Investors

News

Globant Reports 2017 Third Quarter Results - Strong Revenue Growth Driven by Increasing Demand Environment

SAN FRANCISCO, Nov. 16, 2017 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three and nine months ended September 30, 2017.

Globant logo

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.

Third quarter 2017 highlights

  • Revenue increased to a record $109.7 million, representing 33.2% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $42.8 million (39.0% Non-IFRS Adjusted Gross Profit Margin), an increase of $8.6 million compared to $34.2 million for the third quarter of 2016 (41.5% Non-IFRS Adjusted Gross Profit Margin).
  • Non-IFRS Adjusted Net Income was $12.5 million (11.4% Non-IFRS Adjusted Net Income Margin), compared to a profit of $10.5 million for the third quarter of 2016 (12.8% Non-IFRS Adjusted Net Income Margin).
  • Non-IFRS Adjusted Diluted EPS was $0.34 per share (based on an average of 36.3 million diluted shares), compared to Non-IFRS Adjusted Diluted EPS of $0.30 for the third quarter of 2016 (based on an average of 35.5 million diluted shares).

Nine months ended September 30, 2017 highlights

  • Revenue for the period increased to $298.0 million, representing 26.5% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $115.3 million (38.7% Non-IFRS Adjusted Gross Profit Margin), an increase of $14.0 million compared to $101.3 million (43.0% Non-IFRS Adjusted Gross Profit Margin) in the first nine months of 2016.
  • Non-IFRS Adjusted Net Income was $31.8 million (10.7% Non-IFRS Adjusted Net Income Margin), an increase of $2.7 million, compared to a profit of $29.1 million (12.4% Non-IFRS Adjusted Net Income Margin) in the first nine months of 2016.
  • Non-IFRS Adjusted Diluted EPS was $0.88 per share (based on an average of 36.1 million diluted shares during the first nine months of the 2017), an increase of $0.06 compared to Non-IFRS Adjusted Diluted EPS of $0.82 for the first nine months of 2016 (based on an average of 35.3 million diluted shares during the first nine months of the 2016).

"We are very pleased with our third quarter performance. Our revenues increased to a record $109.7 million, representing solid 33.2% year-over-year growth, and we continue to experience strong momentum in our business" said Martín Migoya, Globant's CEO and co-founder.

"We continue to have strong demand from companies looking to achieve digital transformations. Moreover, we expect to see a significant opportunity coming from artificial intelligence, which has the potential to impact all businesses and industries. We believe that our expertise and Studio model positions us as a leader in this area and makes us an ideal partner for companies facing these transformations," added Martín Migoya.

"Q3 was another quarter of robust and solid revenue growth as the demand for our service offerings continues to expand and the relationship with our strategic accounts across different verticals remains strong. In terms of operating performance, we expect to continue executing on our strategy to keep gross margins stable, diversify our talent base and maintain disciplined spending on our SG&A so that we can expand our operating leverage", explained Alejandro Scannapieco, Globant's CFO.

Globant completed the third quarter with 6,397 Globers, 5,925 of whom were IT professionals. The geographic revenue breakdown for the third quarter was as follows: 79.1% from North America (top country: US), 13.3% from Latin America and others (top country: Chile) and 7.6% from Europe (top country: Spain). 85.4% of Globant's revenue for the third quarter was denominated in US dollars, and the remaining 14.6% was denominated in other currencies, including GB pounds, Euros and other Latin American currencies.

During the last 12 months ended September 30, 2017, Globant served 346 customers, 78 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top 5 customers and top 10 customers represented 10.3%, 26.8% and 40.7% of third quarter revenues, respectively.

Cash and cash equivalents and investments as of September 30, 2017 decreased to $44.1 million from $59.9 million as of December 31, 2016. Current assets as of September 30, 2017 amounted to $141.9 million, accounting for 40.6% of total assets. Finally, as of September 30, 2017, 35.1 million common shares were issued and outstanding.

2017 Fourth Quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the fourth quarter and the full year of 2017:

  • Fourth quarter Revenue is estimated to be between $108-$110 million, implying 24.9% year-over-year growth at the midpoint of the range.
  • Fourth quarter 2017 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $0.38-$0.40 (assuming an average of 36.5 million diluted shares outstanding during the fourth quarter).
  • Fiscal year 2017 Revenue is estimated to be in the range of $406-$408 million, implying 26.1% year-over-year revenue growth at the midpoint of the range.
  • Fiscal year 2017 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $1.25-$1.29 (assuming an average of 36.2 million diluted shares outstanding during 2017).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the Q3 2017 results in a conference call today beginning at 4:30pm ET.

