded for ~~2017, 2016~~2022, 2021 or ~~2015.~~2020.

Other intangible assets include customer relationships, non-compete arrangements, trade names, customer backlog, and ~~internally~~ developed software, which are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from ~~less than~~ one year to ~~ten~~10 years. Amortization of customer relationships, non-compete arrangements, trade names, customer backlog, and ~~internally~~ developed software is considered an operating expense and is included in ~~“Amortization”~~Amortization in the accompanying Consolidated Statements of Operations. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life. Other intangible assets are evaluated for impairment upon the occurrence of events or changes in circumstances indicating that the carrying amount of an asset may not be recoverable. No impairment of intangible assets ~~were~~was recorded for ~~2017, 2016~~2022, 2021 or ~~2015.~~2020.

Purchase Accounting and Related Fair Value Measurements

The Company allocates the purchase price, including contingent consideration, of ~~our~~its acquisitions to the assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the date of acquisition. Such fair market value assessments are primarily based on third-party valuations using assumptions developed by management that require significant judgments and estimates that can change materially as additional information becomes available. The purchase price allocated to intangibles is based on unobservable factors, including but not limited to, projected revenues, expenses, customer attrition rates, royalty rates, aand weighted average cost of capital, among others. The weighted average cost of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks inherent in the cash flows. The approach to valuing the initial contingent consideration associated with the purchase price also uses similar unobservable factors such ~~as;~~as projected revenues and expenses over the term of the contingent earn-out period, discounted for the period over which the initial contingent ~~considerations~~consideration is ~~measured.~~measured, and volatility rates. Based upon these assumptions, the contingent consideration is then valued using a Monte Carlo simulation. The Company finalizes the purchase price allocation ~~within 12 months of the acquisition date as~~once certain initial accounting valuation estimates are ~~finalized.~~finalized, and no later than 12 months following the acquisition date.

Financial Instruments

Cash equivalents, accounts receivable, accounts payable, and other accrued liabilities are stated at amounts which approximate fair value due to the near term maturities of these instruments. The Company’s long-term debt balance ~~approximates~~related to

its 2.375% Convertible Senior Notes Due 2023 (“2023 Notes”), 1.250% Convertible Senior Notes Due 2025 (“2025 Notes”), and 0.125% Convertible Senior Notes Due 2026 (“2026 Notes” and collectively with the 2023 Notes and the 2025 Notes, the “Notes”) are carried at their principal amount less unamortized debt discount and issuance costs, and are not carried at fair ~~market value.~~value at each period end. See Note 12, Long-Term Debt, for information regarding the Company’s convertible debt accounting policies.

The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of foreign currency exchange rate risk. Both the gain or loss on derivatives not designated as hedging instruments and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. All derivatives are carried at fair value in the consolidated balance sheets. See Note ~~11,~~ ~~Financial Instruments~~14, Derivatives, for additional information regarding ~~our~~the Company’s derivative financial instruments.

Treasury Stock

The Company uses the cost method to account for repurchases of its own stock.

Segment and Geographic Information

The Company operates as one reportable operating segment according to ASC Topic 280, Segment Reporting, which establishes standards for the way that business enterprises report information about operating segments. The chief operating decision maker formulates decisions about how to allocate resources and assess performance based on consolidated financial results. ~~The Company also has one reporting unit for purposes~~During the years ended December 31, 2022, 2021 and 2020, approximately 97%, 97%, and 98%, respectively, of the ~~goodwill impairment analysis discussed above.~~ ~~Approximately98% of our~~Company’s revenues were derived from clients in the United ~~States during each~~States.As of ~~the years ended~~ December 31, ~~2017, 2016~~2022 and ~~2015. Less than 2%~~2021, 25% and 33%, respectively, of the Company’s non-current assets were located outside the United States, ~~for each~~the majority of which were comprised of goodwill and other intangible assets from acquisitions outside of the ~~years ended December 31, 2017 and 2016.~~United States.

Recent Accounting Pronouncements

In ~~May 2014,~~June 2016, the Financial Accounting Standard Board (the “FASB”) issued ASU No. 2016-13, which amended the guidance of ASC Topic 326, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 requires the immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including trade receivables. The Company adopted this ASU on January 1, 2020 using a modified retrospective approach, which allows the impact of adoption to be recorded through a cumulative effect adjustment to retained earnings without restating comparative periods. The cumulative effect adjustment for adoption of ASU No. 2016-13 resulted in a decrease of $0.4 million in Accounts receivable, net, and a decrease of $0.3 million in Retained earnings, net of tax, as of January 1, 2020. Refer to Note 8, Allowance for Credit Losses, for additional disclosures resulting from the adoption of ASU No. 2016-13.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU ~~No. 2014-09,~~ ~~Revenue from Contracts with Customers~~2020-06”), which ~~requires an entity~~simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to ~~recognize the amount of revenue to which it expects to be entitled~~qualify for the ~~transfer~~derivative scope exception, permitting more contracts to qualify for the exception. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of ~~promised goods~~the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods. The ASU allows entities to use a modified or services to customers. ASU No. 2014-09 replaced most existing revenue recognition guidance in U.S. GAAP. In 2015, the FASB deferred the effective date of ASU No. 2014-09 by one year. In 2016, the FASB issued ASU No. 2016-08, ~~Principal versus Agent Considerations, ASU No. 2016-10,~~ ~~Identifying Performance Obligations and Licensing, ASU No. 2016-12,~~ ~~Narrow-Scope Improvements and Practical Expedients~~ ~~and ASU No. 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, all of which further amended ASU No. 2014-09. The Company adopted the standard on January 1, 2018 using~~full retrospective transition method. Under the modified ~~retrospective method which requires a cumulative-effect~~approach, entities will apply the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained ~~earnings within stockholders’ equity, as~~earnings. Under the full retrospective method, entities will ~~be fully presented in~~apply the ~~Company’s Quarterly Report on Form 10-Q~~guidance to all outstanding financial instruments for ~~the three months ended March 31, 2018.~~each prior reporting period presented. The Company ~~has determined that the most significant impact upon adoption is to third-party software and hardware revenue, which has primarily been recorded~~adopted this ASU on ~~a gross basis as the principal in the transaction through December 31, 2017 and will be presented on a net basis as the agent as of~~ January 1, 2018. Had the Company historically presented third-party software and hardware revenues on a net basis, software and hardware revenues would have been $5.3 million, $6.4 million, and $5.5 million for the years ended December 31, 2017, 2016, and 2015, respectively. As the Company adopted ASU No. 2014-09 using2022 under the modified retrospective method of transition. Upon adoption, the ~~gross versus net presentation will not impact~~Company recorded a $2.1 million cumulative-effect adjustment that increased the opening balance of retained earnings on the consolidated balance sheet, largely due to the reduction in non-cash interest expense associated with the historical ~~presentation but will impact~~separation of debt and equity components for the ~~2018 presentation. Additionally, as~~Notes described in Note 11, Long-Term Debt. The Company also recorded an increase to long-term debt, net of $66.2 million, a net change in the ~~agent, revenue from multi-year sales~~deferred tax balance of third-party software and support will be recognized upfront as the performance obligation is fulfilled, rather than annually as invoiced to the customer. The impact from this timing change is expected to be immaterial. Variable consideration related to service contracts, such as volume discounts and holdbacks, may be recognized earlier under the new standard, and the Company is currently evaluating the impact of this change on contracts that are open as of December 31, 2017. The adoption of ASU No. 2014-09 and its amendments will also result in additional disclosures around the nature and timing of performance obligations, contract costs, and deferred revenue, as well as significant judgments and practical expedients used by the Company.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases, which supersedes ASC Topic 840,~~ ~~Leases,~~ ~~and creates a new topic, ASC Topic 842,~~ ~~Leases. This update requires lessees to recognize a lease liability~~$16.8 million, and a ~~lease asset for all leases, including operating leases, with~~decrease to additional paid-in capital of $51.5 million due to no longer separating the embedded conversion feature of the Notes. Upon adoption, the Company's interest expense recognized has been reduced as a ~~term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is to become effective~~result of accounting for the ~~Company on January 1, 2019, with earlier application permitted.~~convertible debt instrument as a single liability measured at its amortized cost. This update will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. While the Company is currently assessing the impact ASU No. 2016-02 will have on its consolidated financial statements, the Company expects the primary impact upon adoption will be the recognition, on a discounted basis, of its minimum commitments under noncancellable operating leases on its consolidated balance sheets resulting in the recording of right of use assets and lease obligations. Current minimum commitments under noncancellable operating leases are disclosed in Note 12, ~~Commitments and Contingencies~~.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~. This update eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU No. 2016-15 designates the appropriate cash flow classification, including requirements to allocate certain components of these cash receipts and payments among operating, investing and financing activities. This update is to become effective for the Company on January 1, 2018 and requires using a retrospective approach. The Company elected to early adopt this update retrospectively on January 1, 2017 since the Company was already in compliance with the new standard. The adoption of ASU No. 2016-15 did not have a material impact on the ~~Company’s~~ consolidated ~~financial statements.~~statement of cash flows. Upon adoption, the Company prospectively utilized the if-converted method to calculate the impact of convertible instruments on diluted

earnings per share. For the three and twelve months ended December 31, 2022, shares used in computing diluted net income per share increased by 2.3 million and 2.2 million shares, respectively, due to the change from the treasury stock method to the if-converted method.

