Perficient Inc (PRFT) Q1 2021 Earnings Call Transcript

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Perficient Inc (PRFT -2.11%)
Q1 2021 Earnings Call
Apr 29, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2021 Perficient Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker for today, Jeff Davis, Chairman and Chief Executive Officer. You may begin.

Jeff Davis -- Chairman and Chief Executive Officer

Thank you, and thank you, everyone, for your time this morning. This is Jeff Davis. With me on the call is Paul Martin, our Chief Financial Officer; and Tom Hogan, our President and Chief Operating Officer. I want to thank you again for your time. As is typical, we've got about 10 to 15 minutes of prepared material, after which we'll open up the call for questions.

Before we proceed, Paul, would you please read the safe harbor?

Paul Martin -- Chief Financial Officer

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 meaning of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and 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 measure prepared in accordance with generally accepted accounting principles or GAAP, is posted on our website at www.proficient.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 our Investor Relations. Jeff?

Jeff Davis -- Chairman and Chief Executive Officer

Thanks, Paul. And once again, good morning, and thanks, everyone, for joining. We're excited to be with you this morning to discuss our first quarter and an updated outlook for the remainder of 2021. Just more than two months ago, we issued a full year forecast that called for accelerating revenue growth and increasing profitability. Since then, the velocity and intensity of our momentum has only grown. Perficient's business and our optimism regarding the future is as strong as it has ever been right now. As you know, for several years, we've been working to transform Perficient from a primarily U.S.-based firm to a true global digital consulting leader.

And as you can see from our results and the revised outlook, we're well on our way. Organic offshore revenue growth during the quarter was 42%. Let me repeat that. Organic offshore revenue growth was 42% in the first quarter and total offshore revenue growth was 130% year-over-year. New and existing customers are aggressively embracing our differentiated delivery model, which couples a strong and high-touch domestic presence with the nearshore and global delivery capabilities enterprises required today. Demand for our services has never been more robust and the same can be said for candidate and colleague interest in building careers at Perficient.

Our talent acquisition remains a core competency and another key differentiator for us. And while we've built that team and function out substantially in recent years, we're continually enhancing our capabilities through improved tools and processes, along with increased capacity, so that we can identify and onboard talent in our -- to support our growth. We continue to win Best Places to Work awards in several markets and have emerged as an employer of choice in many regards. We're assessing talent and hiring at an extraordinary pace right now. Tom will share the full details regarding large wins shortly.

But already this year, we've closed two 8-figure deals and a few dozen, actually, 7-figure deals. What's most exciting is that our pipeline shows little sign of abating. As quickly as we close these large deals, more appear. And again, it's really unprecedented demand. Some of that, of course, we can attribute to a general client confidence as the economy improves alongside vaccination rates and consumer optimism. But the success we're realizing right now is also the result of some very specific decisions and investment we've made along with advantages that are unique to Perficient. We continue to scale our sales organization.

Our brand is growing stronger and more relevant each day, and our clients continue to refer to us as a breadth of fresh air. They appreciate our pragmatism and the benefit of a true strategic partner and the full breadth and depth of our capabilities. As I mentioned earlier, customers are gravitating to our collaborative approach and compelling blend of domestic and global delivery talent. The nearshore capabilities we added in 2020 have proven to be an even bigger game changer than we anticipated. In fact, we've introduced more than a dozen legacy Perficient accounts there and have many, many more in the pipeline.

Across industries, platforms and solution disciplines, we are succeeding. And we continue to collaborate routinely with key technology partners and our strong channel relationships remain an important factor in our business. Just this month, we were named the Red Hat North American Application Platform Success Partner of the Year, as well as the Talent U.S. Partner of the Year. And Paul will speak to the financial results shortly, but we were again pleased with the key performance metrics, particularly North American utilization, which we've sustained at or above our goal of 80% for the past four quarters.

