© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for standing by, and welcome to the Perficient Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions]
I would now like to hand the conference over to your host, Chairman and CEO, Jeff Davis. Please go ahead.
Well, thank you, and thanks, everyone, for joining us this morning. With me on the call is Paul Martin, our CFO; and Tom Hogan, our President and COO. I'd like to thank you all again for your time this morning.
As typical, we've got about 10 to 15 minutes of prepared comments, after which we'll open up the call for questions. But before we proceed, Paul, will you please read the safe harbor statement?
Sure. Thanks, Jeff, and good morning, everyone. Some of the things we will discuss in today's call concerning future company performance will be forward-looking statements within the meanings of the securities laws.
Actual results may materially differ from those discussed in these forward-looking statements. We encourage you to refer to the additional information contained in our SEC filings concerning factors that could cause those results to be different than contemplated in today's discussion.
At times during this call, we will refer to adjusted EPS and adjusted EBITDA. Our earnings press release, including a reconciliation of certain non-GAAP financial measures to the most directly comparable financial measures, prepared in accordance with Generally Accepted Accounting Principles or GAAP is posted on our website at www.perficient.com.
We have also posted a slide deck which includes a reconciliation of certain non-GAAP guidance to the most directly comparable financial measures prepared in accordance with GAAP on our website under Investor Relations. Jeff?
Thank you, Paul. And once again, thanks, everyone for joining. We're pleased to be with you here this morning to discuss our third quarter results and provide guidance for fourth quarter and the remainder of 2021.
As you'll see that guidance, obviously, reflects our accelerating momentum and confidence. Perficient's strong performance continued in the third quarter as we built upon our first half success, continue to gain new customers expand existing relationships and take share. As we head into the final weeks of 2021 and look forward to 2022 and beyond, our business has never been stronger.
Digital transformation is driving tremendous spin and Perficient's own transformation has uniquely positioned us as a true next-generation global digital consultancy, that is poised for robust and sustainable growth. Organic offshore revenue during the quarter grew 48%, driven by accelerated demand and strong utilization.
And our aggressive global expansion continued recently, with two acquisitions that strengthen our ability to drive continued outperformance. Collectively, the addition of Talos Digital and Overactive brought nearly 800 New Latin American base colleagues to our team, increasing our nearshore capacity and capabilities.
I think it's worth pointing out that with these additions, Perficient achieved the milestone of now having more delivery talent offshore than onshore, a truly global organization. In fact, Forrester recently recognized Perficient on its list of Global Digital Service Providers. For the first time, we've met their stringent criteria for the inclusion.
But it's a combination of our strong U.S. presence with a deep and geographically dispersed global footprint that sets Perficient apart. We certainly compete globally for talent. But in terms of winning work, we rarely run into some of the more recognizable digital provider names that lack our domestic footprint. And that's because they don't have the relationships we do.
And frankly, they struggle to deliver the type of work that provides the most value to the customer, and hence, commands the highest rates. In fact, our revenue per billable colleague is typically more than double, and in some cases, triple of those burns. And that's because we're engaged in more strategic and mission-critical work.
We construct a blended rate that the customer is happy to pay, because we're helping them achieve their most important outcomes. We also believe that our strategy of growing a diversified global footprint creates advantage. We now have 25% of our billable colleagues in India, 25% in Latin America, just under half in North America and about 2% elsewhere.
Spreading that global talent helps insulate us from some of the geopolitical challenges others have had or may have in the future. And as we expand globally, we're focused on diversifying within regions as we have in the U.S. For example, our footprint in India now includes Chennai, Nagpur and Bangalore.
And while we're now among the top technology employers in Colombia, the acquisition of Overactive brings our presence in South America to now include Argentina, Chile, and Uruguay, where Overactive was headquartered.
As we expand in South America, we build brand and gain access to more talent in more countries, where education and literacy rates are high. technology infrastructure and acumen is strong, and business is relatively easy to conduct.
And the reason we're doing all this is that our clients are clamoring to work with a vendor that's local and global. It's a big differentiator for Perficient and key to the results we're delivering. In fact, on last quarter's call, we highlighted that 14 of our North American customers had begun to leverage our nearshore team.