In ~~January 2017,~~October 2021, the FASB issued ASU No. ~~2017-04,~~ ~~Simplifying the Test~~2021-08, Business Combinations - Accounting for ~~Goodwill Impairment.~~ ~~This update eliminates Step 2~~Contract Assets and Contract Liabilities from ~~the goodwill impairment test~~Contracts with Customers (Subtopic 805), which ~~compares the implied~~requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers, rather than adjust them to fair value at the acquisition date. The Company adopted this ASU on July 1, 2022 and determined the impact of ~~a reporting unit’s goodwill~~the new guidance on its financial statements was immaterial.

3. Revenues

The Company’s revenues consist of services and software and hardware sales. In accordance with ASC Topic 606, revenues are recognized when control of services or goods are transferred to clients, in an amount that reflects the ~~carrying amount~~consideration the Company expects to be entitled to in exchange for those services or goods.

Services Revenues

Services revenues are primarily comprised of professional services that ~~goodwill. ASU No. 2017-04~~include developing, implementing, automating and extending business processes, technology infrastructure, and software applications. The Company’s professional services span multiple industries, platforms and solutions; however, the Company has remained relatively diversified and does not ~~make~~believe that it has significant revenue concentration within any ~~changes to the impairment indicators~~single industry, platform or aspects of the qualitative assessment. This update is to become effective for the Company on January 1, 2020 and requires using a prospective approach. Early adoption is permitted beginning with interim or annual goodwill impairment testssolution.

Professional services revenues are recognized over time as services are rendered. Most projects are performed on ~~testing dates~~a time and materials basis, while a portion of revenues is derived from projects performed on a fixed fee or after January 1, 2017. The Company elected to early adopt this update prospectively on January 1, 2017. The adoption of ASU No. 2017-04 did not have an impact on the Company’s consolidated financial statements.

~~3. Net Income Per Share~~

~~Basic earnings per share is computed~~fixed fee percent complete basis. For time and material contracts, revenues are generally recognized and invoiced by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the weighted average number of common shares outstanding andmultiplying the number of ~~equivalent shares~~hours expended in the performance of the contract by the hourly rates. For fixed fee contracts, revenues are generally recognized and invoiced by multiplying the fixed rate per time period established in the contract by the number of time periods elapsed. For fixed fee percent complete contracts, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours, and the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract.

Clients are typically billed monthly for services provided during that month, but can be billed on a more or less frequent basis as determined by the contract. If the time is worked and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as revenue once the Company verifies all other revenue recognition criteria have been met, and the amount is classified as a receivable as the right to consideration is unconditional at that point. Amounts invoiced in excess of revenues recognized are contract liabilities, which are classified as deferred revenues in the Consolidated Balance Sheet. The term between invoicing and payment due date is not significant. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract. Certain contracts may include volume discounts or holdbacks, which are accounted for as variable consideration, but are not typically significant. The Company estimates variable consideration based on historical experience and forecasted sales and includes the variable consideration in the transaction price.

Other services revenues are comprised of hosting fees, partner referral fees, maintenance agreements, training and internally developed software-as-a-service (“SaaS”) sales. Revenues from hosting fees, maintenance agreements, training and internally developed SaaS sales are generally recognized over time using a time-based measure of progress as services are rendered. Partner referral fees are recorded at a point in time upon meeting specified requirements to earn the respective fee.

On many professional service projects, the Company is also reimbursed for out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of the transaction price of the respective professional services contract and are invoiced as the expenses are incurred. The Company structures its professional services arrangements to recover the cost of reimbursable expenses without a markup.

Software and Hardware Revenues

occurs when the purchase order with the vendor is executed and the customer has access to the software or the hardware has been shipped to the customer. Internally developed software revenues are recognized and invoiced when control is transferred to the customer, which occurs when the software has been made available to the customer and the license term has commenced. 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. There are no significant cancellation or termination-type provisions for the Company’s software and hardware sales, and the term between invoicing and payment due date is not significant.

Arrangements with Multiple Performance Obligations

Arrangements with clients may contain multiple promises such as delivery of software, hardware, professional services or post-contract support services. These promises are accounted for as separate performance obligations if they are distinct. For arrangements with clients that contain multiple performance obligations, the transaction price is allocated to the separate performance obligations based on estimated relative standalone selling price, which is estimated by the expected cost plus a margin approach, taking into consideration market conditions and competitive factors. Because contracts that contain multiple performance obligations are typically short term due to the contract cancellation provisions, the allocation of the transaction price to the separate performance obligations is not considered a significant estimate.

Contract Costs

In accordance with the terms of the Company’s sales commission plan, commissions are not earned until the related revenue is recognized. Therefore, sales commissions are expensed as they are earned. Certain sales incentives are accrued based on achievement of specified bookings goals. For these incentives, the Company applies the practical expedient that allows the Company to expense the incentives as incurred, since the amortization period would ~~be issued~~have been one year or less.

Deferred Revenue

The Company’s deferred revenue balance as of December 31, 2022 and 2021 was $12.7 million and $8.2 million, respectively. Substantially all of the December 31, 2021 deferred revenue balance was recognized in revenue during the year ended December 31, 2022.

Transaction Price Allocated to Remaining Performance Obligations

Due to the ability of the client or the Company to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required), the majority of the Company’s contracts have a term of less than one year. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original maturity date of one year or less or time and materials contracts for which the Company has the right to invoice for services performed. Revenue related to ~~the stock options, unvested restricted stock,~~unsatisfied performance obligations for remaining contracts as of December 31, 2022 was immaterial.

Disaggregation of Revenue

The following tables present revenue disaggregated by revenue source and ~~warrants using the treasury method, unless such additional equivalent shares are anti-dilutive.~~pattern of revenue recognition (in thousands):


	Year Ended December 31, 2022
	Over Time		Point In Time		Total Revenues
Time and materials contracts	$	696,040	$	—	$	696,040
Fixed fee percent complete contracts	52,183		—		52,183
Fixed fee contracts	135,053		—		135,053
Reimbursable expenses	9,371		—		9,371
Total professional services fees	892,647		—		892,647
Other services revenue*	7,663		2,111		9,774
Total services	900,310		2,111		902,421
Software and hardware	—		2,641		2,641
Total revenues	$	900,310	$	4,752	$	905,062


	Year Ended December 31, 2021
	Over Time		Point In Time		Total Revenues
Time and materials contracts	$	577,674	$	—	$	577,674
Fixed fee percent complete contracts	49,117		—		49,117
Fixed fee contracts	107,698		—		107,698
Reimbursable expenses	10,677		—		10,677
Total professional services fees	745,166		—		745,166
Other services revenue*	11,320		2,236		13,556
Total services	756,486		2,236		758,722
Software and hardware	—		2,305		2,305
Total revenues	$	756,486	$	4,541	$	761,027


	Year Ended December 31, 2020
	Over Time		Point In Time		Total Revenues
Time and materials contracts	$	436,466	$	—	$	436,466
Fixed fee percent complete contracts	51,752		—		51,752
Fixed fee contracts	95,237		—		95,237
Reimbursable expenses	10,110		—		10,110
Total professional services fees	593,565		—		593,565
Other services revenue*	13,536		2,482		16,018
Total services	607,101		2,482		609,583
Software and hardware	—		2,550		2,550
Total revenues	$	607,101	$	5,032	$	612,133

* Other services revenue primarily consists of hosting fees, maintenance, training, internally developed SaaS and partner referral fees.

The following table presents revenue disaggregated by geographic area, as determined by the ~~calculation~~billing address of ~~basic and diluted net income per share~~customers (in ~~thousands, except per share information)~~thousands):

Year Ended December 31,
2017 2016 2015
Net income $ 18,581 $ 20,459 $ 23,007
Basic:
Weighted-average shares of common stock outstanding 33,016 34,023 33,408
Shares used in computing basic net income per share 33,016 34,023 33,408

Effect of dilutive securities:
Restricted stock subject to vesting 488 493 466
Contingently issuable shares (1) - 2 2
Shares issuable for acquisition consideration (2) 562 483 448
Shares used in computing diluted net income per share 34,066 35,001 34,324

Basic net income per share $ 0.56 $ 0.60 $ 0.69
Diluted net income per share $ 0.55 $ 0.58 $ 0.67

Anti-dilutive options and restricted stock not included in the calculation of diluted net income per share 88 - 28


	Year Ended December 31,
	2022		2021		2020
United States	$	875,298	$	738,298	$	599,236
Other countries	29,764		22,729		12,897
Total revenues	$	905,062	$	761,027	$	612,133

~~(1)~~

For the year ended December 31, 2016, this represents the shares issued to Zeon Solutions Incorporated and certain related entities (collectively, “Zeon”) pursuant to the Asset Purchase Agreement. For the year ended December 31, 2015, this represents the Company’s estimate of shares to be issued to Zeon pursuant to the Asset Purchase Agreement.