Our business leaders are collaborating constantly and proactively managing our entire talent pool across the spectrum of accounts and opportunities. That's a key input to our quickly accelerating profitability. The business really is firing on all cylinders right now. Nothing has slowed us down in the second quarter so far. And at the moment, I can't see anything that prevents 2021 from becoming the strongest year in Perficient's history as the increased guidance, which we'll discuss shortly reflects.

With that, I'll turn the call over to Paul who will share the financial results details for the first quarter. Paul?

Paul Martin -- Chief Financial Officer

Thanks, Jeff. Services revenue reimbursed expenses were $166.5 million in the first quarter, an 18.1% increase over the comparable prior year period. Gross margins for the quarter ended March 31 increased 140 basis points to 37.4% compared to the prior period. SG&A expense was $34 million compared to $33.2 million in the comparable prior year period, and SG&A expense as a percentage of revenue decreased to 20.1% from 22.8% in the first quarter of 2020. Adjusted EBITDA for the first quarter of 2021 was $34.6 million or 20.4% of revenues compared to $23.8 million or 16.3% of revenues in the first quarter of 2020.

First quarter of 2021 included amortization expense of $7.1 million compared to $3.9 million in the comparable prior year period. The increase is primarily associated with the acquisitions completed in 2020. Net interest expense for the first quarter of 2021 increased to $3.3 million from $1.9 million in the comparable prior year period primarily as a result of the August 2020 convertible debt offering. Our effective tax rate for the first quarter of 2021 was 19% compared to 14.6% in the first quarter of 2020. The increase in the effective rate was primarily due to the relative decrease in tax benefits recognized related to share-based compensation deductions during the three months ended March 31, 2020.

Net income increased 51% to $13.6 million for the first quarter of 2021 from $9 million in the first quarter of 2020, primarily as a result of the improved EBITDA. Diluted GAAP earnings per share increased to $0.41 a share for the first quarter of 2021 from $0.27 a share in the first quarter of 2020. Adjusted earnings per share increased to $0.75 for the first quarter of 2021 from $0.51 in the first quarter of 2020. See the press release for a full reconciliation to GAAP earnings. Our ending billable headcount at March 31, 2021, was 4,164, including 3,882 billable consultants and 282 subcontractors. Ending SG&A headcount was 664.

Our outstanding debt net of unamortized debt discount and deferred issuance cost as of March 31, 2020, was $186.1 million. We also have 20 -- excuse me, $72.1 million in cash and cash equivalents as of March 31, 2021 and $124.8 million of unused borrowing capacity on our credit facility. Our balance sheet continues to leave us very well positioned to execute against our strategic plan. Finally, days sales outstanding on accounts receivable decreased to 66 days at the end of the first quarter of 2021 compared to 71 days at the end of the first quarter of 2020.

I'll now turn the call over to Tom for a little more commentary behind these metrics. Tom?

Tom Hogan -- President and Chief Operating Officer

Thank you, Paul, and good morning, everybody. Bookings in 2021 really gotten off to an incredible start for the quarter. We booked 92 deals greater than $500,000 during the first quarter of 2021, but that's far away. It's a record in terms of large deals, volume booked. Those 92 wins compared to 71 in a year ago period and 70 during the fourth quarter of 2020. As I mentioned a couple of quarters now, that's really the type of success that really underscores the traction we have in the market and how well we're executing right now. We still cannot travel to meet our customers and prospects, and we're not working on-site anywhere, yet we have won more large deals than ever before during Q1.

Jeff talked about us -- about our work in transforming to be a true global firm. More than 40% of our delivery resources are now offshore. And our global talent is embedded into virtually every single large deal we win and deliver. As an example, we recently partnered with a non-profit health insurance provider to overhaul its legacy website, mobile experience and customer portal, all of which require modernization. We beat out several competitors for a broad customer experience engagement due to our full scope of services and solution expertise.