That number now stands at 25. And those relationships that expanded - or relationships that expanded before are 2 most recent nearshore acquisitions. And Tom will share the full details regarding large wins during the quarter. But bookings remain strong. And as importantly, the pipeline continues to grow.
In fact, our total pipeline and very importantly, our weighted pipeline is stronger than it's ever been. We're pursuing hundreds of 7-figure deals and many 8-figure and beyond opportunities. So with that, I'm going to turn the call over to Paul, who will share the financial results, details for the quarter. Paul?
Thanks, Jeff. Services revenue excluding reimbursable expenses were $190.1 million for the third quarter of 2021, a 22.5% increase over the prior year. Services gross margin excluding reimbursable expenses and stock compensation increased 40 basis points to 40.3%.
SG&A expense was $39.3 million for the third quarter of 2021, compared to $34.6 million in the prior year. SG&A as a percentage of revenues decreased to 20.4% from 21.9% in the third quarter of 2020. Adjusted EBITDA for the third quarter of 2021 was $41.5 million, or 21.5% of revenues, compared to $31.1 million or 19.8% of revenues in the third quarter of 2020.
The third quarter 2021 included amortization of $4.3 million compared to $7.2 million in the prior quarter. The decrease in amortization expense was primarily due to certain intangibles in the PSL acquisition becoming fully amortized. Net interest expense for the third quarter of 2021 increased to $3.5 million from $2.8 million in the prior year, primarily as a result of the August 2020 convertible debt offering.
Our effective tax rate for the third quarter 2021 was 28.1% compared to 27.6% in the third quarter of 2020. The increase in the effective tax rate was primarily due to an increase in the Colombian tax rate that occurred in September 2021. And the related non-recurring adjustment to Colombian deferred tax liabilities. Net income increased to 182% to $17.4 million for the third quarter of 2021 from $6.2 million in the third quarter of 2020, primarily as a result of higher revenues, lower SG&A as a percentage of revenues, lower amortization expense or loss on extinguishment of debt, lower adjustments to fair value of contingent consideration.
Diluted GAAP earnings per share increased to $0.48 a share for the third quarter of 2021 from $0.19 in the third quarter of 2020. Adjusted earnings per share increased to $0.88 a share for the third quarter of 2021 from $0.67 in the third quarter of 2020. You can see the press release for a full reconciliation to GAAP earnings.
I'll now turn to the year-to-date results through September. Services revenue excluding reimbursable expenses were $537.8 million for the 9 months ended September 30, 2021, a 22.1% increase over the prior year. Services gross margin including reimbursable expenses and stock compensation increased 70 basis points to 39.8%. SG&A expense was $110.7 million compared to $101.7 million in the prior year. And SG&A as a percentage of revenue decreased to 20.3% from 22.6% in the 9 months ended September 30, 2020.
Adjusted EBITDA for the 9 months ended September 30, 2021 was $115.1 million or 21.1% of revenues compared to $81.3 million or 18.1% of revenues in the prior year. The 9 months ended September 30, 2021 include an amortization expense of $17.7 million compared to $15.6 million in the prior year. Net interest expense for the 9 months ended September 30, 2021 increased to $10.1 million from $6.8 million in the prior year, again primarily as a result of the August 2020 convertible debt offering.
Our effective tax rate increased to 25.3% for the 9 months ended September 30, 2021 from 24.2% for the 9 months ended September 30, 2020. Net income for the 9 months ended September 30, 2021 was $47.6 million compared to $21.8 million in the prior year, primarily as a result of higher revenues, gross margins, lower SG&A as a percent of revenues, lower acquisition costs, lower loss from extinguishment of debt, and lower adjustments to fair value of contingent consideration. This resulted in diluted GAAP earnings per share increasing to $1.39 for the 9 months ended September 30, 2021, compared to $0.67 in the prior year.
Adjusted earnings per share increased to $2.49 for the 9 months ended September 30, 2021 from $1.74 in the prior year. Our ending billable headcount at September 30, 2021 was 4,827, which includes 4,499 billable consultants, and 328 subcontractors, and the SG&A headcount was 710. Our outstanding debt, net of unamortized debt discount and deferred issuance costs as of September 30, 2021 was $186.5 million. We also had $56.4 million in cash and cash equivalents as of September 30, 2021, and $199.8 million of unused borrowing capacity under our credit facility. Our balance sheet continues to leave us well positioned to execute against our strategic plan.
