Sapient Reports 10% Revenue Gain

Alan-Herrick-BBoston-based marketing services firm Sapient reported a 10% revenue gain for the second quarter to $279 million, while net income dipped 3% to $14.7 million. For the first six months of the year, revenue climbed 9% to nearly $540 million as net income fell 12% to just over $24 million.

Digital agency SapientNitro accounted for 70% of the firm’s revenues in the second quarter, or $194 million -- up 15%, company executives confirmed. Agency profits totaled $62 million, up nearly 16% from the prior quarter.

Part of the overall net income drop is due to investment and expansion.

Company CEO Alan Herrick told analysts on a conference call that expenses related to its expansion into Asia would outpace revenues this year by close to $15 million. For now, the company is expecting to reach break-even on its Asia investment by sometime in 2013.

Herrick also said that SapientNitro had a number of new business wins in the second quarter; clients include Home Depot, Rolls Royce, Philips, Intel, Heineken, UPS, Orville Redenbacher and SeaWorld.

However, Herrick said those new wins won’t be adding revenue to the company’s coffers in the second half of the year as quickly as the company had anticipated. He attributed the holdup to “increasing economic uncertainty,” resulting in delays in the start of new work, “slower decision making” on the part of clients and smaller budgets when work does begin.

A number of clients, he said, are focused on managing their own expenses and earnings for the balance of the year before authorizing new work.

The company now expects third-quarter revenues of between $277 million and $284 million with full-year revenues up 8% to 10%, or between $1.103 billion and $1.123 billion.

SapientNitro has been identified by analysts as a potential candidate for acquisition by one of the major holding companies, given the latest round of consolidation in the digital marketing services sector. WPP recently struck a deal to purchase AKQA, while Omnicom has reportedly been in talks to buy LBi. Dentsu has agreed to purchase London-based Aegis Group, which is both a traditional and digital media specialist.


 

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