Our global team is engaged in this 8-figure engagement that will improve processes across the provider's digital platforms to enhance the customer experience and increase their competitive advantage. That's just one of the many examples of our continued success in healthcare, where we continue to be a recognized leader for our technology industry expertise. In fact, just last week, we announced that Modern Healthcare ranked us the fourth largest healthcare IT consulting firm. Our momentum in this space is significant. And as we work with our clients to enhance healthcare delivery and improve the patient experience.

Financial services is another industry where we continue to shine. As an example, we recently entered the next phase of a project with an investment banking services holding company. We previously supported the company's strategic initiative to change how they treat and use data by creating a centralized location that allows stakeholders from across the organization to interact with information they need. During the second phase of the project, our initial delivery team will expand to include more than 130 onshore and offshore subject matter experts, providing expertise on data platforms and core development solutions. So again, just a fantastic quarter, a lot of momentum and what appears to be a great 2021 ahead of us.

And with that, I'll turn things back over to Jeff to discuss second quarter remainder of the year.

Jeff Davis -- Chairman and Chief Executive Officer

Thanks, Tom. So Perficient expects our second quarter 2021 revenue to be in the range of $173 million to $179 million. Second quarter GAAP earnings per share is expected to be in the range of $0.41 to $0.44 and second quarter adjusted earnings per share is expected to be in the range of $0.77 to $0.80. Perficient is raising its full year 2021 guidance to a range of $685 million to $710 million, raising 2021 GAAP earnings per share guidance to a range of $1.72 to $1.87 and raising 2021 adjusted earnings per share guidance to a range of $0.03 to $3.15.

With that, operator, we can open up the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Mayank Tandon with Needham & Company. Your line is open.

Mayank Tandon -- Needham & Company -- Analyst

Thank you. Good morning, Jeff. Congrats on the strong start to fiscal '21. I wanted to first ask you, as you look at the guidance for the remainder of the year. How are you thinking about growth from recruiting versus additional pricing leverage? I know you talked about ABR increases in the past? And then is there still room for utilization expansion? Or should we look at headcount expansion and pricing leverage to be the main catalyst the revenue growth this year?

Jeff Davis -- Chairman and Chief Executive Officer

Yes. I think it's going to be primarily through hiring. We're running, as I mentioned, the utilization at or above 80%, which we think is the long-term sustainable level. Obviously, we can let that creep up a little bit for a quarter or 2, but for the most part, that's, I think, a great sustainable goal. ABR, I think as I mentioned on the last call, we're not pushing for a lot of rate increase. We might see a little bit this year. Our goal primarily is to gain margin expansion through that mix shift to offshore, which actually is up to 14% of our revenue now. I think that's nearly double about a year ago, where we were roughly 8%.

Mayank Tandon -- Needham & Company -- Analyst

Got it. And then for my follow-up, I just wanted to -- given how strong demand is. I wanted to turn to the supply side. So given how much there is a war for talent, are you finding the people to fulfill demand? And then if you could maybe also speak to some of the headwinds, one may see in a strong demand climate, such as the wage pressures and attrition rates that could potentially crimp on margins, if that is the case. So any perspective on that would be helpful.

Jeff Davis -- Chairman and Chief Executive Officer

Sure, absolutely. I'll start at the -- at your last point there, a comment regarding attrition. Attrition throughout COVID was quite low, not surprising. But even in the quarter annualized, it was about 17%, 18%, which is right in the middle of our 15% to 20% goal. So attrition is, from our perspective, quite favorable relative to the market at large. Certainly, the market is tightening, but I'm going to let Tom comment. Tom leads talent acquisition or reports to him. And I'm going to let him comment on what we were able to accomplish in the first quarter in terms of hiring and a little commentary maybe on why we are a preferred employer. Tom?

