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Globant Reports 2019 Second Quarter Financial Results

Revenue Growth and Earnings Momentum Continues

Second quarter revenues of $157.5 million, up 23.2% year-over-year
IFRS Diluted EPS of $0.36 for the second quarter
Non-IFRS Diluted EPS of $0.53 for the second quarter

LUXEMBOURG, Aug. 15, 2019 /PRNewswire/ -- Globant (GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2019.

Globant new logo (PRNewsfoto/Globant)

Please see highlights below, including certain Non-IFRS measures. Note that reconciliations between Non-IFRS financial measures and IFRS operating results are disclosed at the end of this press release.

Second quarter 2019 highlights

  • Revenue rose to $157.5 million, representing 23.2% year-over-year growth compared to the second quarter of 2018.
  • IFRS Gross Profit margin was 38.5% compared to 38.3% in the second quarter of 2018.
  • Non-IFRS Adjusted Gross Profit Margin was 40.2% compared to 40.1% in the second quarter of 2018.
  • IFRS Profit from Operations Margin was 12.3% compared to 12.5% in the second quarter of 2018.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.4% compared to 15.8% in the second quarter of 2018.
  • IFRS Diluted EPS was $0.36, compared to $0.39 in the second quarter of 2018.
  • Non-IFRS Adjusted Diluted EPS was $0.53, compared to $0.40 in the second quarter of 2018.

Six months ended June 30, 2019 highlights

  • Revenue rose to $303.7 million, representing 22.6% year-over-year growth compared to the first six months of 2018.
  • IFRS Gross Profit margin was 38.9% compared to 38.0% in the first six months of 2018.
  • Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to 39.6% in the first six months of 2018.
  • IFRS Profit from Operations Margin was 12.4% compared to 12.1% in the first six months of 2018.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.7% compared to 15.2% in the first six months of 2018.
  • IFRS Diluted EPS was $0.68, compared to $0.67 in the first six months of 2018.
  • Non-IFRS Adjusted Diluted EPS was $1.02, compared to $0.78 in the first six months of 2018.

"I am very pleased to announce another quarter of robust growth and solid financial performance. Our second quarter revenues for 2019 amounted to a record of $157.5 million, representing a 23.2% year-over-year growth," said Martín Migoya, Globant's CEO and co-founder.

"We continue to see strong demand coming from organizations as they look to transform their businesses. Industry analysts continue to report record spending in digital and cognitive transformation in excess of $5 trillion over the years 2018 to 2021," explained Martín Migoya. "As digitalization and high consumer expectations change, organizations need to adapt to stay relevant. We will continue to help our customers uncover ways to create more business value, making digital and cognitive transformation sustainable," added Martín Migoya.

"Once again, we delivered a solid performance in terms of revenues and EPS for the quarter. The strong net additions of Globers coupled with a slight reduction in attrition place us in a good position to capture market growth opportunities," explained Juan Urthiague, Globant's CFO.

Globant completed the second quarter with 9,905 Globers, 9,215 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the first quarter was as follows: 75.2% from North America (top country: US), 16.1% from Latin America and others (top country: Argentina) and 8.7% from Europe (top country: Spain). In terms of currencies, 88.7% of Globant's revenues for the second quarter was denominated in US dollars.

During the last twelve months ended June 30, 2019, Globant served 585 customers, 97 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 10.4%, 27.2% and 41.0% of second quarter revenues, respectively.

Cash and bank balances and Investments as of June 30, 2019 amounted to $58.2 million and current assets amounted to $241.2 million, accounting for 43.2% of total assets for the same period. Finally, as of June 30, 2019, 36.6 million common shares were issued and outstanding.

2019 Third Quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the third quarter and the full year of 2019:

  • Third quarter 2019 Revenues are estimated to be between $170-$172 million, implying 27.1% year-over-year growth at the midpoint of the range.
  • Third quarter 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $0.57-$0.61 (assuming an average of 37.9 million diluted shares outstanding during the third quarter).
  • Fiscal year 2019 Revenues are estimated to be in the range of $654-$660 million, implying 25.8% year-over-year revenue growth at the midpoint of the range.
  • Fiscal year 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $2.19-$2.25 (assuming an average of 37.7 million diluted shares outstanding during 2019). 

Conference Call and Webcast

Martín Migoya and Juan Urthiague will discuss the Q2 2019 results in a conference call today beginning at 4:30pm ET.

Conference call access information is:
US & Canada +1 (888) 346-2877 
International +1 (412) 902-4257
Webcast http://investors.globant.com/

Additionally, a replay will be available via the same dial-in number and on our investor relations website after the call.

About Globant (GLOB)

We are a digitally native company where innovation, design and engineering meet scale. We use the latest technologies in the digital and cognitive field to empower organizations in every aspect.

We have more than 9,900 employees and we are present in 17 countries working for companies like Google, Southwest Airlines, EA and BBVA, among others.

We were named a Worldwide Leader of Digital Strategy Consulting Services by IDC MarketScape report (2016 and 2017). We were also featured as a business case study at Harvard, MIT, and Stanford. We are a member of the Cybersecurity Tech Accord (2019).