~~(2)~~

For the year ended December 31, 2017, this represents the shares held in escrow pursuant to: (i) the Asset Purchase Agreement with BioPharm Systems, Inc. (“BioPharm”); (ii) the Asset Purchase Agreement with Zeon; (iii) the Asset Purchase Agreement with The Pup Group, Inc. d/b/a Enlighten (“Enlighten”); (iv) the Asset Purchase Agreement with RAS & Associates, LLC (“RAS”); and (v) the Asset Purchase Agreement with Clarity Consulting, Inc. and Truth Labs, LLC (together, “Clarity”), as part of the consideration. For the year ended December 31, 2016, this represents the shares held in escrow pursuant to: (i) the Asset Purchase Agreement with BioPharm; (ii) the Asset Purchase Agreement with Zeon; (iii) the Stock Purchase Agreement for Market Street Solutions, Inc. (“Market Street”); and (iv) the Asset Purchase Agreement with Enlighten as part of the consideration. For the year ended December 31, 2015, this represents the shares held in escrow pursuant to: (i) the Agreement and Plan of Merger with ForwardThink Group Inc. (“ForwardThink”); (ii) the Asset Purchase Agreement with BioPharm; (iii) the Asset Purchase Agreement with Trifecta Technologies, Inc. and Trifecta Technologies Canada, Limited (together “Trifecta”); (iv) the Asset Purchase Agreement with Zeon; (v) the Stock Purchase Agreement for Market Street and (vi) the Asset Purchase Agreement with Enlighten as part of the consideration.

4. Concentration of Credit Risk and Significant Customers

~~11. Financial Instruments~~

14. Derivatives

In the normal course of business, the Company uses derivative financial instruments to manage foreign currency exchange rate risk. Currency exposure is monitored and managed by the Company as part of its risk management program which seeks to reduce the potentially adverse effects that market volatility could have on operating results. The Company’s derivative financial instruments consist of non-deliverable foreign currency forward contracts. Derivative financial instruments are neither held nor issued by the Company for trading purposes.

Derivatives Not Designated as Hedging Instruments

Both the gain or loss on the derivatives not designated as hedging instruments and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net ~~gain~~loss of ~~$0.1~~$1.8 million during the year ended December 31, 2022, a net loss of $1.2 million during the year ended December 31, ~~2017. A~~2021, and a net ~~loss~~gain of ~~$0.3~~$0.7 million ~~was recognized~~ during the year ended ~~December~~December 31, ~~2016.~~2020. Gains and losses on these contracts are recorded in net other ~~income (expense)~~expense (income) and net interest expense in the Consolidated Statements of Operations and are offset by losses and gains on the related hedged items.

The notional amounts of the Company’s derivative instruments outstanding were as follows (in thousands):


	December 31,
	2022		2021
Derivatives not designated as hedges
Foreign exchange contracts	$	30,967	$	24,223
Total derivatives not designated as hedges	$	30,967	$	24,223

December 31,
2017 2016
Derivatives not designated as hedges
Foreign exchange contracts $ 3,979 $ 4,541
Total derivatives not designated as hedges $ 3,979 $ 4,541

Derivatives may give rise to credit risks from the possible non-performance by counterparties. Credit risk is generally limited to the fair value of those contracts that are favorable to the Company. The Company has limited its credit risk by entering into derivative transactions only with highly-rated global financial institutions, limiting the amount of credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial institutions with which the Company does business.

The Company utilizes standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations and for the set-off of certain obligations in the event of an insolvency of one of the parties to the transaction. Within the Consolidated Balance Sheets, the Company records derivative assets and liabilities at fair value.

15. Fair Value ~~of Derivative Instruments~~Measurements

The authoritative guidance defines fair value as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions.

The fair value hierarchy consists of the following three levels:

•Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.

•Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

•Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments.

All highly liquid investments with maturities at date of purchase of three months or less are considered to be cash equivalents. Based on their short-term nature, the carrying value of cash equivalents approximate their fair value.As of December 31, 2022 and December 31, 2021, $8.4 million and $12.1 million, respectively of the Company’s cash and cash equivalents balance related to money-market fund investments. These short-term money-market funds are considered Level 1 investments.

The Company has a deferred compensation plan, which is funded through COLI policies. The COLI asset is carried at fair value derived from quoted market prices of investments within the COLI policies, which are considered Level 2 inputs. Refer to Note 11, Employee Benefit Plans, for the fair value of the COLI asset as of December 31, 2022 and 2021.

The Company estimates the fair value of each foreign exchange forward contract by using the present value of expected cash flows. ~~This considers~~The estimate takes into account the difference between the current market forward price and contracted forward price for each foreign exchange contract and applies the difference in the rates to each outstanding contract. Valuations for all derivatives fall within Level 2 of the GAAP valuation hierarchy. The fair value of the Company’s derivative instruments outstanding as of December 31, ~~2017~~2022 and 2021 was immaterial.

~~Derivatives may give rise~~The Company has contingent consideration liabilities related to ~~credit risks from~~acquisitions which are measured on a recurring basis and recorded at fair value, determined using the ~~possible non-performance by counterparties. Credit risk is generally limited~~discounted cash flow method. The inputs used to calculate the fair value of ~~those contracts~~the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. For acquisitions during the year ended December 31, 2022, key unobservable inputs included revenue growth rates, which ranged from 16% to 43%, and volatility rates, which were 9% for revenue and ranged from 22% to 23% for earnings. For acquisitions during the year ended December 31, 2021, key observable inputs included revenue growth rates, which ranged from 36% to 76%, and volatility rates, which ranged from 5% to 6% for revenue and were 17% for earnings. An increase in future revenue and earnings may result in a higher estimated fair value while a decrease in future revenue and earnings may result in a lower estimated fair value of the contingent consideration liabilities. Remeasurements to fair value are recorded in adjustment to fair value of contingent consideration in the Consolidated Statements of Operations. Refer to Note 7, Balance Sheet Components, for the estimated fair value of the contingent consideration liabilities as of December 31, 2022 and 2021.

The fair value of the Notes is measured using quoted price inputs. The Notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates could significantly increase or decrease.

The Notes are carried at their principal amount less issuance costs, and are not carried at fair value at each period end. Prior to the adoption of ASU 2020-06, the debt discount was calculated at a market interest rate for nonconvertible debt at the time of issuance, which represented a Level 3 fair value measurement based on inputs that ranged from 5.2% to 7.9% for the 2025 Notes and 3.8% to 4.0% for the 2026 Notes. The approximate fair value of the 2026 Notes as of December 31, 2022 and 2021 was $295.5 million and $363.6 million, respectively. The approximate fair value of the 2025 Notes as of December 31, 2022 and 2021 was $33.8 million and $59.6 million, respectively. As of December 31, 2022, the 2023 Notes have been fully repurchased. The fair values were estimated on the basis of inputs that are ~~favorable to us. The Company has limited its credit risk by entering into derivative transactions only with highly-rated global financial institutions, limiting~~observable in the ~~amount of credit exposure with any one financial institution~~market and ~~conducting ongoing evaluation of the creditworthiness of the financial institutions with which the Company does business.~~are considered a Level 2 fair value measurement.

16. Leases

The Company ~~utilizes standard counterparty master~~leases office space under various operating lease agreements, ~~containing provisions for the netting~~which have remaining lease terms of ~~certain foreign currency transaction obligations and for the set-off of certain obligations in the event of an insolvency of~~less than one ~~of the parties~~year to eight years.

The following discussion relates to the ~~transaction. Within the Consolidated Balance Sheets, the Company records derivative assets and liabilities at fair value.~~Company’s lease accounting policy, effective January 1, 2019, under ASC Topic 842.

The ~~carrying value~~Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right of ~~cash and cash equivalents, accounts receivable, accounts payable,~~use (“ROU”) assets, other current liabilities, and operating lease liabilities on the ~~revolving line of credit approximate fair~~consolidated balance sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value ~~because~~ of the ~~short maturity~~future minimum lease payments over the lease term at commencement date. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. In determining the expected lease term, the majority of ~~these instruments.~~

the Company’s renewal options are not reasonably certain based on conditions of the Company’s existing leases and its overall business strategies. The Company will periodically reassess expected lease terms based on significant triggering events or compelling economic reasons to exercise renewal options. The Company utilizes its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Operating lease expense for

minimum lease payments is recognized on a straight-line basis over the lease term. The Company accounts for lease and non-lease components as a single lease component.

~~12.~~

Supplemental balance sheet information related to leases was as follows (in thousands):


	December 31, 2022		December 31, 2021
Other current liabilities	$	10,334	$	11,543
Operating lease liabilities	18,528		23,898
Total	$	28,862	$	35,441

Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows (in thousands):


	December 31, 2022
2023	$	8,151
2024	7,803
2025	5,683
2026	3,298
2027	2,969
Thereafter	3,089
Total future lease payments	30,993
Less implied interest	(2,131)
Total	$	28,862

Operating lease expense for the years ended December 31, 2022, 2021, and 2020 was $13.0 million, $13.0 million, and $12.2 million respectively, of which $1.6 million, $1.3 million, and $1.5 million related to variable lease payments. Short term lease payments were immaterial for the years ended December 31, 2022, 2021 and 2020. Operating cash flows for amounts included in the measurement of the Company’s operating lease liabilities for the years ended December 31, 2022, 2021 and 2020 were $11.5 million, $10.3 million, and $10.8 million, respectively. ROU assets obtained in exchange for lease liabilities during the years ended December 31, 2022, 2021, and 2020 were $4.2 million, $5.4 million, and $20.1 million, respectively. The weighted average remaining lease term of the Company’s operating leases as of December 31, 2022, 2021 and 2020 was 4 years, 4 years, and 5 years, respectively, and the weighted average incremental borrowing rate as of December 31, 2022, 2021 and 2020 was 3.3%, 3.3%, and 3.5%, respectively.