Tom Hogan -- President and Chief Operating Officer

Jeff, the -- we really have a differentiated solution. As far as where we're adding for North American individuals. We've added hundreds in United States, 300-plus in North America alone. That's on top of the hundreds we added India as well as Columbia demand is quite high. As Jeff mentioned, as we're showing in our results. I will say we have a differentiated approach. We are not getting into bidding awards. We're talented. We have a location and a demand that people want to join Perficient as well. We've added to the way in which we're driving talent acquisition and becoming an employer of choice. I think Jeff mentioned the awards of Best places to Work.

We're really looking at a holistic approach to talent acquisition versus getting into bidding wars. And that's working. People want to be part of a winning team. They want a part of a growing team. They want to be part of great technology and digital transformation, and that's where Perficient really comes to play. So we're competing for talent quite successfully, and we don't have to overpay for it, which is a big advantage for us.

Mayank Tandon -- Needham & Company -- Analyst

Got it. And then just sorry, one housekeeping item. What was the organic growth in 1Q and your expectations for organic growth in 2Q and for the full year? Thank you.

Jeff Davis -- Chairman and Chief Executive Officer

Yes. It was about 10% in the first quarter. If you look at the midpoint of the second quarter, I want to say we're right around 14%, 15% -- I'm sorry, 15%, 16% and a total growth of '20. And for the year, the midpoint is roughly about 13% year-over-year.

Mayank Tandon -- Needham & Company -- Analyst

Thanks, Jeff.

Jeff Davis -- Chairman and Chief Executive Officer

Yes.

Operator

Thank you. Our next question comes from the line of Maggie Nolan with William Blair. Your line is open.

Maggie Nolan -- William Blair -- Analyst

Good morning. Congrats on the results.

Jeff Davis -- Chairman and Chief Executive Officer

Thanks, Maggie.

Maggie Nolan -- William Blair -- Analyst

I wanted to talk a little bit more about that offshore delivery and kind of the mix into offshore. What is the balance of moving existing work offshore that was previously being delivered onshore versus new engagements being delivered from offshore from the start?

Jeff Davis -- Chairman and Chief Executive Officer

It's a blend of the 2, but predominantly, it's new business. So we're not -- in some cases, we're helping clients maximize their budget potential by transitioning some work to offshore. And by that, I want to be clear, the budget remains the same. So the outcome is a win-win for both the client and us. We get better margins and they get more work done for the same budget. So we're shifting, that's primarily the model. But I would say -- and I'm estimating here, but I would say 70% of what we're driving offshore is new business, might be new business in existing accounts where we weren't pursuing or weren't considered offshore.

That's changing very rapidly, as you can see or completely new relationships where we're introducing offshore into the mix on pretty much every deal we propose.

Maggie Nolan -- William Blair -- Analyst

Okay, great. Thanks. And then when you think about the kind of near-term plan to be moving more work offshore. Are you looking at offshore and nearshore differently for 2021 than you maybe were in the past, just given the kind of resurgence of COVID in some key geographies like India?

Jeff Davis -- Chairman and Chief Executive Officer

We're faring extremely well from a business perspective. I know that it's sort of a human tragedy or a challenge, what's happening in not only India, but several other countries. But so far, we've really not been negatively impacted by that. So our decisions are based pretty much exclusively on what we feel like is mapped best to the customers' needs. In some cases, they have their own requirements or requests offshore versus nearshore. But often, where we're in control of that. Again, we assess what their needs are and what our capacity and skill sets are in the various locations and make decisions pretty much exclusively based on that.

Maggie Nolan -- William Blair -- Analyst

Okay. Thank you.

Jeff Davis -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Puneet Jain with JPMorgan. Your line is open.

Puneet Jain -- JPMorgan -- Analyst

Hey. Thanks for taking my question. And good performance in the quarter. As you emerge from the pandemic, obviously, with a more robust, low-cost mix. How is your competitive set changing? Like are you competing? Are you seeing new competitors competing more with digital pure plays or more with offshore names now than before?