Conference call access information is:
US +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 (NYSE: GLOB)

We are a digitally native technology services company. We are passionate about building the new way of being digital. We want to help our clients emotionally connect with consumers and employees, leveraging the power of artificial intelligence for business optimization. We are the place where engineering, design, and innovation meet scale.

Globant has more than 6,300 professionals in 12 countries working for companies like Google, Linkedin, BBVA, EA and Coca Cola, 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.

For more information, visit www.globant.com

Non-IFRS Financial Information

The financial information in this press release has been prepared consistently with International Accounting Standards 34, "Interim Financial Reporting". The financial information in this press release have not been audited.

Globant provides non-IFRS financial measures to complement reported IFRS results, in accordance with IAS 34 "Interim Financial Reporting". Management believes these measures help illustrate underlying trends in the company's business and uses the 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 results that exclude share-based compensation expense and depreciation and amortization. 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 September 30, 2017 and December 31, 2016 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and nine month periods ended September 30, 2017 and 2016, 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 and impairment of tax credits. 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, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, Non-IFRS results of operations and Non-IFRS earnings per share, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "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: the persistence and intensification of competition in the IT industry; the future growth of spending in IT services outsourcing generally, application outsourcing and custom application development and offshore development services; the level of growth of demand for our services from our clients; the level of increase in revenues from our new clients; the resource utilization rates and productivity levels and the level of attrition of our IT professionals; the pricing structures we use for our client contracts; the general economic and business conditions in the locations in which we operate; the levels of our concentration of revenues by vertical, geography, by client and by type of contract in the future; the continuity of tax incentives available for software companies with operations in Argentina; Argentina's regulations on proceeds from the export of services; our expectation that we will be able to integrate and manage the companies we acquire and that our acquisitions will yield the benefits we envision; the demands we expect our rapid growth to place on our management and infrastructure; the sufficiency of our current cash, cash flow from operations, and lines of credit to meet our anticipated cash needs; the high proportion of our cost of services comprised of personnel salaries; and other factors discussed under the heading "Risk Factors" in our most recent Form 20-F filed with the Securities and Exchange Commission.

These forward-looking statements involve various risks and uncertainties. Although the registrant believes that its expectations expressed in these forward-looking statements are reasonable, its expectations may turn out to be incorrect. The registrant's actual results could be materially different from its expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed might not occur, and the registrant's future results and its performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these 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.

These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier).


Globant S.A.

Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income

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












Three months ended


Nine months ended



September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016










Revenues 


109,675


82,350


298,006


235,602

Cost of revenues 


(69,733)


(49,673)


(190,470)


(138,194)

Gross profit


39,942


32,677


107,536


97,408










Selling, general and administrative expenses 


(28,782)


(20,910)


(81,805)


(58,998)

Impairment of tax credits


-


-


(1,586)


-

Profit from operations


11,160


11,767


24,145


38,410










Finance income


1,060


2,415


5,182


13,504

Finance (expense) gain, net


(1,971)


(2,181)


(7,407)


(15,314)

Finance expense, net


(911)


234


(2,225)


(1,810)










Other income, net


2


399


2,410


1,053

Profit before income tax


10,251


12,400


24,330


37,653










Income tax


(2,262)


(2,872)


(5,387)


(11,271)

Net income for the period


7,989


9,528


18,943


26,382










Other comprehensive income, net of income tax effects









Items that may be reclassified subsequently to profit and loss:









- Exchange differences on translating foreign operations


282


(36)


204


1,115

- Net fair value loss on available-for-sale financial assets


(32)


(25)


(27)


(45)

Total comprehensive income for the period


8,239


9,467


19,120


27,452










Net income attributable to:









Owners of the Company


8,009


9,537


18,996


26,400

Non-controlling interest


(20)


(9)


(53)


(18)

Net income for the period


7,989


9,528


18,943


26,382










Total comprehensive income for the period attributable to:









Owners of the Company


8,259


9,476


19,173


27,470

Non-controlling interest


(20)


(9)


(53)


(18)

Total comprehensive income for the period


8,239


9,467


19,120


27,452



















Earnings per share 









Basic


0.23


0.28


0.54


0.77

Diluted


0.22


0.27


0.53


0.75










Weighted average of outstanding shares (in thousands)









Basic


35,020


34,464


34,833


34,335

Diluted


36,254


35,457


36,067


35,328

 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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