And finally, our day sales outstanding on accounts receivable decreased to 71 days from 73 days in the third quarter of 2020.
I'll now turn the call over to Tom Hogan for a little more commentary on the metrics. Tom?
Thank you, Paul. Good morning, everybody. As Jeff mentioned, bookings remained strong in the third quarter. We booked 80 deals greater than $500,000 during the third quarter of 2021, which compares to 66 in the year-ago period. Global delivery by the way as embedded into virtually every one of those wins. Here are a couple of examples of the work we're doing. We're continuing a partnership with a leading healthcare technology company to consolidate multiple portals into a centralized customer experience. This multiyear, multi-short delivery strategy that spans our teams in India, Latin America and North America will create a single support portal for the client's entire line of products, while migrating to a streamlined system.
The new portal will ultimately reduce call volume, enable customer self-service, and transition 1,000s of users to the new site and introduce single sign-on functionality. Another example, our Perficient Latin America team alongside our cross-BU onshore teams are using multiple technology stacks to create 3 custom products that will improve the customer onboarding and support experience for a new financial services client, the cash access and ticket redemption service provider.
Our partnership will optimize the client digital strategy, reduce current customer service costs, and improve the digital customer and employee experiences. Growing a self-service - growing a service business is always a balancing act. You're either trying to find demand to support your supply or building supply to meet demand. And the current environment, the most pressing challenge is certainly around recruiting and retaining talent.
The good news is we're succeeding on that front as well. We're hiring faster than ever before in the infusion of talent the 2 recent acquisitions brought is another lever we can pull to prioritize the accounts with the greatest long-term potential and align our talent to our most important opportunities. As we compete for talent in the market, Perficient's value proposition has resonated strongly, because we've made a conscious effort to build a unique and compelling culture to ensure Perficient is perceived as an employer of choice.
As we know, it's working, because our employees themselves are telling us that they're engaged, excited and enthusiastic about Perficient. We recently conducted an all colleague employee engagement survey, where an outstanding 98% of our employees responded. Standard employee survey responses are well below that particularly a company of our size.
But at Perficient, colleagues know their voices are valued, and can and will drive improvement. At least, based on employee feedback, we've done things like increased our maternity and paternity coverage, launch wellness programs and services that employees and their families can access.
We've created thriving employee resource groups, including Women in Technology, and a Giving ERG that focuses entirely on volunteerism and philanthropy. Our colleagues are excited about building careers at Perficient, because we ask for it and react to it. But their feedback is collectively helping us grow and shape our future together.
That's a key reason we feel great about sustaining and growing our performance over time. So again, a great quarter. We're focused on finishing strong in 2021 and carrying that momentum into 2022 and beyond. And with that, I'll turn things back over to Jeff to discuss fourth quarter and update outlook for the full year. Jeff?
Thanks, Tom. So Perficient expects its fourth quarter 2021 revenue to be in the range of $203 million to $209 million. Fourth quarter GAAP earnings per share is expected to be in the range of $0.61 to $0.64. Fourth quarter adjusted earnings per share is expected to be in the range of $0.90 to $0.93.
And Perficient expects its full year 2021 revenue to be in the range of $749 million to $755 million, 2021 GAAP earnings per share in the range of $2 to $2.03, and 2021 adjusted earnings per share in the range of $3.38 to $3.41.
So, with that, operator, we can open up the call for questions.
Thank you. [Operator Instructions] Our first question comes from the lines of Surinder Thind of Jefferies. Your line is open.
Good morning. Congratulations on the results, gentlemen.
Thank you.
My first question is about the deal pipeline and revenue visibility. Can you maybe talk - you mentioned that I think on a weighted average, it's the largest it's ever been at this point? Can you maybe talk about, with these large wins, what it's kind of doing to the overall length of your projects at this point? Are we beginning to see some measurable changes in duration here?
And then, maybe can you talk a little bit about, from a demand perspective, how far in advance do clients now need to kind of lock up resources for you?