17. Commitments and Contingencies

From time to time the Company is involved in legal proceedings, claims and litigation related to employee claims, contractual disputes and taxes in the ordinary course of business. Although the Company cannot predict the outcome of such matters, currently the Company has no reason to believe the disposition of any current matter could reasonably be expected to have a material adverse impact on the Company’s financial position, results of operations or the ability to carry on any of its business activities.

In June 2016, the Company entered into an agreement to purchase software licenses for internal use payable over a two-year period. As a result, the Company has recorded $0.8 million in “Other current liabilities” in the Consolidated Balance Sheet as of December 31, 2017.

Certain of the Company’s operating leases contain predetermined fixed escalations of minimum rentals during the original lease terms. For these leases, the Company recognizes the related rental expense on a straight-line basis over the life of the lease and records the difference between the amounts charged to operations and amounts paid as accrued rent expense.

The Company leases office space and certain equipment under various operating lease agreements. The Company has the option to extend the term of certain lease agreements. Future minimum commitments under these lease agreements as of December 31, 2017 are as follows ~~(in thousands):~~

Operating
Leases

2018 $ 6,535
2019 6,539
2020 6,072
2021 4,595
2022 2,773
Thereafter 2,970
Total minimum lease payments $ 29,484

~~Rent expense for the years ended December 31, 2017, 2016, and 2015 was approximately $7.9 million, $7.5 million, and $6.5 million, respectively.~~

~~13. Balance Sheet Components~~

December 31,
2017 2016
(In thousands)
Accounts receivable:
Accounts receivable $ 82,603 $ 80,461
Unbilled revenues 30,863 24,518
Allowance for doubtful accounts (1,272 ) (1,277 )
Total $ 112,194 $ 103,702

Property and Equipment:
Computer hardware (useful life of 3 years) $ 13,110 $ 12,191
Furniture and fixtures (useful life of 5 years) 3,772 3,306
Leasehold improvements (useful life of 5 years) 2,836 1,958
Software (useful life of 1 to 7 years) 5,159 9,186
Less: Accumulated depreciation (17,732 ) (17,753 )
Total $ 7,145 $ 8,888

Other current liabilities:
Accrued variable compensation $ 16,842 $ 10,979
Deferred revenues 3,278 3,138
Payroll related costs 2,971 2,607
Accrued subcontractor fees 469 1,049
Accrued medical claims expense 2,133 1,859
Professional fees 357 420
Estimated fair value of contingent consideration liability (Note 6) 8,148 3,384
Net working capital settlements - 62
Other current liabilities 3,879 4,139
Total $ 38,077 $ 27,637

Other non-current liabilities:
Deferred compensation liability $ 4,409 $ 3,662
Deferred income taxes 7,360 12,853
Other non-current liabilities 4,667 2,543
Total $ 16,436 $ 19,058

~~14. Allowance for Doubtful Accounts~~

~~Activity in the allowance for doubtful accounts is summarized as follows for the years presented (in thousands):~~

Year Ended December 31,
2017 2016 2015
Balance, beginning of year $ 1,277 $ 749 $ 911
Charges to expense 919 1,251 455
Uncollected balances written off, net of recoveries (924 ) (723 ) (617 )
Balance, end of year $ 1,272 $ 1,277 $ 749

~~15.~~18. Quarterly Financial Results (Unaudited)

The following tables set forth certain unaudited supplemental quarterly financial information for the years ended December 31, ~~2017~~2022 and ~~2016.~~2021. The quarterly operating results are not necessarily indicative of future results of operations (in thousands except per share data).

Three Months Ended,

March 31,
2017

June 30,
2017

September 30,
2017

December 31,
2017

(Unaudited)
Total revenues $ 111,019 $ 117,026 $ 123,738 $ 133,478
Total cost of revenues 74,944 77,635 81,139 90,030
Income from operations 4,859 8,225 10,957 4,939
Income before income taxes 4,530 7,619 10,532 4,462
Net income (1) 2,709 2,409 7,027 6,436
Basic net income per share 0.08 0.07 0.22 0.20
Diluted net income per share 0.08 0.07 0.21 0.19


	Three Months Ended,
	March 31, 2022		June 30, 2022		September 30, 2022		December 31, 2022
	(Unaudited)
Total revenues	$	222,111	$	222,738	$	227,614	$	232,599
Total cost of revenues	138,518		136,762		136,416		141,007
Income from operations	34,170		39,539		33,220		37,346
Income before income taxes	33,050		38,581		32,584		36,746
Net income	27,136		27,782		23,015		26,459
Basic net income per share	0.80		0.82		0.68		0.78
Diluted net income per share	0.75		0.77		0.64		0.74


	Three Months Ended,
	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021
	(Unaudited)
Total revenues	$	169,341	$	184,136	$	192,820	$	214,730
Total cost of revenues	106,062		113,180		118,260		131,311
Income from operations	20,206		26,094		28,014		31,618
Income (loss) before income taxes	16,788		22,718		24,180		(1,203)
Net income	13,593		16,573		17,396		4,529
Basic net income per share	0.43		0.52		0.54		0.14
Diluted net income per share	0.41		0.49		0.48		0.13

~~(1) See Note 10,~~ ~~Income Taxes,~~ ~~for additional information regarding the 2017 Tax Act and its impact on the fourth quarter of 2017.~~

Three Months Ended,

March 31,
2016

June 30,
2016

September 30,
2016

December 31,
2016

(Unaudited)
Total revenues $ 123,843 $ 124,396 $ 119,153 $ 119,590
Total cost of revenues 83,619 86,076 82,741 83,266
Income from operations 8,472 9,237 8,014 6,482
Income before income taxes 7,849 8,867 7,590 6,203
Net income 5,406 5,815 5,545 3,693
Basic net income per share 0.16 0.17 0.16 0.11
Diluted net income per share 0.16 0.17 0.16 0.11

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Perficient, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Perficient, Inc. and subsidiaries (the ~~“Company”)~~Company) as of December 31, ~~2017~~2022 and ~~2016,~~2021, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, ~~2017,~~2022, and the related notes (collectively, the “consolidated financial ~~statements~~”)statements). We also have audited the Company’s internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2022 and ~~2016,~~2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2017,~~2022, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company acquired ~~substantially all of the assets of Clarity Consulting,~~Inflection Point Systems, Inc. and ~~Truth Labs, LLC (together,~~ “~~Clarity~~”)its subsidiary (collectively, Inflection Point Systems) in ~~June 2017,~~September 2022 and Ameex Technologies Corporation and its subsidiaries (Ameex) in October 2022 (the acquired businesses), and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017, Clarity’s~~2022, the acquired businesses’ internal control over financial reporting associated with ~~9% and 4%~~1% of ~~the Company’s~~ total assets excluding goodwill and other intangible assets and 1% of total revenues ~~respectively,~~ included in the consolidated financial statements of the Company as of and for the year ended December 31, ~~2017.~~2022. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of ~~Clarity.~~the acquired businesses.

Change in Accounting Principle

As discussed in Notes 2, 6, and 12 to the consolidated financial statements, the Company has changed its method of accounting for convertible debt as of January 1, 2022, due to the adoption of ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40).

Basis for ~~Opinion~~Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ~~Management’s~~Management's Report on Internal Control over Financial ~~Reporting~~.Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ~~(“PCAOB”)~~(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of the customer relationships intangible asset related to the acquisition of Inflection Point Systems

As discussed in Notes 2 and 9 to the consolidated financial statements, the Company makes certain assumptions and judgments in determining fair value measurements for business acquisitions. During the year ended December 31, 2022, the Company consummated two business acquisitions. These acquisitions resulted in the recognition of customer relationships intangible assets of $29.9 million.

We identified the evaluation of the fair value of the customer relationships intangible asset related to the Inflection Point Systems acquisition as a critical audit matter. Evaluating the fair value involved a high degree of subjective auditor judgment related to the use of certain assumptions in the specific valuation model. The key assumptions used within the valuation model included forecasts of projected revenues and customer attrition rates. In addition, changes in these assumptions could have a significant impact on the fair value of the customer relationships intangible asset in the Inflection Point Systems acquisition.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s fair value measurement process for the Inflection Point Systems acquisition, including controls related to the determination of the key assumptions. We evaluated the forecasts of projected revenues and customer attrition rates used by the Company by comparing the assumptions to the acquiree’s historical performance and to the growth rates of peer companies. We compared the forecasts of projected revenues to industry data. We also involved valuation professionals with specialized skills and knowledge, who assisted us in evaluating customer attrition rates used by the Company to value the customer relationships intangible asset compared to historical customer attrition rates as well as qualitative factors such as the acquiree’s industry and customer base.

