Sapient Corporation: An unbeatable blend
Too tired to go out at night, but still want to enjoy the nightlife? Just sign in to your Facebook account, download the Burn Alter Ego applet, and upload your face onto an avatar. Your avatar will go out bar-hopping at night with your friends’ avatars, then report back in the morning in a blog that goes on your profile page, complete with photos. You’ll have so much fun you won’t even notice you’re shilling for Coca Cola’s new Burn Energy Drink.
This advertising campaign, which uses Facebook’s powerful platform as a viral ad carrier, is the brainchild of Sapient Interactive, one half of Boston-based global services firm Sapient Corporation (Nasdaq:SAPE). Sapient Interactive provides brand and marketing strategy, Web design and development, and emerging media expertise. The other side of the business, Sapient Consulting, provides business and IT strategy as well as outsourcing services such as testing, maintenance, and support. The $1.09 billion market-cap company recently dropped two rounds of good news on investors: the SEC closed its investigation of Sapient’s alleged stock options-backdating and will not bring enforcement action. Oh, and second-quarter results were a blowout that handily beat the Street’s expectations.
Service revenue for the second quarter was $165.8 million, up 29% year over year, with the fast-growing European market showing a 54% increase. The company posted second-quarter earnings of $11.6 million, or $0.09 EPS, compared with $847,000, or $0.01 a year earlier. Analysts had been expecting $0.06 per share on revenues of $158.4 million. Earnings per share adjusted for the company’s costs related to the stock options investigation and restatement were $0.13 for the quarter, compared with $0.07 last year.
Analysts see much cause for optimism in Sapient’s future. The company recently purchased London-based Derivative Consulting Group. With a significant operation in India, Sapient Consulting is already one of the first calls an investment bank makes when it wants to offshore its front-office applications. With the purchase of Derivative, the company significantly bolsters an already strong trading and risk management practice and lays further claim to its consulting niche of offshoring derivatives applications. Some analysts believe this niche focus gives Sapient an advantage over competitors that focus on a broad spectrum of lower-level outsourced functions.
On the interactive side, Sapient introduced BridgeTrack 5.0 late last year, a digital marketing suite that provides real time data on the effectiveness of online marketing campaigns and allows customers to instantly identify and recalibrate elements that aren’t working. This should only strengthen Sapient’s self-proclaimed position as the largest independent interactive agency in the world, as will its designation by several publications, including New Media Age and Consulting Magazine, as a great place to work. Great places to work attract the best talent in the market.
On the whole, Sapient has strong recurring revenues and a list of clients that covers a broad spectrum. The highest concentrations are in financial services, consumer and travel, and technology and communication, all sectors where online spending is expected to rapidly increase over the coming years. With big footprints in two unstoppable economic trends — offshoring and new media marketing — Sapient seems to have found the perfect combination of technology, creativity and business expertise.