Sure. So we definitely are seeing the relationships and the projects extend in duration, definitely. That's the reason the backlog is what it is. And by the way, when I refer to the weighted pipeline, and even the backlog, as I just referred to, I'm talking both, obviously, in absolute dollars, but also as a percent of our forecast. So, to your to your question, or to your point, we're definitely increasing our visibility.
We have a pretty clear line of sight into and through Q1 now. And really, we're getting a pretty good handle on what we think 2022 is going to shape up like. So we're feeling quite good about that and definitely increasing. If you take out, say, the bottom 10% of deals, doing just simple statistics, yeah, you'll see that the duration of projects has extended substantially over, say, 2, 3 years ago.
And the 10% I'm referring to is oftentimes new relationships start small. So, again, if you kind of take those out, you'll see that the rest of it is quite extended. In terms of staffing, we're actually having great success. As Tom mentioned, recruiting is going well and we're able to staff projects, pretty much in real time.
I mean, there might be - obviously, there is a planning-cycle involved. And typically, a project might only start with an architect, a team lead, as really they're pulling those plans together and laying them out. So there is a sort of an inherent opportunity up front for us to work on staffing, while that planning is underway. So that's working well. We're not experiencing any delays due to staffing.
That's helpful. And then, industry-specific question. Obviously, we're seeing continued growth in the financial services side. But on the healthcare side, it seems like when I look at revenues on an absolute basis, or at least my calculations suggest that they've been kind of flat to down the last couple quarters. Any color you can provide there, in terms of what's going on within Financial Services, where things seem to be trending really well, and in healthcare, where it seems to be a bit more flat?
Yeah, I mean, keep in mind, the backdrop there is we're growing 20%-plus organic. So when you say flat, I would say, it's maybe dropped or flat on a relative basis, but still growing in that double-digit range. Now, that said, it does ebb and flow, like a lot of our industries do to a small degree, I would say.
And, in fact, the bookings in healthcare in the third quarter were really substantial. So I actually think we'll see a tick-up there as well. The good news is that a lot of the reason that you're seeing it on a relative basis, maybe slow a little bit, is that we're seeing other sectors really pick up. And you hit on one that we're really excited about, which is financial services.
In the financial services space, we've got a really formidable management consulting team and do a lot of management consulting in that space and have for a long time. And I've often felt and, collectively, we agreed that we're underrepresented in technology there. So we really put out a concerted effort over the last 12 to 24 months to address that.
And you're seeing some of the results of that. So we're excited about Financial Services and the future there. I think that's going to continue to outpace other sectors for us right now. And again, a lot of it's because we were underrepresented. But of course, the spend is increasing there as well. So hopefully, that answers your question.
Yeah, it's very helpful. And then, just one other question here. Can you maybe talk a little bit about the dynamics of having a more global footprint at this point? When I think about, obviously, the nearshore capabilities you've added in South America, I also start thinking about the cost structure and currency fluctuations and so forth. Is that generally handled through hedging? Or do you pay people in U.S. dollars? Or how should we think about the complexity that that adds to your expense and potentially the volatility for having [indiscernible]?
Yeah, it adds some complexity. Of course, given the scale that Overactive was, and really PSL that we did last year, mature businesses that has good infrastructure and that we're going to be combining over time, but leaving a lot of it largely intact, because they operate exclusively in South America, and they've got really strong management there.
So we're leveraging that to address that complexity as it were. But yeah, we hedge. We don't pay in U.S. dollars. We pay in local currency. And we use hedging vehicles to address volatility. It's worked very well thus far. And, we'll see how it plays out. There is some, we're entering a little more, some countries, there is a little more volatility. But so far, we've had great success in hedging.
Thank you. I'll get back in the queue.
Sure.
Thank you. Our next question comes from Maggie Nolan of William Blair. Your line is open.
Hi, I wanted to ask about some of those newer geographies as well. Can you talk about how you're building a hiring engine there? Thoughts about your ability to grow these new locations organically going forward?
Yeah, absolutely. Kind of as I just alluded to, these organizations have strong talent acquisition capability already in place. So, while we're obviously going to plug that into sort of our centralized engine, helping them from a marketing standpoint, and getting out there with the branding, the reality is, again, we're going to continue to leverage the TA that they have in place and that's great. These are fast-growing businesses and have been for a while.