For more information, visit www.globant.com

Non-IFRS Financial Measures

While the financial figures included in this press release have been computed in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting". The financial information in this press release has not been audited.

Globant provides non-IFRS financial measures in addition to reported IFRS results prepared in accordance with IAS 34 "Interim Financial Reporting". Management believes these measures help illustrate underlying trends in the company's business and uses the non-IFRS financial measures to establish budgets and operational goals, communicated internally and externally, for managing the company's business and evaluating its performance. The company anticipates that it will continue to report both IFRS and certain non-IFRS financial measures in its financial results, including non-IFRS measures that exclude share-based compensation expense, depreciation and amortization, impairment of assets and acquisition-related charges. Because the company's non-IFRS financial measures are not calculated according to IFRS, these measures are not comparable to IFRS and may not necessarily be comparable to similarly described non-IFRS measures reported by other companies within the company's industry. Consequently, Globant's non-IFRS financial measures should not be evaluated in isolation or supplant comparable IFRS measures, but, rather, should be considered together with its unaudited interim consolidated statement of financial position as of June 30, 2019 and December 31, 2018 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and six months ended June 30, 2019 and 2018, prepared in accordance with IAS 34.

Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Diluted EPS to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, share-based compensation expense, impairment of assets and acquisition-related charges. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.

Forward Looking Statements

In addition to historical information, this release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: our ability to maintain current resource utilization rates and productivity levels; our ability to manage attrition and attract and retain highly-skilled IT professionals; our ability to accurately price our client contracts; our ability to achieve our anticipated growth; our ability to effectively manage our rapid growth; our ability to retain our senior management team and other key employees; our ability to continue to innovate and remain at the forefront of emerging technologies and related market trends; our ability to retain our business relationships and client contracts; our ability to manage the impact of global adverse economic conditions; our ability to manage uncertainty concerning the instability in the current economic, political and social environment in Latin America; and other factors discussed under the heading "Risk Factors" in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission.

Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements.  Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.


 

Globant S.A.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

(In thousands of U.S. dollars, except per share amounts, unaudited)










Six months ended


Three months ended


June 30, 2019


June 30, 2018


June 30, 2019


June 30, 2018









Revenues 

303,685


247,604


157,534


127,892

Cost of revenues 

(185,616)


(153,404)


(96,889)


(78,861)

Gross profit

118,069


94,200


60,645


49,031









Selling, general and administrative expenses 

(79,192)


(63,880)


(40,560)


(32,681)

Net impairment losses on financial assets

(1,075)


(434)


(639)


(423)

Profit from operations

37,802


29,886


19,446


15,927









Finance income

2,692


16,018


1,801


13,665

Finance expense

(8,046)


(18,961)


(4,344)


(15,717)

Finance expense, net

(5,354)


(2,943)


(2,543)


(2,052)









Other income, net

8


4,521


27


4,507

Profit before income tax

32,456


31,464


16,930


18,382









Income tax

(6,972)


(6,898)


(3,545)


(3,957)

Net income for the period

25,484


24,566


13,385


14,425









Other comprehensive income, net of income tax effects








Items that may be reclassified subsequently to profit and loss:








- Exchange differences on translating foreign operations

(159)


(1,123)


457


(1,294)

- Net change in fair value on financial assets measured at FVOCI

27


(9)


(8)


(3)

- Gains and losses on cash flow hedges

433


-


1,315


-

Total comprehensive income for the period

25,785


23,434


15,149


13,128









Net income attributable to:








Owners of the Company

25,484


24,583


13,385


14,413

Non-controlling interest

-


(17)


-


12

Net income for the period

25,484


24,566


13,385


14,425









Total comprehensive income for the period attributable to:








Owners of the Company

25,785


23,451


15,149


13,116

Non-controlling interest

-


(17)


-


12

Total comprehensive income for the period

25,785


23,434


15,149


13,128

















Earnings per share 








Basic

0.70


0.69


0.37


0.40

Diluted

0.68


0.67


0.36


0.39









Weighted average of outstanding shares (in thousands)








Basic

36,361


35,584


36,516


35,735

Diluted

37,467


36,510


37,622


36,661

 

 

Globant S.A.

Consolidated Statement of Financial Position

(In thousands of U.S. dollars, unaudited)






June 30, 2019


December 31, 2018

ASSETS


Current assets




Cash and bank balances

42,132


77,606

Investments

16,110


8,635

Trade receivables

149,532


110,898

Other assets

11,138


-

Other receivables 

21,042


15,341

Other financial assets

1,268


550

Total current assets

241,222


213,030





Non-current assets




Investments

514


527

Other assets

7,792


-

Other receivables 

37,480


34,197

Deferred tax assets

19,135


16,916

Investment in associates

4,000


4,000

Other financial assets

2,343


345

Property and equipment

51,141


51,460

Intangible assets

12,846


11,778

Right-of-use asset

40,186


-

Goodwill

141,693


104,846

Total non-current assets

317,130


224,069

TOTAL ASSETS

558,352


437,099





LIABILITIES




Current liabilities




Trade payables 

26,169


17,578

Payroll and social security taxes payable

53,081


58,535

Borrowings

586


-

Other financial liabilities

5,338


9,347

Lease liabilities

14,800


-

Tax liabilities

6,862


7,399

Other liabilities 

5


44

Total current liabilities

106,841


92,903





Non-current liabilities




Trade payables

5,824


-

Borrowings

25,239


-

Other financial liabilities

1,061


3,418

Lease liabilities

28,270


-

Tax liabilities

153


-

Provisions for contingencies

2,486


2,862

Total non-current liabilities

63,033


6,280

TOTAL LIABILITIES

169,874


99,183





Capital and reserves




Issued capital

43,945


43,158

Additional paid-in capital

135,521


109,559

Other reserves

(1,835)