Jeff Davis -- Chairman and Chief Executive Officer

It's interesting. I wouldn't say we're seeing any new competition. I would say that some of the stall awards that we compete with day in and day out and have for many, many years now, are improving their capabilities from a digital standpoint, offshore. But I'm convinced and the evidence shows that we still have -- we're still ahead of the curve. And we've been pretty much -- because we've built our offshore as digital was emerging as a big surge. We focused on digital. So all of our offshore is digital capable, I guess not true of probably any of our competitors. Those competitors who claim that, we don't actually see interestingly enough.

We don't compete with them. So we're competing primarily again with the majors and I'm confident that we're ahead of them and we'll stay there.

Puneet Jain -- JPMorgan -- Analyst

Got you. And as obviously, in India, COVID cases have significantly increased this quarter. Could you talk about how the pricing case load might impact your ability to hire and ramp-up in that location in 2Q and potentially 3Q?

Jeff Davis -- Chairman and Chief Executive Officer

Yes. It's a good question. And some of that, I guess, remains to be seen, but I'll tell you, even as we speak, literally in the month of April, we've had phenomenal success, obviously, growing it at greater than 40% for the last two quarters in terms of headcount. So we've had great success adding resources even in the COVID environment. Again, I think as Tom pointed out earlier, the comments and the differentiators that he mentioned don't apply just to the U.S., they apply to India as well, maybe even more so India, because the alternatives in India, frankly, are not as interesting, they're not as exciting.

And as Tom pointed out, we're winning. And we have a lot of people very interested in coming to work for Perficient, both in India, Colombia, all of our locations as in the U.S. So we've had great success. The pandemic doesn't seem to be driving any sort of reluctance on the part of targets. And the demographic that we hire, frankly, is a little below the threshold for where people are mostly susceptible to COVID. So I think that's a benefit as well.

Puneet Jain -- JPMorgan -- Analyst

Got you. Thank you.

Jeff Davis -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Surinder Thind with Jefferies.

Surinder Thind -- Jefferies -- Analyst

Hi, Jeff. I'd like to start with a question on just the bookings number. Obviously, the 92 large deal wins, as Tom mentioned, that's one of the biggest numbers you've seen. Can you provide any additional color in terms of the clients' willingness to commit at this point? Are they simply just opening up the spigots? And how should we think about that, the ability to win kind of future business on a go-forward basis? Obviously, 1Q is seasonally strongest, but is there still a lot left to tap in that pipeline at this point?

Jeff Davis -- Chairman and Chief Executive Officer

Yes, absolutely. Good question. So year-to-date, our -- and we don't disclose specifics. But year-to-date, our bookings are probably a record year-over-year. I don't know that for a fact, but I'm pretty sure they are. We're multiple double digits year-over-year organic normalized organic in our bookings. Along with that, I'll comment that our weighted pipeline, in particular, when we look at that, those are deals at 50% or better. 85% historically, of which typically close is substantially up year-over-year as well. So the outlook as well as the year-to-date results have been very, very strong.

Surinder Thind -- Jefferies -- Analyst

Got it. That's helpful. And then in terms of the actual mix that you're seeing. Any color in terms of the relative to historical -- the new logo wins versus wins at existing clients?

Jeff Davis -- Chairman and Chief Executive Officer

Yes, good question. And I commented earlier alluded to the investments that we've made in sales in terms of processes, compensation structure, management structure, being more prescriptive and adding capacity. Much of that is geared toward new logos. That said, it's a combination of the 2, but certainly shifting more toward the new. And I don't have the numbers sliced between new logos versus, say, legacy accounts, but we're seeing strength in both. And part of the strength that we're seeing in the existing accounts, I think it's worth pointing out, is not just that their spending has increased.