So they've got a formidable team in place. And again, we'll be leveraging that and scaling it as we as we need to. And I believe, we will need to, because the demand there is just tremendous.
Okay. And then, you've been operating comfortably above the 20% adjusted EBITDA level in terms of margins for a couple of quarters here. When we think about a little bit more long-term, what's the balance you're envisioning for reinvesting into the business for growth versus letting margins kind of continue to expand as your delivery footprint has changed so much?
Yeah, good question. Of course, we've continued to reinvest in the business all along the way. So there's not sort of a stair-step function there, that's going to kick in along the way. We're going to continue that level of investment, which is typically sort of at or with our growth level. And it's particularly focused on sales, but of course, it's also focused on our employees, as Tom went through, a number of areas and programs that we invest in. And, of course, there is training and recruiting involved in terms of a lot of that reinvestment.
Again, I think that's more of a, kind of a linear straight line than any kind of a stair step. So, I see that continue with the level, what it is, in terms of adjusted EBITDA or EBITDA margins, I do think there's expansion opportunity continuing. We're enjoying some nice economies, I've mentioned before that, I think, this year, we're clearly on a path to be around a couple of 100 basis point expansion on EBITDA.
Looking forward, will we continue at that clip of expansion? Probably not. But I do think it will continue to expand. I probably wouldn't hazard a guess too much into next year. But, I think, maybe half of that is achievable. So, obviously, we will be providing guidance on next year later. But we feel good about, again, some continued at least modest expansion. And if you consider 100 basis points modest, and I think that's going to continue for quite some time and still allow for investment.
Okay. Thanks. Congrats on another beat-and-raise.
Thanks, Maggie.
Thank you. Our next question comes from Mayank Tandon of Needham. Your question, please.
Thank you. Good morning. Congrats, Jeff.
Thanks, Mayank.
I just wanted to go back to the revenue trajectory. So could you just give us a sense of what the implied organic growth is in the fourth quarter and then for fiscal 2021? And then, based on your comments around the demand picture, should we expect another year at least low-double-digit growth in 2022, even though you're not giving specific guidance, maybe just some color, so we can be more appropriate with our models, as we look out into next year?
Sure. Yeah, happy to do that. So, yeah, the implied guidance at the midpoint for Q4 is just over 20%, 21%. And that's at the midpoint, and obviously, our goal will be to come in above that. So the implied is, again, around 20%, 21%. Yeah, as we look ahead to next year, and I mentioned earlier, that we're getting some good visibility, certainly into Q1 and even the first half. We're feeling really good about sustaining growth levels at or near where we're at, so I think, yes, double digits, for sure. And I would say, probably high teens, and I don't see any reason right now that we can't sustain. The levels that we're driving right now, as we look ahead and looking at our pipeline and looking at the bookings that we're enjoying, and the bookings that we're putting up now, primarily impact Q1 and Q2. So Q4 is in the bag. So those are good indicators that we'll be able to sustain high growth levels similar to what we're enjoying now.
That's great to hear. And then just turning to the balance sheet, I was curious in terms of funding the Overactive acquisition, given the cash on hand, and then the access to credit. Could you just talk about what your plans are on them maybe potentially building in some more ammunition for future M&A, if that is something on the agenda?
Sure. I'm going to let, Paul, chime in here as well. But in terms of funding Overactive, we had cash on the balance sheet, we did take a small draw on the line, I think $40 million or so to make up the balance of that. But, our cash flow is tremendous, we - our free cash flow is really good. And so even when we do these large acquisitions that we've done over the last 12 months or so, we're able to pay that down pretty quickly. So I point back to PSL, and, that was - what, 8 figure, 9 figure deal. And, we ended up here a year later with still $50 million on the balance sheet. So, I think, the line that we have is, I mean, there is more than adequate to do what we do accomplish what we want to be. Paul, is there anything you'd like to add to that?
No, I think, the main thing, we did a combination of cash to draw on the line, as Jeff said, to fund the Overactive deal. Q4 specifically is generally a strong cash flow generation quarter. So that'll help us, and as always we look at our balance sheet and in opportunities on, what are we going to do to continue to fund our growth and we feel we're well positioned to do so.