(2,136)

Retained earnings

210,847


187,335

Total equity attributable to owners of the Company

388,478


337,916

TOTAL EQUITY AND LIABILITIES

558,352


437,099





 

 

Globant S.A.

Supplemental Non-IFRS Financial Information

(In thousands of U.S. dollars, unaudited)










Six months ended


Three months ended


June 30, 2019


June 30, 2018


June 30, 2019


June 30, 2018









Reconciliation of adjusted gross profit








Gross Profit

118,069


94,200


60,645


49,031

Depreciation and amortization expense

2,920


2,003


1,693


1,010

Share-based compensation expense

2,453


1,953


1,010


1,292

Adjusted gross profit

123,442


98,156


63,348


51,333

Adjusted gross profit margin

40.6%


39.6%


40.2%


40.1%









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(79,192)


(63,880)


(40,560)


(32,681)

Depreciation and amortization expense

8,527


7,479


4,108


3,967

Share-based compensation expense

6,834


4,203


3,857


1,995

Acquisition-related charges (a)

3,165


1,265


1,333


707

Adjusted selling, general and administrative expenses

(60,666)


(50,933)


(31,262)


(26,012)

Adjusted selling, general and administrative expenses as % of revenues

(20.0)%


(20.6)%


(19.8)%


(20.3)%









Reconciliation of Adjusted Profit from Operations








Profit from Operations

37,802


29,886


19,446


15,927

Share-based compensation expense

9,287


6,156


4,867


3,287

Acquisition-related charges (a)

3,534


1,649


1,588


899

Impairment of assets (b)

-


48


-


48

Adjusted Profit from Operations

50,623


37,739


25,901


20,161

Adjusted Profit from Operations margin

16.7%


15.2%


16.4%


15.8%









Reconciliation of Net income for the period








Net income for the period

25,484


24,566


13,385


14,425

Share-based compensation expense

9,287


6,156


4,867


3,287

Acquisition-related charges (a)

3,631


(2,585)


1,614


(3,467)

Impairment of assets (b)

-


48


-


48

Expenses related to secondary share offering (c)

-


234


-


234

Adjusted Net income 

38,402


28,419


19,866


14,527

Adjusted Net income margin

12.6%


11.5%


12.6%


11.4%









Calculation of Adjusted Diluted EPS








Adjusted Net income 

38,402


28,419


19,866


14,527

Diluted shares

37,467


36,510


37,622


36,661

Adjusted Diluted EPS

1.02


0.78


0.53


0.40

(a)  Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our consolidated statements of operations, external deal costs, acquisition-related retention bonuses, integration costs, changes in the fair value of contingent consideration liabilities, charges for impairment of acquired intangible assets and other acquisition-related costs. We cannot provide acquisition-related charges on a forward-looking basis without unreasonable effort as such charges may fluctuate based on the timing, size, and complexity of future acquisitions as well as other uncertainty inherent in mergers and acquisitions.

(b) Impairment of assets include, when applicable, charges for impairment of intangible assets, charges for impairment of investments in associates and charges for impairment of tax credits, net of recoveries.

(c) Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held WPP Luxembourg Gamma Three S.àr.l. ("WPP").

 

 

Globant S.A.

Schedule of Supplemental Information (unaudited)







Metrics

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019







Total Employees

7,279

7,807

8,384

9,259

9,905

IT Professionals

6,775

7,285

7,821

8,609

9,215







North America Revenues %

78.4

77.5

77.4

73.7

75.2

Latin America and Others Revenues % 

13.1

12.5

13.5

17.0

16.1

Europe Revenues %

8.5

10.0

9.1

9.3

8.7







USD Revenues %

86.4

85.1

85.6

83.3

88.7

Other Currencies Revenues %

13.6

14.9

14.4

16.7

11.3







Top Customer %

11.1

11.9

10.9

10.5

10.4

Top 5 Customers %

32.5

33.4

30.9

28.9

27.2

Top 10 Customers %

44.6

45.8

42.7

40.8

41.0







Customers Served (Last Twelve Months)

355

344

373

472

585

Customers with >$1M in Revenues (Last Twelve Months)

92

90

90

91

97

 

Investor Relations Contact:
Paula Conde, Globant
investors@globant.com
+1 (877) 215-5230

Media Contact:
Wanda Weigert, Globant
pr@globant.com
+1 (877) 215-5230

 

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