And a lot of our clients are Fortune 1000 customers who really didn't drop a lot. And we recall last year, given the backdrop wasn't the bad -- wasn't a terrible year for us. We didn't contract in any given quarter. And a lot of that was because of our sort of stalwart existing customers. So we're seeing increased spend there or increased share is what I should say. The spend is up a little. As you would expect, I think Gartner's whoever has got it at mid-single digits, upper-single digits for digital and or low double digits perhaps. And we're seeing more than that out of our existing relationships.

But again, new logo is making significant percentage of the bookings we're enjoying right now and a lot of those new logos, we've identified as enterprise accounts, which we define as accounts that we can -- we believe we've got a good shot at getting to $5 million annually or more, in many cases, more where we're just beginning those relationships. So I think the stage is set very well for the future beyond 2021 going into 2022 and beyond.

Surinder Thind -- Jefferies -- Analyst

Good to hear. And then, I guess, one related to the bookings number. In terms of, obviously, the earlier commentary about the strength of the consulting practice with respect to the healthcare business. Any color on maybe the mix that you're seeing in terms of the bookings wins, I believe, last quarter, a bit more than your revenue mix was within the Healthcare segment. Any change there?

Jeff Davis -- Chairman and Chief Executive Officer

Yes. No. Healthcare is up substantially. I want to say the bookings are up about 24% year-over-year. But financial services is improving dramatically. We had a very robust management consulting practice. We have a very robust amazement consulting practice in Finserv, where we work with clients on regulatory issues, etc., pretty high end stuff, bill rates in the high 100s or 200s dollars an hour. But in the last year or two, back to that kind of prescriptive comment I've made earlier, we've really focused on driving more technology business there, and that's getting a lot of traction and taking off. So that was up about 17% year-over-year. And those are our top two verticals that represent probably about half of our revenue between the two.

Surinder Thind -- Jefferies -- Analyst

Got it. I'll get back in the queue for additional questions. Thank you.

Jeff Davis -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Vincent Colicchio with Barrington Research. Your line is open.

Vincent Colicchio -- Barrington Research -- Analyst

Yes. Jeff, you sound excited about the nearshore business. I'm curious, is that helping you? Is that part of the strength of new deal signings in the quarter?

Jeff Davis -- Chairman and Chief Executive Officer

It absolutely helps. Again, I think we've improved our messaging. We've improved our strategy for offshore collective, but nearshore is just a hot place right now. Customers like it. The time zone, is example, our Perficient Latin America is in the mountain time zone, right? So timezone's perfect. And English is good. Skills are strong, and clients really embrace that. And the pricing is a little higher, obviously, than India. But valuable and the clients see the value in it. So it's certainly helping win new deals absolutely and expand some of those existing relationships that I mentioned a minute ago.

Vincent Colicchio -- Barrington Research -- Analyst

And could you give us an update on the sales force? You've been expanding it in recent years. Are you seeing a broadening of productivity that you're looking for?

Jeff Davis -- Chairman and Chief Executive Officer

We are. Absolutely. What's exciting is I think -- certainly, as I mentioned earlier, we can attribute some of the improvement to the climate. But I think a lot of it has to do with us really coming into our own relative to those investments we've made. You probably heard me talk about this before that we had dry powder. What I mean by that is newer salespeople that aren't quite hitting their stride yet going back a couple of years. Many of those have become more seasoned now, and the productivity is -- increases substantially. It's really kind of an exponential curve as they get that second, third year under their belt.

So we're seeing some of that, and we're continuing to expand and hiring really, our goal is to hire ahead of organic growth and continue to help fuel that growth.

Vincent Colicchio -- Barrington Research -- Analyst

Thank you. Nice quarter.

Jeff Davis -- Chairman and Chief Executive Officer

Thanks, Vince.

Operator

Thank you. Our next question comes from the line of Jack Vander Aarde of Maxim Group. Your line is open.

Jack Vander Aarde -- Maxim Group -- Analyst

Great. Thank you. Good morning, guys. Congrats on the solid quarter and strong guide.