And, Paul, our line is $200 million plus on accordion feature, right?
That's correct. I think, it's a $75 million accordion feature in a $200 million line.
Yeah, which we have $40 million or $50 million against right now.
Right. Very helpful. Thanks so much, Jeff and Paul.
Thanks, Mayank.
Sure. Thanks.
Thank you. Our next question comes from Brian Kinstlinger of Alliance Global Partners. Your question, please.
Hey, guys, great results. Given growth is accelerating, can you talk about where utilization and attritional, and your goals for utilization? And then you highlighted increased wage pressure, I think, most of that comes from the U.S. So can you talk about if you see that impacting the P&L at all over the next 12 months that offset some of that margin expansion?
Yeah, fair question. So utilization is running 80% to 82%, which we've sustained now for several quarters, if you go back even into 2020, frankly, during kind of the toughest part of the pandemic, we were still over 80%. So, 80% to 82% is the range that we like to be in and we feel confident is sustainable. In terms of attrition, our attrition has picked up a little bit, I think there was some pent-up demand, and we were in the low-double-digits. So 11%, I think, was the bottom last year during the height of the pandemic. So, I think, we're seeing a little bit of a kick up there that I believe is probably temporary. But we're a little over 20%, I think, 22%, 23% in this past quarter on an annualized basis, year-to-date, it's actually still below 20% on an annualized basis.
Our goal around that, by the way, is 15% to 20%, I think, genuinely below 15% is unhealthy just like above 20% is costly. So our goal would be to be somewhere around the middle of that. But given the circumstances and the environment we're in, I think, we can expect the higher end of that 15% to 20%. And as Tom pointed out in the early part of the call, we are really shoring up a very strong, or I should say, scaling up a very strong platform with talent acquisition that we've got in place. So the team has done an amazing job, they're recruiting against that, but also recruiting on top of that, obviously, our tremendous growth.
And as I said before, we're not experiencing hindrances due to labor shortages. So we're able to meet our demand. And, in terms of wage inflation, I don't know that, I don't recall anybody necessarily alluding to that, but we're seeing about 3% of it, we're not seeing anything yet. That's above sort of our normal rate pool in any given year. So, right now, the wage increases this year will be around 3%, maybe 3% to 4% somewhere in there.
But to your point, part of the reason that we're able to afford that without it affecting the P&L margin, clearly the shift to, or I should say, the incremental revenue going to offshore, which is a very, very high margin delivery service right in the 50%, 55% range. And we're actually seeing rates tick up again as well. So we've got some incentives in place and driving the sales team to modestly push rates up, we don't want to price ourselves out of anything, we want to maintain this growth momentum, as I mentioned earlier, so we're very careful about that. But we have been able to inch up rates a bit, we're up about - and North America were up about $2 from last quarter. So that's about 1.5% in a single quarter that doesn't suggest that we're going to do 6% over a year. But we are seeing them took off, which will help offset that cost.
That's great. Just a couple of quick ones on Overactive, it sounds like a trailing 12 months of $40 million. Can you tell us what organic growth was? Is your utilization similar? Or is it lower as you can absorb people? And then just comment on their geography, do they have local customers they don't have that arbitrage, or are they all North American and European customers? Thank you. That's all for me.
Yeah, the utilization there is about the same as us. Their organic growth has been higher, law of large numbers. So their organic growth, I want to say has been in the 30%-plus, maybe close to 40%. And again, similar utilization, so we weren't looking at it as sort of overnight capacity. We're looking more at their access to the talent pool, which they've demonstrated to perform very well with.
And, yeah, there are local customers, there are some domestic customers in Latin America, they probably brought a little more than PSL did. But we also gained some from PSL. Obviously, we continue to, or we intend to continue to service that that market. But we also intend to drive a lot of demand or in a lot of increased demand from our existing client base, which is mostly North America, but we've got some global customers as well.
Great. Thanks so much.
Thank you.
Thank you. Our next question comes from Puneet Jain of JP Morgan. Please go ahead.
Hey, thanks for taking my question. So high-teens growth for next year, just a clarification, did you mean that organic growth or reported growth including acquisition contribution?
