Performant Financial Corp. :PFMT-US: Earnings Analysis: Q1, 2017 By the Numbers : May 12, 2017

Performant Financial Corp. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Performant Financial Corp. – ExlService Holdings, Inc., HMS Holdings Corp. and ARC Document Solutions, Inc. (EXLS-US, HMSY-US and ARC-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 33.11 million, Net Earnings of USD -2.96 million.
  • Year-on-year change in operating cash flow of -96.45% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 33.11 33.81 31.2 38.07 38.28
Revenue Growth (%YOY) -13.51 -17.64 -18.99 -7.73 -0.73
Earnings (mil) -2.96 -12.3 -0.72 1.48 0.08
Earnings Growth (%YOY) -3798.75 -660.14 -127.71 103.44 101.82
Net Margin (%) -8.94 -36.36 -2.29 3.88 0.21
EPS -0.06 -0.24 -0.01 0.03 0
Return on Equity (%) -13.89 -53.58 -2.94 6.15 0.34
Return on Assets (%) -6.46 -24.52 -1.3 2.67 0.14

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Market Share Versus Profits

Revenues History
Earnings History

PFMT-US‘s change in revenue this period compared to the same period last year of -13.51% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that PFMT-US is holding onto its market share. Also, for comparison purposes, revenues changed by -2.08% and earnings by 75.93% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

PFMT-US‘s change in operating cash flow of -96.45% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -2.10% to -3.10% and (2) one-time items that contributed to a decrease in pretax margins from 0.40% to -7.96%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Performant Financial Corp. engages in the provision of technology-enabled services platform that provides recovery and analytics services. It identifies and recovers student loans, improper healthcare payments, delinquent state tax and federal treasury receivables. It operates through the Performant Recovery and Performant Technologies businesses. The Performant Recovery business focuses on audit and recovery services for commercial and government clients. The Performant Technologies business uses analytics to uncover value in complex data. The company was founded in 1976 and is headquartered in Livermore, CA.

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