Jeff Davis -- Chairman and Chief Executive Officer

Thank you.

Jack Vander Aarde -- Maxim Group -- Analyst

I guess just a couple of questions. Start with a question for Jeff. Clearly, the organic growth of the business has been solved in terms of returning back to growth. So maybe I just want to touch on the acquisition front of the business. You closed three acquisitions during the first half of 2020. And just wondering if we can expect any more acquisitions. I don't know in the near term, without providing any too much details, but just given your acquisitive strategy, wondering any thoughts on that.

Jeff Davis -- Chairman and Chief Executive Officer

Sure. Yes, good question. Yes, we're very active in the program still and have a number of things in the pipeline. I would say nothing sort of impending. So we're hoping to get maybe something done this quarter. Could be more Q3. As I mentioned before, and it really ebbs and flows quite a lot, as you can see. Last year, we -- as you pointed out, we closed three in the first half, but we're very, very selective. And that's really the reason I think we've had great success with our acquisition program. So we've got a few things in the works, very attractive. And hopefully, we'll get something done here, again, in the near future. And I'm still optimistic we can get a couple or three deals done this year, but it will see what we could find.

Jack Vander Aarde -- Maxim Group -- Analyst

That's helpful. Maybe just a follow-up to that. Is there -- I think before previously or historically, you've targeted kind of a certain revenue level from acquisitions? I'm not sure if that's a rough ballpark, but somewhere between maybe 5% and 10% of your overall revenue, which is not baked into the guidance, obviously. But is that still some -- how you think about it?

Jeff Davis -- Chairman and Chief Executive Officer

Yes. I think last year was a great year for -- I think we did about $60 million of acquired run rate revenue. And our goal -- our stated goal has always been around 50. To your point, as we're growing, I'd like to see that move up, and we'd love to repeat last year or even add more. So the deal we did with PSL was really kind of a poster child in many ways, including the size, plus $30 million plus revenue run rate. So we've got an appetite for that. At the same time, a lot of emerging technology, very dynamic industry right now and really, as always. I think maybe now more than in recent years. So as we're pivoting to these new hot skills, acquisitions make sense, and some of them may well be smaller if they've got that right equation.

Jack Vander Aarde -- Maxim Group -- Analyst

That's helpful color. And then maybe just one more question, maybe for Tom. Tom, large deals, obviously, everyone's kind of touched on this, but 92 this quarter, it's just -- it's exceptionally strong. Just wondering like the delta of that relative to last year and every quarter last year basically in history, is that sort of -- is that level of the delta an outlier here? Or is that kind of what you expect going forward as Perficient is clearly being more recognized on a global scale? Just wondering about the delta.

Tom Hogan -- President and Chief Operating Officer

Yes. I'd love to say you have to get promised that going forward. But I'd tell you the pipeline is strong. The deal size continues to grow as far as what we're going after. I don't think it's an outlier. I don't know if they'll always be as strong as far as incremental growth from a year-over-year basis or even sequentially, but I don't think it's an outlier. The deal of volume is up, but I'll tell you the size of deal is up as well, and that's indicative also of the pipeline or I'll see a large increased pipeline. The deal volume size is quite significant. So I don't think it's an outlier. I can't say it's going to be that high of year-over-year compare every single quarter, but it's definitely trending in that direction. I mean, we have really good velocity right now.

Jack Vander Aarde -- Maxim Group -- Analyst

Great. Well, that's very encouraging to hear. And congrats on the strong quarter again, guys. Thanks.

Jeff Davis -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Brian Kinstlinger with APG. Your line is open.

Brian Kinstlinger -- APG -- Analyst

Hi, guys. Nice to talk to you. And sorry, I hopefully don't repeat a question I got knocked off for 10 minutes. But 40% of your consultants are either offshore or nearshore. I want to dig into your expectations of delivery mix over the next year or 2. The Indian outsources traditionally targeted 70-30 in the offshore on-site mix. What's your long-term goal? And where do you think you'll be in, say, 18 or 24 months?