No, I was speaking just organic.
That's great. Like that would be like very bullish like the current growth rate is continuing to next year. So would you attribute that to industry-wide strong demand trends as clients continue to spend in digital areas? Or would that be more driven by Perficient specific drivers such as more efficient delivery that you didn't have before?
I think, it's the latter, and you've probably heard me talk about this for a while now. We've been getting many years ago now. We had done a lot of work on our sales platform in terms of the organization, the tools, the prescriptive nature of quotas, et cetera, and really equipping that team. We've improved our onboarding. We've improved our talent acquisition there. So that we're getting better success out of sales folks that we're hiring. We've got a very robust platform now that is very scalable. And, as I mentioned earlier, that's where a lot of our reinvestment, that business will go, we'll be to increasing our sales capacity. Because we know that if we get to the table, we win more than we lose.
So we're going to continue to focus on that, I think, a lot of it's coming from that evidence of that, by the way, I'll point to our top 50 customers, where we're growing those relationships at about 15% that's total revenue growth. And keep in mind that many of those same customers now are really embracing our offshore, nearshore capability. So that incremental 15% is actually coming from offshore, nearshore, which is running a rate that's about a quarter of our U.S. rate.
So if you think about the hours involved in that, we're growing very substantial in those accounts. Their spend is not increasing that much, even in digital, it's not increasing that much. So a lot of our growth is actually coming from taking share away from competitors. That's the point of a bad example. And, I think, that's going to continue, not just in the top 50, but in other accounts as well.
And then, lastly, I would say, certainly, the market is good for digital transformation services, digital experience. So we're in a good spot as well, it just - in certain senses, and in terms of the broader market.
Got you. I appreciate that. And with Latin America as big as India in terms of delivery footprint, how do you think about your further global diversification plans? And are there any differences in the 2 regions in terms of what type of services you deliver from each one of them?
Yeah, I think at any given point in time, there are some skills that might be more prevalent or stronger at a given region. Obviously, our goal over time is to sort of neutralize that and have the ability to choose for anything that we're delivering, choose any location in terms of sourcing the experts to deliver that. So for the most part, the skills are very similar, super capable, great people. And again, our long-term goal would be that everybody has some level of skill, and pretty much everything we do. So that, again, we've got options to pick and choose wherever, it makes the most sense for the client to draw on those deliveries resources.
Got you. Thank you.
Thank you.
Thank you. Our next question comes from Vincent Colicchio of Barrington. Your question, please.
Yeah, Jeff, a follow-up on the last question. So what is your target for your geographic footprint? Do you know yet, what I mean is - what portion offshore versus onshore?
I think, first and foremost, we're going to continue to take advantage of what we're seeing out there. And, you can see, we've been driving 48% plus, I think, it was 75%, even in the second quarter. And that's, again, why we've done those acquisitions, we see just tremendous opportunity there. So, I think, going forward sort of notionally, I'd like to see offshore, nearshore that kind of get to what I think is a tipping point of maybe 50% in terms of revenue, right? So we already mentioned that. We're already there in terms of consultants. And, I'd like to see us get there in terms of revenue, where we'll really begin to see I think that that strong margin from those other regions, really, really driving some margin expansion for the company. When does that come about? It's tough to say, if we can continue to drive the growth that we are now, and I believe, we will I don't see any reason we can't in terms of the offshore, then I think it's about 3 years out, where we could be approaching that level.
And can you provide an update on pricing? Are we seeing any inflation given the market?
We're definitely seeing more openness among clients. They're seeing it. It's interesting, it's actually a real advantage for us, particularly in existing accounts where we can see a lot of competitors really struggling to come up with resources, and that's actually opening up some opportunities for us. So in terms of rate increases, yes, again, more openness to that. We're getting [Cola] [ph], as an example built into MSAs now, where that was difficult in the past. Of course, our business is changed now, where MSAs in the past may have been short lived, but as you know, our focus on land and expand and maintaining these relationships, and the average tenure of those top-50 is I want to say about 9 or 10 years.
So, we're going back and even when we're renewing new MSAs with those existing accounts, they're tolerant to build in [Cola] [ph]. And certainly, in new accounts, we're getting higher rates than existing accounts.