/s/ KPMG LLP

We have served as the Company’s auditor since 2007.

St. Louis, Missouri

~~March 1, 2018~~February 28, 2023


Item 9.			Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.


Item 9A.			Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer of the Company, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, the Company’s principal executive and principal financial officers have determined that the Company’s disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under those criteria, management concluded that the Company’s internal control over financial reporting was effective as of December 31, ~~2017.~~2022.

The Company acquired ~~substantially all of~~Inflection Point in September 2022, and Ameex in October 2022 (the “Acquired Businesses”). Management excluded the ~~assets of Clarity Consulting, Inc. and Truth Labs, LLC (together, “Clarity”) in June 2017. As permitted by SEC guidance, management excluded Clarity~~Acquired Businesses from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017.~~ ~~Clarity~~2022. The Acquired Businesses represented ~~9% and 4%~~1% of the Company’s total assets excluding goodwill and other intangible assets and 1% of the Company’s total revenues, ~~respectively,~~ as of and for the year ended December 31, ~~2017. Excluding identifiable intangible assets and goodwill recorded in the business combination, Clarity represented 1% of the Company’s total assets as of December 31, 2017.~~2022.

KPMG LLP, our independent registered public accounting firm, has audited our consolidated financial statements as of and for the year ended December 31, ~~2017~~2022 included in this Annual Report on Form 10-K, and has issued its report on the effectiveness of internal control over financial reporting as of December 31, ~~2017,~~2022, which is included herein.

Changes in Internal Control Over Financial Reporting

There ~~was~~were no ~~change~~significant changes in the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the ~~quarter~~year ended December 31, ~~2017,~~2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Item 9B.			Other Information.

None.

OnFebruary 23, 2018, as a result of the one-time benefit the Company received under the 2017 Tax Act and to facilitate retention of the Company’s executive employees, the Compensation Committee of the Board of Directors of the Company approved the payment of supplemental bonuses in the aggregate amount of $2.8 million to employees of the Company that are eligible to participate under the Company’s Executive Bonus Plan, as generally described in the Company’s proxy statement of its annual meeting of stockholders held on June 14, 2017. The bonus recipients included, among others, Jeffrey S. Davis, the Company’s President, Chief Executive Officer and Chairman, Kathryn J. Henely, the Company’s Chief Operating Officer, and Paul E. Martin, the Company’s Chief Financial Officer, Treasurer and Secretary. Messrs. Davis and Martin and Ms. Henely were awarded bonuses in the amounts of $300,000, $70,000, and $98,750, respectively. Such bonuses are to be paid by March 15, 2018.


Item 9C.			Disclosure Regarding Foreign Jurisdictions That Prevent Inspection.

None.

PART III


Item 10.			Directors, Executive Officers and Corporate Governance.

Executive Officers

Our executive officers, including their ages as of the date of this filing are as follows:

~~Name~~

~~Age~~

~~Position~~

Name

Age

Position

Jeffrey S. Davis

5358

Chairman of the Board ~~President~~ and Chief Executive Officer

~~Kathryn~~Thomas J. ~~Henely~~Hogan

5346

President and Chief Operating Officer

Paul E. Martin

5762

Chief Financial Officer, Treasurer and Assistant Secretary

Jeffrey S. ~~Davis~~Davis became the Chief Executive Officer and a member of the Board in 2009 and was elected Chairman of the Board in ~~February~~ 2017. He previously served as the Chief Operating Officer of the Company following its acquisition of Vertecon in April 2002 and was named the Company’s President in ~~2004.~~2004, in which capacity he served until February 2021. He served ~~the same role of~~as Chief Operating Officer at Vertecon from October 1999 tountil its acquisition by the Company. Before Vertecon, Mr. Davis was a Senior Manager and member of the leadership team in Arthur Andersen’s Business Consulting Practice, where he was responsible for defining and managing internal processes, while managing business development and delivery of all products, services and solutions to a number of large accounts. Mr. Davis also served in a leadership position at Ernst & Young LLP in the Management Consulting practice and in industry at Boeing, Inc. and Mallinckrodt, Inc. Mr. Davis currently serves as a member of the board of directors of St. Luke's Hospital in St. Louis, Missouri. Mr. Davis is an active volunteer member of the board of directors of the Cystic Fibrosis Foundation of St. Louis, Missouri and a member of the University of Missouri Trulaske College of Business advisory board. Mr. Davis has a M.B.A. from Washington University and a B.S. degree in Electrical Engineering from the University of Missouri.

~~Kathryn~~Thomas J. ~~Henely~~Hogan was appointed as the Company’s President in February 2021 and began serving as our Chief Operating Officer in ~~2009. Ms. Henely~~2018. Mr. Hogan joined the Company in January 2008 and has served the ~~St. Louis office following its acquisition~~Company in several capacities, including Vice President of ~~Vertecon in 2002. Ms. Henely was the~~Field Operations, General Manager, Director of ~~the St. Louis office~~Business Development, and ~~the Vice President for the Company’s largest business group, which included several local and national business units along with the Company’s offshore development center in China.~~Engagement Director. Prior to ~~her appointment to Chief Operating Officer she actively participated~~joining the Company, Mr. Hogan served in ~~the due diligence~~business development and ~~integration of several acquisitions within her business group. Additionally, she led the establishment of the Strategic Advisory Team~~leadership positions with Creative Metrics, PreVisor, and ~~Corporate Recruiting organization. Ms. Henely~~TEKsystems. Mr. Hogan received ~~her M.S. in Computer Science~~his M.B.A from the Kellogg School of Management at Northwestern University and a B.A. degree from Saint Mary’s University of ~~Missouri-Rolla and her B.S. in Computer Science from the University of Iowa.~~Minnesota.

Paul E. Martin joined the Company in ~~August~~ 2006 as Chief Financial Officer, Treasurer and Secretary. Mr. Martin served as Secretary until February 2022, when he was appointed as the Company’s Assistant Secretary. From ~~August~~ 2004 until ~~February~~ 2006, Mr. Martin was the Interim co-Chief Financial Officer and Interim Chief Financial Officer of Charter Communications, Inc. (NASDAQ: CHTR) (“Charter”), a publicly traded multi-billion dollar revenue domestic cable television multi-system operator. From ~~April~~ 2002 through ~~April~~ 2006, Mr. Martin was the Senior Vice President, Principal Accounting Officer and Corporate Controller of Charter, and was Charter’s Vice President and Corporate Controller from ~~March~~ 2000 to ~~April~~ 2002. ~~Prior to Charter, Mr. Martin was Vice President and Controller for Operations and Logistics for Fort James Corporation, a manufacturer of paper products with multi-billion dollar revenue.~~ From 1995 to ~~February~~ 1999, Mr. Martin was Chief Financial Officer of Rawlings Sporting Goods Company, Inc., a formerly publicly traded multi-million dollar revenue sporting goods manufacturer and distributor. Mr. Martin received a B.S. degree ~~with honors~~ in accounting from the University of Missouri –- St. Louis. ~~Mr. Martin is also a member of the board of the St. Louis chapter of Autism Speaks.~~

Additional information with respect to Directors and Executive Officers of the Company is incorporated by reference to the Company’s proxy statement to be used in connection with the ~~2018~~2023 Annual Meeting of Stockholders (the “Proxy Statement”) under the captions “Directors and Executive Officers,” and “Composition and Meetings of the Board of Directors and ~~Committees,” and “Section 16(a) Beneficial Ownership Reporting Compliance.~~Committees.” The Proxy Statement will be filed pursuant to Regulation 14A within 120 days of the end of the Company’s fiscal year.

Codes of Conduct and Ethics

Information on this subject is found in the Proxy Statement under the caption “Certain Relationships and Related Transactions” and is incorporated herein by reference.

The Company has adopted a Corporate Code of Business Conduct and Ethics that applies to all employees and directors of the Company while acting on the Company’s behalf and has adopted a Financial Code of Ethics applicable to the chief executive officer, the chief financial officer, and other senior financial officials. These policies are available on the

Company’s website at www.perficient.com. Any amendment to, or waiver of, the Financial Code of Ethics will be disclosed by the Company on its website at www.perficient.com.

Audit Committee of the Board of Directors

Information on this subject is found in the Proxy Statement under the caption “Composition and Meetings of the Board of Directors and Committees” and is incorporated herein by reference.


Item 11.			Executive Compensation.

Information on this subject is found in the Proxy Statement under the captions “Compensation of Directors,” “Compensation of Executive Officers,” “Directors and Executive Officers,” “Compensation Committee Report,” and “Compensation Committee Interlocks and Insider Participation” and is incorporated herein by reference.


Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information on this subject is found in the Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management,” “Directors and Executive Officers,” and “Equity Compensation Plan Information” and is incorporated herein by reference.


Item 13.			Certain Relationships and Related Transactions, and Director Independence.

Information on this subject is found in the Proxy Statement under the caption “Certain Relationships and Related Transactions” and “Composition and Meetings of the Board of Directors and Committees” and incorporated herein by reference.