Jeff Davis -- Chairman and Chief Executive Officer

Yes, it's a good question. Yes, we expect to continue to drive the pace that we are. We're actually exploring additional acquisitions, in fact, in Latin America. But organically alone, I think that's going to quickly move from 40 to 50, perhaps by the end of this year, given the pace of growth that we have, certainly into next year. In terms of our mix on a project basis, of course, it really depends on the engagement. But I'll tell you, I don't think we're going to get to that high ratio that some of our competitors pursue. Frankly, I don't think digital implementation lends itself to those really, really high ratios.

We use more of a hybrid approach where the folks that are offshore are peers in terms of tenure experience level and skill set to the folks that are onshore. And it's a blend. And digital is high touch. So I don't know that it's going to be a 30-70 on to off for us any time in the near future. And like I said, depending on what happens in the industry, in general, a lot of the demand to these clients. So it's really about business. It's about change management. It's about their customer, understanding it, understanding their business, understanding the business culture in the United States are all relevant factors. So I think that's an advantage that we have. It's a differentiator that we're going to protect.

Brian Kinstlinger -- APG -- Analyst

Great. I have one follow-up on that, and then I'll ask one more question. Can you just talk about the differences between the gross margin of nearshore versus offshore? Is it significant? Is it close?

Jeff Davis -- Chairman and Chief Executive Officer

It's close. Yes, it's basically the same. It's in the 50s. Yes.

Brian Kinstlinger -- APG -- Analyst

Yes. So nearshore is obviously better given the higher bill rate and similar margin?

Jeff Davis -- Chairman and Chief Executive Officer

Yes.

Brian Kinstlinger -- APG -- Analyst

Yes. Okay. Lastly, I wanted to touch on two sectors. We don't talk about much auto as well as retail and CPG. They posted kind of a breakout sequential uptick in revenue. Granted they were smaller than healthcare and financial services. But maybe if you can put some context into any commonalities of what are driving the growth in these two sectors? And should we continue to expect to ramp in these sectors? Thank you.

Jeff Davis -- Chairman and Chief Executive Officer

Yes, I think so. We've got -- without any names, we've got some really significant accounts in each of those sectors, and particularly in automotive and a relationship that we've had for many, many years, where we've actually moved to a Tier one supplier, which is very unique. There's only a handful globally. And that's going to yield us quite a bit more work just in that one account, but that's happening across the board. And I do expect that those sectors are going to grow pretty nicely. They're just being well outpaced with the 24 and 17, respectively, in healthcare and financial services. So on a relative basis, they're maybe not growing quite as fast, but they're still growing absolutely.

Brian Kinstlinger -- APG -- Analyst

Great. Thanks so much.

Jeff Davis -- Chairman and Chief Executive Officer

Thanks, Brian.

Operator

Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Mr. Jeff Davis for closing comments.

Jeff Davis -- Chairman and Chief Executive Officer

Great. Well, thank you all for your time today. As you can see, we're really excited about where the business is at, what Q1 reflected and what the rest of the guidance for the year, Q2 and the rest of the year reflects. I think the stage is set for another year in 2022. And obviously, we'll be talking more and more about that as the year progresses. But again, thank you for your time, and look forward to speaking to you in about 90 days. Thank you.

Operator

[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Jeff Davis -- Chairman and Chief Executive Officer

Paul Martin -- Chief Financial Officer

Tom Hogan -- President and Chief Operating Officer

Mayank Tandon -- Needham & Company -- Analyst

Maggie Nolan -- William Blair -- Analyst

Puneet Jain -- JPMorgan -- Analyst

Surinder Thind -- Jefferies -- Analyst

Vincent Colicchio -- Barrington Research -- Analyst

Jack Vander Aarde -- Maxim Group -- Analyst

Brian Kinstlinger -- APG -- Analyst

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