September 30, 2017


 December 31, 2016

ASSETS



Current assets





Cash and cash equivalents 


35,285


50,532

Investments


8,827


9,355

Trade receivables


82,781


54,170

Other receivables 


14,129


18,869

Other financial assets


900


900

Total current assets


141,922


133,826






Non-current assets





Other receivables 


33,745


27,465

Deferred tax assets


11,120


7,691

Investment in associates


1,550


800

Other financial assets


555


319

Property and equipment


42,787


35,676

Intangible assets


14,944


13,791

Goodwill


102,930


65,180

Total non-current assets


207,631


150,922

TOTAL ASSETS


349,553


284,748






LIABILITIES





Current liabilities





Trade payables 


9,532


5,603

Payroll and social security taxes payable


35,553


30,328

Borrowings


10,579


217

Other financial liabilities


17,981


12,602

Tax liabilities


4,436


6,249

Total current liabilities


78,081


54,999






Non-current liabilities





Other financial liabilities


21,500


19,224

Other liabilities 


20


20

Provisions for contingencies


1,207


1,945

Total non-current liabilities


22,727


21,189

TOTAL LIABILITIES


100,808


76,188






Capital and reserves





Issued and paid-in capital


42,171


41,576

Additional paid-in capital


83,260


62,790

Other reserves


(784)


(961)

Retained earnings


124,115


105,119

Total equity attributable to owners of the Company


248,762


208,524

Non-controlling interests


(17)


36

Total equity


248,745


208,560

TOTAL EQUITY AND LIABILITIES


349,553


284,748






Globant S.A.

Supplemental Non-IFRS Financial Information

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












Three months ended


Nine months ended



September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016










Reconciliation of adjusted gross profit









Gross Profit


39,942


32,677


107,536


97,408

Depreciation and amortization expense


1,069


1,260


3,268


3,189

Share-based compensation expense


1,771


263


4,501


711

Adjusted gross profit


42,782


34,200


115,305


101,308

Adjusted gross profit margin


39.0%


41.5%


38.7%


43.0%










Reconciliation of selling, general and administrative expenses









Selling, general and administrative expenses


(28,782)


(20,910)


(81,805)


(58,998)

Depreciation and amortization expense


3,004


1,769


8,485


4,536

Share-based compensation expense


2,738


756


6,766


2,042

Adjusted selling, general and administrative expenses


(23,040)


(18,385)


(66,554)


(52,420)

Adjusted selling, general and administrative expenses as % of revenues


(21.0)%


(22.3)%


(22.3)%


(22.2)%










Reconciliation of Adjusted Profit from Operations









Operating Profit


11,160


11,767


24,145


38,410

Impairment of tax credits


-


-


1,586


-

Share-based compensation expense


4,509


1,019


11,267


2,753

Adjusted Profit from Operations


15,669


12,786


36,998


41,163

Adjusted Profit from Operations margin


14.3%


15.5%


12.4%


17.5%










Reconciliation of Net income for the period









Net income for the period


7,989


9,528


18,943


26,382

Impairment of tax credits


-


-


1,586


-

Share-based compensation expense


4,509


1,019


11,267


2,753

Adjusted Net income 


12,498


10,547


31,796


29,135

Adjusted Net income margin


11.4%


12.8%


10.7%


12.4%










Calculation of Adjusted Diluted EPS









Adjusted Net income 


12,498


10,547


31,796


29,135

Diluted shares


36,254


35,457


36,067


35,328

Adjusted Diluted EPS


0.34


0.30


0.88


0.82

 

Globant S.A.

Schedule of Supplemental Information (unaudited)







Metrics

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017







Total Employees

5,421

5,631

5,855

6,223

6,397

IT Professionals

4,983

5,219

5,421

5,772

5,925







North America Revenue %

81.4

78.9

78.9

78.5

79.1

Latin America and Others Revenue % 

9.4

9.6

9.9

9.2

13.3

Europe Revenue %

9.2

11.5

11.2

12.3

7.6







USD Revenue %

89.7

88.0

88.6

87.6

85.4

Other Currencies Revenue %

10.3

12.0

11.4

12.4

14.6







Top Customer %

10.4

9.4

9.7

10.1

10.3

Top 5 Customers %

33.9

33.3

31.1

31.6

26.8

Top 10 Customers %

46.8

45.8

43.7

43.9

40.7







Customers Served (Last Twelve Months)

354

340

336

331

346

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

61

60

67

76

78

 

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

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

Logo - http://mma.prnewswire.com/media/460822/globant_logo.jpg

 

SOURCE Globant


print email rss

Drop Us a Line

Contact Info