Item 14.			Principal Accounting Fees and Services.

The Company’s independent registered public accounting firm is KPMG, LLP, St. Louis, MO, Auditor Firm ID:185.

Information on this subject is found in the Proxy Statement under the caption “Principal Accounting Firm Fees and Services” and incorporated herein by reference.

PART IV


Item 15.			Exhibits, Financial Statement Schedules.

~~Financial Statements~~

1.Financial Statements

The following consolidated statements are included in Part ~~III,~~II, Item 8 under the following captions:

~~Index~~	~~Page~~
Index		Page
Consolidated Balance Sheets		25 33
Consolidated Statements of Operations		26 34
Consolidated Statements of Comprehensive Income		27 35
Consolidated Statements of Changes in Stockholders’ Equity		28 36
Consolidated Statements of Cash Flows		29 38
Notes to Consolidated Financial Statements		30 39
Report of Independent Registered Public Accounting Firm		43

~~Financial Statement Schedules~~

2.Financial Statement Schedules

No financial statement schedules are required to be filed by Items 8 and 15(b) because they are not required or are not applicable, or the required information is set forth in the applicable financial statements or notes thereto.

~~Exhibits~~

3.Exhibits

See Index to Exhibits.


Item 16.			Form 10-K Summary.

None.

INDEX TO EXHIBITS


Exhibit Number		Description
2.1		Asset Purchase Agreement, dated as of December 18, 2014, by and among Perficient, Inc., Zeon Solutions Incorporated, Grand River Interactive LLC and Rupesh Agrawal, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed on December 19, 2014 and incorporated herein by reference
~~3.1~~2.2		Stock Purchase Agreement dated as of June 17, 2020, by and among Perficient, Inc., Perficient UK Limited, Productora de Software S.A.S., each of the Shareholders and the Representative, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on July 30, 2020 and incorporated herein by reference
2.3		Stock Purchase Agreement dated as of October 15, 2021, by and among Perficient, Inc., Perficient UK Limited, Izmul S.A., each of the Shareholders of Izmul S.A. and the Representative, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference
3.1		Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Registration Statement on Form SB-2 (File No. 333-78337) declared effective on July 28, 1999 by the Securities and Exchange Commission and incorporated herein by reference
3.2		Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Form 8-A filed with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 on February 15, 2005 and incorporated herein by reference
3.3		Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Registration Statement on Form S-8 (File No. 333-130624) filed on December 22, 2005 and incorporated herein by reference
3.4		Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on August 3, 2017 and incorporated herein by reference
3.5		Amended and Restated Bylaws of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2012 and incorporated herein by reference
4.1		Specimen Certificate for shares of Perficient, Inc. common stock previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on May 7, 2009 and incorporated herein by reference
~~10.1†~~4.2		Description of Securities, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference
4.3		Indenture, dated August 14, 2020, between Perficient, Inc. and U.S. Bank National Association, as trustee, relating to the Company’s 1.250% Convertible Senior Notes due 2025, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed August 18, 2020 and incorporated herein by reference
4.4		Form of 1.250% Convertible Senior Notes due 2025, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed August 18, 2020 and incorporated herein by reference
4.5		Indenture, dated November 9, 2021, between Perficient, Inc. and U.S. Bank National Association, as trustee, relating to the Company’s 0.125% Convertible Senior Notes due 2026, previously filed with the Securities and exchange Commission as an Exhibit to our Current Report on Form 8-K filed November 9, 2021 and incorporated herein by reference
4.6		Form of 0.125% Convertible Senior Notes due 2026, previously filed with the Securities and exchange Commission as an Exhibit to our Current Report on Form 8-K filed November 9, 2021 and incorporated herein by reference
10.1†		Perficient, Inc. Employee Stock Purchase Plan, previously filed with the Securities and Exchange Commission as Appendix A to our Schedule 14A filed on October 13, 2005 and incorporated herein by reference
~~10.2~~10.2†		~~Second Amended and Restated Credit Agreement~~ by and among Silicon Valley Bank, Bank of America, N.A., and US Bank, N.A., and Perficient, Inc. dated effective as of July 31, 2013, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on August 1, 2013 and incorporated herein by reference
~~10.3†~~	Amended and Restated Perficient, Inc. 2012 Long-Term Incentive Plan, previously filed with the Securities and Exchange Commission as Appendix A to our Schedule 14A filed on April 14, 2014 and incorporated herein by reference
~~10.4†~~10.3†		Second Amended and Restated Perficient, Inc. 2012 Long-Term Incentive Plan, previously filed with the Securities and Exchange Commission as Appendix A to our Schedule 14A filed on April 28, 2017 and incorporated herein by reference


~~10.5~~		~~Amendment No. 1 to Second Amended and Restated Credit Agreement~~, dated May 7, 2014, by and among Perficient, Inc., the Lenders party thereto and Silicon Valley Bank, as Lead Arranger, Book Manager, Swingline Lender and as Administrative Agent for the Lenders, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on May 8, 2014 and incorporated herein by reference
~~10.6†~~10.4†		~~Form of Restricted Stock Award Agreement (Non-Employee Director Award), previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on July 31, 2014 and incorporated herein by reference~~
~~10.7†~~	~~Form of Restricted Stock Award and Non-Competition Agreement (Employee Grant), previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on July 31, 2014 and incorporated herein by reference~~
~~10.8†~~	~~Form of Restricted Stock Unit Award and Non-Competition Agreement (Employee Grant), previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on July 31, 2014 and incorporated herein by reference~~
~~10.9†~~	~~Second~~Fourth Amended and Restated Employment Agreement with Chief Executive Officer of Perficient, Inc., effective as of ~~January 1, 2018, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on November 2, 2017 and incorporated herein by reference~~
~~10.10†~~	~~Second Amended and Restated Employment Agreement with Chief Financial Officer of Perficient, Inc.~~, effective as of January 1, 2018, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on November 2, 2017 and incorporated herein by reference
~~10.11~~	~~Amendment No. 2 and Consent to Second Amended and Restated Credit Agreement, dated January 2, 2015, by and among Perficient, Inc., the Lenders party thereto and Silicon Valley Bank, as Lead Arranger, Book Manager, Swingline Lender and as Administrative Agent for the Lenders,~~February 23, 2021, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2020 filed February 25, 2021 and incorporated herein by reference
~~10.12~~10.5†			~~Amendment No. 3 and Consent to Second~~Third Amended and Restated ~~Credit~~Employment Agreement~~, dated September 22, 2015, by and among~~ with Chief Financial Officer of Perficient, Inc., ~~the Lenders party thereto and Silicon Valley Bank,~~effective as ~~Lead Arranger, Book Manager, Swingline Lender and as Administrative Agent for the Lenders,~~of January 1, 2021, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on ~~November 5, 2015~~October 29, 2020 and incorporated herein by reference
~~10.13~~10.6†			~~Amendment No. 4 to~~ Second Amended and Restated ~~Credit~~Employment Agreement~~, dated June 24, 2016, by and among~~ with Chief Operating Officer of Perficient, Inc., ~~the Lenders party thereto and Silicon Valley Bank,~~effective as ~~Lead Arranger, Book Manager, Swingline Lender and as Administrative Agent for the Lenders,~~of February 23, 2021, previously filed with the Securities and Exchange Commission as an Exhibit to our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the year ended December 31, 2020 filed ~~on June 27, 2016~~February 25, 2021 and incorporated herein by reference
~~10.14~~10.7			Amended and Restated Credit Agreement, dated as of May 7, 2021, by and among Perficient, Inc., as Borrower, Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing lender, Bank of America, N.A., and U.S. Bank National Association, ~~Fifth Third~~as syndication agents, JPMorgan Chase Bank, N.A., as documentation agent, Wells Fargo Securities, LLC, BofA Securities, Inc. and ~~Perficient, Inc. dated~~U.S. Bank National Association as ~~of June 9, 2017,~~joint lead arrangers and joint bookrunners and the other lenders parties thereto, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed ~~on June 12, 2017~~May 7, 2021 and incorporated herein by reference
~~10.15†~~10.8†			Form of Restricted Stock Award Agreement (Non-Employee Director Award), previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on November 2, 2017 and incorporated herein by reference
~~10.16†~~10.9†			Form of Restricted Stock Award and Non-Competition Agreement (Employee Grant), previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on November 2, 2017 and incorporated herein by reference
~~10.17†~~10.10†			Form of Restricted Stock Unit Award and Non-Competition Agreement (Employee Grant), previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q filed on November 2, 2017 and incorporated herein by reference
10.18*10.11†			~~First Amendment~~Form of Restricted Stock Award Agreement (Non-Employee Director Award), previously filed with the Securities and Exchange Commission as an Exhibit to ~~Credit Agreement,~~our Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by ~~and among Perficient, Inc. the Subsidiary Guarantors, the Lenders, and Wells Fargo Bank, National Association~~reference
21.1*10.12†			~~Subsidiaries~~Form of Restricted Stock Award and Non-Competition Agreement (Employee Grant), previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference
23.1* 10.13†			Form of Restricted Stock Unit Award and Non-Competition Agreement (Employee Grant), previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference
10.14			Form of Convertible Note Hedge Transaction Confirmation, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed August 18, 2020 and incorporated herein by reference
10.15			Form of Warrant Transaction Confirmation, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed August 18, 2020 and incorporated herein by reference
10.16			Form of Convertible Note Hedge Transaction Confirmation, previously filed with the Securities and exchange Commission as an Exhibit to our Current Report on Form 8-K filed November 9, 2021 and incorporated herein by reference
10.17			Form of Warrant Transaction Confirmation, previously filed with the Securities and exchange Commission as an Exhibit to our Current Report on Form 8-K filed November 9, 2021 and incorporated herein by reference
10.18			Form of Exchange Agreement, previously filed with the Securities and exchange Commission as an Exhibit to our Current Report on Form 8-K filed November 9, 2021 and incorporated herein by reference
21.1*			Subsidiaries
23.1*			Consent of KPMG LLP
24.1*			Power of Attorney (included on the signature page hereto)
31.1*			Certification by the Chief Executive Officer of Perficient, ~~Inc.~~Inc. as required by Section 302 of the Sarbanes-Oxley Act of 2002
31.2*			Certification by the Chief Financial Officer of Perficient, Inc. as required by Section 302 of the Sarbanes-Oxley Act of 2002
32.1*			Certification by the Chief Executive Officer and Chief Financial Officer of Perficient, Inc. pursuant to 18 U.S.C Section 1350,, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