So I think there is tolerance. And I think that's going to increase. In fact, we're doing, working hard to get out in front of it. We've got our sales team pretty focused on that. And we know that more is coming. So we want to be on the frontend of that.
Where do you stand with some of the discounts you gave during the pandemic? Have some returned to normal in terms of pricing?
Yeah, actually, I would say, I would say substantially all. But you might recall that we've pretty much cut those off in the first part of this year. So I'd say as we stand here today, there probably aren't many, if any, at all, sort of pandemic discounts.
And last question, I must have missed. What was organic growth in the quarter?
22%.
Thanks. Great job in the quarter.
Thanks, Vince.
Thank you. [Operator Instructions] Our next question comes from the line of Jack Vander Aarde of Maxim Group. Your question, please.
Great. Good morning, guys. Thanks for taking my questions. Solid quarter, sold guidance again. Jeff, first question for you. In your prepared remarks, you mentioned that revenue per billable colleague is typically more than double, sometimes triple, relative to some of the other notable names in this space. And you said, I think more due to strategic and mission-critical work.
First question, were you referring to your overall billable employees? Or was this just offshore, nearshore billable employees?
That's overall. So overall revenue per employee. Although, I will tell you that our offshore and nearshore is typically above theirs as well.
Okay, fantastic. Well, and that just seems more so encouraging, because of the fact that your average billable rates are far below what you charge relative to some of the larger competitors. Is this sort of average revenue delta outperformance, something you think that is sustainable? And, over the - a trend you expect to continue over the next couple of years? I'm just trying to understand why you have such a, I guess, a better, it's just a utilization factor. But you're also just putting your employees to work more than others, even if at a lower rate. How are you sustaining this?
Yeah, I don't think it's utilization so much. I imagine that they run similar utilization to us. And again, we're not running crazy utilization. And kind of the low 80%s is, again, something we can sustain and have for quite some time now.
So I think it's actually more a factor of, or I think this is - I know this is it - and this is, I think, a really critical differentiator for us. It is the North American presence that we have, that allows us to establish very strategic relationships with the majority of our clients, which are in the U.S. And so, once we've established those and demonstrated the value that we bring to the table is of strategic nature, we're able to command stronger rates, certainly in North America.
But then that extends to our offshore and nearshore capability. The clients place a value on the solution that we're delivering. And again, we start earlier in the cycle than a lot of our competitors do. And by that, I mean, we're starting with ideation. We're starting with what is the business problem or business opportunity that the clients are trying to address.
So as we establish ourselves as an end-to-end provider, with those clients, and I'll kind of point back to those top 50 again, the relationships that we have there, those are not staff augmentation. Those are strategic solution-driven engagements. And now, we're able to extend more and more of that work into our offshore and nearshore capability, with very attractive rates there as well.
Great, fantastic. I appreciate it. And then, just one last question maybe for Tom. You had 80 large deals in this third quarter. And I'm not sure if you touched on this during your prepared remarks, but are you able to provide any additional color regarding the number of 7-figure and 8-figure deals that either you closed in the third quarter or you expect to close in the upcoming quarters, just because you touched on that last quarter?
Yeah, I didn't cover that, Jack. But I'll tell you that pipeline continues to grow, and the number of deals continues to accelerate. Jeff mentioned, the number of deals we're chasing is more than ever, as far as the 6- and 7-figure deals. I don't have the numbers handy, but I'll tell you, Jack, that they're accelerating. And year-over-year, I don't have it in front of me, but continue to increase the large deals that are coming into the pipeline.
Okay. Fair enough. That's all I need to know. Great quarter, guys. I'll hop back in the queue.
Thanks, Jack.
Thanks, Jack.
Thank you. At this time, I'd like to turn the call back over to Jeff Davis for closing remarks. Sir?
All right. Well, as you could see, things are going very well at Perficient. And we're super excited, not only about the past results, but clearly the fourth quarter. And we've talked a lot about the longer-term outlook as well, and particularly 2022 that we've got great visibility into and feel really strongly about. So we look forward to speaking to all of you again in February. Thank you for your time today.
And this concludes today's conference call. Thank you for participating. You may now disconnect.