101*						The following financial information from Perficient, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2022, formatted in ~~XBRL (eXtensible~~iXBRL (inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, ~~2017~~2022 and ~~2016,~~2021, (ii) Consolidated Statements of Operations for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, (iv) Consolidated Statements of Shareholders’ Equity for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, (v) Consolidated Statements of Cash Flows for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, and (vi) the Notes to Consolidated Financial Statements
104						Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)


†			Identifies an Exhibit that consists of or includes a management contract or compensatory plan or arrangement.
*			Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~PERFICIENT, INC.~~
				PERFICIENT, INC.
		~~By:~~
			By:	/s/ Paul E. Martin
Date: ~~March 1, 2018~~		February 28, 2023		Paul E. Martin
				Chief Financial Officer(Principal Financial Officer and Principal Accounting Officer)

KNOW ALL ~~MEN~~PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeffrey S. Davis and Paul E. Martin, and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign on his or her behalf individually and in each capacity stated below any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

~~Signature~~

~~Title~~

~~Date~~

Signature

Title

Date

/s/ Jeffrey S. Davis

Chairman of the Board ~~President~~ and Chief Executive Officer

~~March 1, 2018~~February 28, 2023

Jeffrey S. Davis

(Principal Executive Officer)

/s/ Paul E. Martin

Chief Financial Officer

~~March 1, 2018~~February 28, 2023

Paul E. Martin

(Principal Financial Officer and Principal Accounting Officer)

/s/ Romil Bahl

Director

February 28, 2023

Romil Bahl

/s/ Ralph C. Derrickson

Director

~~March 1, 2018~~February 28, 2023

Ralph C. Derrickson

~~/s/ James R. Kackley~~

~~Director~~

~~March 1, 2018~~

~~James R. Kackley~~

/s/ David S. Lundeen

Director

~~March 1, 2018~~February 28, 2023

David S. Lundeen

/s/ Brian L. Matthews

Director

~~March 1, 2018~~February 28, 2023

Brian L. Matthews

/s/ Nancy C. Pechloff

Director

February 28, 2023

Nancy C. Pechloff

/s/ Gary M. Wimberly

Director

February 28, 2023

Gary M. Wimberly


Title of each ~~class:~~ ~~Common Stock, $0.001 par value~~ class	Trading Symbol(s)	Name of each exchange on which ~~registered:~~ registered
Common Stock, $0.001 par value	PRFT	The Nasdaq Global Select Market


	Shares	Weighted-Average Grant Date Fair Value
Restricted stock awards outstanding at December 31, 2021	642	$	55.34
Awards granted (1)	371	$	75.76
Awards vested (2)	(361)	$	46.68
Awards forfeited	(36)	$	66.75
Restricted stock awards outstanding at December 31, 2022	616	$	72.02


Other current assets:
Miscellaneous receivables	$	2,896	$	1,576
Contractual commitment asset	942		1,736
Federal/state income tax receivable	9,231		2,504
Other current assets	3,687		1,480
Total	$	16,756	$	7,296


Property and equipment:
Computer hardware (useful life of 3 years)	$	26,302	$	21,382
Furniture and fixtures (useful life of 5 years)	4,690		4,599
Leasehold improvements (useful life of 5 years)	7,693		7,850
Software (useful life of 1 to 7 years)	11,866		6,018
Less: Accumulated depreciation	(32,581)		(25,102)
Total	$	17,970	$	14,747


	December 31,
	2022		2021
	(In thousands)
Other non-current assets:
Non-current unbilled revenue	$	1,632	$	3,210
Company owned life insurance (“COLI”) asset	10,467		10,807
Long term deposits	1,929		1,653
Credit facility deferred finance fees, net	476		619
Other non-current assets	8,551		5,629
Deferred income taxes	18,061		1,340
Total	$	41,116	$	23,258


☑			Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended ~~December 31, 2017~~


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~PART I~~
~~Item 1.~~			~~Business.~~	1 PART I
Item ~~1A.~~1.	~~Risk Factors.~~ Business.	6 2
Item 1A.	Risk Factors.	7
Item 1B.	Unresolved Staff Comments.	13 19
Item 2.	Properties.	13 19
Item 3.	Legal Proceedings.	13 19
Item 4.	Mine Safety Disclosures.	13 19

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	14 20
Item 6.	~~Selected Financial Data.~~ [Reserved]	15 21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15 21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	24 31
Item 8.	Financial Statements and Supplementary Data.	25 33
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	44 67
Item 9A.	Controls and Procedures.	44 67
Item 9B.	Other Information.	44 67
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspection.	67
~~PART III~~
PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	45 68
Item 11.	Executive Compensation.	45 69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	45 69
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	45 69
Item 14.	Principal Accounting Fees and Services.	45 69

PART IV
Item 15.	Exhibits, Financial Statement Schedules.	46 70
Item 16.	Form 10-K Summary.	46 70

	High		Low
Year Ending December 31, 2017:
First Quarter	$	19.06	$	16.80
Second Quarter		19.12		16.20
Third Quarter		19.74		16.70
Fourth Quarter		20.22		17.65

Year Ending December 31, 2016:
First Quarter	$	21.92	$	15.46
Second Quarter		21.71		19.37
Third Quarter		22.66		17.66
Fourth Quarter		20.14		14.15

Revenues:	2017			2016			2015
Services revenues		89.5	%		85.9	%		86.9	%
Software and hardware revenues		8.0			10.3			9.8
Reimbursable expenses		2.5			3.8			3.3
Total revenues		100.0			100.0			100.0
Cost of revenues (depreciation and amortization, shown separately below):
Cost of services		57.3			56.2			55.2
Software and hardware costs		6.9			8.9			8.7
Reimbursable expenses		2.5			3.8			3.3
Total cost of revenues		66.7			68.9			67.2
Selling, general and administrative		22.3			20.8			21.1
Depreciation and amortization		4.1			3.7			3.9
Acquisition costs		0.3			0.3			0.3
Adjustment to fair value of contingent consideration		0.7			(0.3	)		0.1
Income from operations		6.0			6.6			7.4
Net interest expense		0.4			0.3			0.4
Net other expense		0.0			0.0			0.1
Income before income taxes		5.6			6.3			6.9
Provision for income taxes		1.8			2.1			2.0
Net income		3.8	%		4.2	%		4.9	%

Selling, General and Administrative Expense (in millions)	For the Year Ended December 31, 2017		For the Year Ended December 31, 2016		Increase (Decrease)			Percentage Change
Sales-related costs	$	30.3	$	28.4	$	1.9			7	%
Salary expense		26.3		25.3		1.0			4
Stock compensation expense		9.3		8.9		0.4			4
Office costs		9.2		8.9		0.3			3
Marketing expense		5.9		5.6		0.3			5
Variable compensation expense		5.2		2.0		3.2			160
Recruiting expense		5.1		5.7		(0.6	)		(11	)
Bad debt expense		0.9		1.1		(0.2	)		(18	)
Other		16.0		15.4		0.6			4
Total	$	108.2	$	101.3	$	6.9			7	%

	Financial Results						Explanation for Increases (Decreases) Over Prior Year Period
	(in thousands)						(in thousands)
	For the Year Ended December 31, 2016		For the Year Ended December 31, 2015		Total Increase Over Prior Year Period		Increase Attributable to Acquired Companies		Decrease Attributable to Base Business
Services Revenues	$	418,589	$	411,469	$	7,120	$	16,405	$	(9,285	)
Software and Hardware Revenues		49,954		46,622		3,332		4,226		(894	)
Reimbursable Expenses		18,439		15,530		2,909		4,427		(1,518	)
Total Revenues	$	486,982	$	473,621	$	13,361	$	25,058	$	(11,697	)

Selling, General and Administrative Expense (in millions)	For the Year Ended December 31, 2016		For the Year Ended December 31, 2015		Increase (Decrease)			Percentage Change
Sales-related costs	$	28.4	$	29.1	$	(0.7	)		(2	)%
Salary expense		25.3		23.9		1.4			6
Stock compensation expense		8.9		8.7		0.2			2
Office costs		8.9		8.2		0.7			9
Recruiting expense		5.7		6.0		(0.3	)		(5	)
Marketing expense		5.6		5.6		0.0			0
Variable compensation expense		2.0		3.4		(1.4	)		(41	)
Bad debt expense		1.1		0.4		0.7			175
Other		15.4		14.7		0.7			5
Total	$	101.3	$	100.0	$	1.3			1	%

	Common Stock Shares			Common Stock Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Treasury Stock			Retained Earnings		Total Stockholders’ Equity
Balance at December 31, 2014		32,855		$	43	$	334,645	$	(651	)	$	(95,353	)	$	66,044	$	304,728
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan		26			-		337		-			-			-		337
Net tax benefit from stock option exercises and restricted stock vesting		-			-		1,335		-			-			-		1,335
Stock compensation related to restricted stock vesting and retirement savings plan contributions		893			-		13,110		-			-			-		13,110
Purchases of treasury stock and buyback of shares for taxes		(411	)		-		-		-			(7,844	)		-		(7,844	)
Issuance of stock for acquisitions		1,031			2		15,359		-			-			-		15,361
Net income		-			-		-		-			-			23,007		23,007
Foreign currency translation adjustment		-			-		-		(1,224	)		-			-		(1,224	)
Balance at December 31, 2015		34,394		$	45	$	364,786	$	(1,875	)	$	(103,197	)	$	89,051	$	348,810
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan		10			-		197		-			-			-		197
Stock compensation related to restricted stock vesting and retirement savings plan contributions		753			1		13,973		-			-			-		13,974
Purchases of treasury stock and buyback of shares for taxes		(1,213	)		-		-		-			(21,746	)		-		(21,746	)
Surrender of stock in conjunction with net working capital settlement		(86	)		-		-		-			(1,499	)		-		(1,499	)
Issuance of stock for acquisitions		8			-		138		-			-			-		138
Net income		-			-		-		-			-			20,459		20,459
Foreign benefit plan		-			-		-		(34	)		-			-		(34	)
Foreign currency translation adjustment		-			-		-		(834	)		-			-		(834	)
Balance at December 31, 2016		33,866		$	46	$	379,094	$	(2,743	)	$	(126,442	)	$	109,510	$	359,465
Proceeds from the sales of stock through the Employee Stock Purchase Plan		8			-		135		-			-			-		135
Stock compensation related to restricted stock vesting and retirement savings plan contributions		784			-		14,096		-			-			-		14,096
Purchases of treasury stock and buyback of shares for taxes		(2,058	)		-		-		-			(36,797	)		-		(36,797	)
Surrender of stock in conjunction with net working capital settlement		(34	)		-		-		-			(632	)		-		(632	)
Issuance of stock in conjunction with acquisitions including stock attributed to future compensation		684			1		10,581		-			-			-		10,582
Net income		-			-		-		-			-			18,581		18,581
Foreign benefit plan		-			-		-		88			-			-		88
Foreign currency translation adjustment		-			-		-		833			-			-		833
Balance at December 31, 2017		33,250		$	47	$	403,906	$	(1,822	)	$	(163,871	)	$	128,091	$	366,351





Other current liabilities:
Accrued variable compensation	$	21,106	$	31,244
Deferred revenues	12,690		8,167
Estimated fair value of contingent consideration liability (Note 9)	32,702		21,644
Current operating lease liabilities	10,334		11,543

Payroll related costs	8,888		9,523
Professional fees	2,155		1,727
Accrued medical claims expense	2,901		2,605
Accrued IT expenses	4,277		1,776
Other current liabilities	9,727		5,648
Total	$	104,780	$	93,877





Other non-current liabilities:
Deferred income taxes	$	8,686	$	13,075

Other non-current liabilities	5,851		3,462
Reserve for uncertain tax positions	17,516		19,127
Non-current software accrual	2,146		2,710
Deferred compensation liability	9,316		9,458
Total	$	43,515	$	47,832


	Ameex			Inflection Point
Cash, net of cash acquired	$	26.2		$	44.6
Company common stock issued at closing	4.2			3.0
Contingent consideration (1)	4.2		(2)	6.6		(3)
Net working capital adjustment due to the seller(s)	1.8			(1.4)
Total allocable purchase price consideration	$	36.4		$	52.8


	Ameex		Inflection Point
Acquired tangible assets	$	7.3	$	3.4
Identified intangible assets	13.2		20.0
Liabilities assumed	(5.2)		(9.3)
Goodwill	21.1		38.7
Total allocable purchase price	$	36.4	$	52.8


	Acquisition Date to December 31, 2022
Revenues	$	9,452
Net income (loss)	$	(445)


	Talos			Overactive
Cash, net of cash acquired	$	14.9		$	93.9
Company common stock issued at closing	3.8			2.4
Contingent consideration (1)	9.0		(2)	12.6		(3)
Net working capital adjustment due to the seller(s)	0.1			1.4
Total allocable purchase price consideration	$	27.8		$	110.3


Customer relationships			5 - 10 years
Non-compete agreements			4 - 5 years
Customer backlog			1 year
Trade name			1 year
Developed software			1 - 7 years


2023	$	19,826
2024	$	14,479
2025	$	11,554
2026	$	9,522
2027	$	7,277
Thereafter	$	26,279

Acquired tangible assets	$	0.9
Acquired intangible assets		3.1
Liabilities assumed		(0.6	)
Goodwill		5.7
Total purchase price	$	9.1

	Weighted Average Useful Life	Estimated Useful Life	Aggregate Acquisitions
Customer relationships	5 years	5 years	$	2.5
Customer backlog	6 months	6 months		0.4
Non-compete agreements	5 years	5 years		0.2
Trade name	1 year	1 year		-
Total acquired intangible assets			$	3.1

Acquired tangible assets	$	6.0
Acquired intangible assets		15.0
Liabilities assumed		(3.6	)
Goodwill		24.3
Total purchase price	$	41.7

	Acquisition Date to December 31, 2017
Revenues	$	26,733
Net income	$	2,634

	Year Ended December 31,
	2017		2016
Balance, beginning of year	$	275,205	$	269,383
Purchase price allocations for acquisitions (Note 6)		29,756		5,716
Purchase accounting adjustments		-		195
Effect of foreign currency translation adjustments		277		(89	)
Balance, end of year	$	305,238	$	275,205

~~Customer relationships~~	~~5 – 10 years~~
~~Non-compete agreements~~	~~2 – 5 years~~
~~Customer backlog~~	~~6 – 12 months~~
~~Trade name~~	~~1 year~~
~~Internally developed software~~	~~1 – 7 years~~

2018	$	14,180
2019	$	12,317
2020	$	9,236
2021	$	7,098
2022	$	5,752
Thereafter	$	2,483


	December 31, 2022
Liability component:	2026 Notes		2025 Notes
Principal	$	380,000	$	23,258
Less: Unamortized debt issuance costs	(8,289)		(382)
Net carrying amount	$	371,711	$	22,876

	Operating Leases
2018	$	6,535
2019		6,539
2020		6,072
2021		4,595
2022		2,773
Thereafter		2,970
Total minimum lease payments	$	29,484

Other current liabilities:
Accrued variable compensation	$	16,842	$	10,979
Deferred revenues		3,278		3,138
Payroll related costs		2,971		2,607
Accrued subcontractor fees		469		1,049
Accrued medical claims expense		2,133		1,859
Professional fees		357		420
Estimated fair value of contingent consideration liability (Note 6)		8,148		3,384
Net working capital settlements		-		62
Other current liabilities		3,879		4,139
Total	$	38,077	$	27,637

Other non-current liabilities:
Deferred compensation liability	$	4,409	$	3,662
Deferred income taxes		7,360		12,853
Other non-current liabilities		4,667		2,543
Total	$	16,436	$	19,058

	Three Months Ended,
	March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
	(Unaudited)
Total revenues	$	111,019	$	117,026	$	123,738	$	133,478
Total cost of revenues		74,944		77,635		81,139		90,030
Income from operations		4,859		8,225		10,957		4,939
Income before income taxes		4,530		7,619		10,532		4,462
Net income (1)		2,709		2,409		7,027		6,436
Basic net income per share		0.08		0.07		0.22		0.20
Diluted net income per share		0.08		0.07		0.21		0.19

	Three Months Ended,
	March 31, 2016		June 30, 2016		September 30, 2016		December 31, 2016
	(Unaudited)
Total revenues	$	123,843	$	124,396	$	119,153	$	119,590
Total cost of revenues		83,619		86,076		82,741		83,266
Income from operations		8,472		9,237		8,014		6,482
Income before income taxes		7,849		8,867		7,590		6,203
Net income		5,406		5,815		5,545		3,693
Basic net income per share		0.16		0.17		0.16		0.11
Diluted net income per share		0.16		0.17		0.16		0.11