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Globant Reports 2018 Third Quarter Financial Results
Revenues Growth Continues With Robust Operating Performance

LUXEMBOURG, Nov. 15, 2018 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and nine months ended September 30, 2018.

Globant 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.

Third quarter 2018 highlights

  • Revenues increased to a record $134.6 million, representing 22.7% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $55.5 million (41.2% Non-IFRS Adjusted Gross Profit Margin), an increase of $12.7 million compared to $42.8 million (39.0% Non-IFRS Adjusted Gross Profit Margin) for the third quarter of 2017.
  • Non-IFRS Adjusted Net Income was $16.8 million (12.5% Non-IFRS Adjusted Net Income Margin), an increase of $3.2 million compared to $13.6 million (12.4% Non-IFRS Adjusted Net Income Margin) for the third quarter of 2017.
  • Non-IFRS Adjusted Diluted EPS was $0.46 per share (based on an average of 36.8 million diluted shares), an increase of $0.09 compared to $0.37 per share (based on an average of 36.3 million diluted shares) for the third quarter of 2017.

Nine months ended September 30, 2018 highlights

  • Revenues increased to $382.2 million, representing 28.2% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $153.6 million (40.2% Non-IFRS Adjusted Gross Profit Margin), an increase of $38.3 million compared to $115.3 million (38.7% Non-IFRS Adjusted Gross Profit Margin) in the first nine months of 2017.
  • Non-IFRS Adjusted Net Income was $45.2 million (11.8% Non-IFRS Adjusted Net Income Margin), an increase of $13.3 million, compared to $31.9 million (10.7% Non-IFRS Adjusted Net Income Margin) in the first nine months of 2017.
  • Non-IFRS Adjusted Diluted EPS was $1.24 per share (based on an average of 36.6 million diluted shares), an increase of $0.35 compared to $0.89 (based on an average of 36.1 million diluted shares) for the first nine months of 2017.

"Third quarter 2018 was another robust quarter for Globant. Our revenues reached a new quarterly record of $134.6 million, with an implied 22.7% year-over-year growth. This solid growth was mainly driven by top 10 accounts, which delivered revenues growth of 37.8% over third quarter of 2017 and 7.9% sequentially," said Martín Migoya, Globant's CEO and co-founder.

"To succeed in this era, organizations need to completely transform. This transformation should start with their culture and business strategies up to their processes and go-to-market approach. As a pure-play in the digital and cognitive arena, we are consistently showing that we are the right partner to help our customers drive their transformations," explained Martin Migoya. "During this quarter we have been involved in several strategic initiatives with key customers from the US, Europe and Latin America. We consistently see a profound need to reshape their organizations and we expect this trend to expand in the months to come". 

"I am very pleased with our third quarter financial performance. During this quarter we delivered strong revenues growth, improved our gross and operating margins and generated significant cash. Additionally, to cope with the current demand environment, we increased our total headcount by 528 Globers," explained Juan Urthiague, Globant's CFO.

Globant completed the third quarter with 7,807 Globers, 7,285 of whom were technology, design and innovation professionals. The geographic revenues breakdown for the third quarter was as follows: 77.5% from North America (top country: US), 12.5% from Latin America and others (top country: Argentina) and 10.0% from Europe (top country: Spain). 85.1% of Globant's revenues for the third quarter was denominated in US dollars, and the remaining 14.9% was denominated in other currencies, including Euros, GB pounds and other Latin American currencies.

During the last twelve months ended September 30, 2018, Globant served 344 customers, 90 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 11.9%, 33.4% and 45.8% of third quarter revenues, respectively.

Cash and bank balances and Investments as of September 30, 2018 increased to $79.2 million from $60.7 million as of December 31, 2017. Current assets amounted to $196.5 million, accounting for 48.0% of total assets for the same period. Finally, as of September 30, 2018, 35.9 million common shares were issued and outstanding.

2018 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 2018:

  • Fourth quarter 2018 Revenues are estimated to be between $138-$140 million, implying 20.4% year-over-year growth at the midpoint of the range.
  • Fourth quarter 2018 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $0.45-$0.49 (assuming an average of 37.0 million diluted shares outstanding during the fourth quarter).
  • Fiscal year 2018 Revenues are estimated to be in the range of $520-$522 million, implying 26.0% year-over-year revenues growth at the midpoint of the range.
  • Fiscal year 2018 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $1.69-$1.73 (assuming an average of 36.8 million diluted shares outstanding during 2018). 

Conference Call and Webcast

Martín Migoya, Juan Urthiague and Alejandro Scannapieco will discuss the Q3 2018 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 where innovation, design and engineering meet scale. We use some of the latest technologies in the digital and cognitive field to empower organizations in every aspect.

We have more than 7,800 professionals and we are present in 13 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 has 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, depreciation and amortization, impairment of tax credits, expenses related to secondary share offering 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 September 30, 2018 and December 31, 2017 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and nine months ended September 30, 2018 and 2017, 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 tax credits 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, 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)




Nine months ended


Three months ended


 September 30, 2018


 September 30, 2017


 September 30, 2018


 September 30, 2017









Revenues 

382,172


298,006


134,568


109,675

Cost of revenues 

(234,757)


(190,470)


(81,353)


(69,733)

Gross profit

147,415


107,536


53,215


39,942









Selling, general and administrative expenses 

(97,647)


(81,908)


(33,767)


(28,522)

Net impairment losses on financial assets

(894)


(1,483)


(460)


(260)

Profit from operations

48,874


24,145


18,988


11,160









Finance income

20,217


5,182


4,199


1,060

Finance expense

(24,257)


(7,407)


(5,296)


(1,971)

Finance expense, net

(4,040)


(2,225)


(1,097)


(911)









Other income, net

7,594


2,410


3,073


2

Profit before income tax

52,428


24,330


20,964


10,251









Income tax

(12,341)


(5,387)


(5,443)


(2,262)

Net income for the period

40,087


18,943


15,521


7,989









Other comprehensive income, net of income tax effects








Items that may be reclassified subsequently to profit and loss:








- Exchange differences on translating foreign operations

(1,322)


204


(199)


282

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

(7)


(27)


2


(32)

Total comprehensive income for the period

38,758


19,120


15,324


8,239









Net income attributable to:








Owners of the Company

40,168


18,996


15,585


8,009

Non-controlling interest

(81)


(53)


(64)


(20)

Net income for the period

40,087


18,943


15,521


7,989









Total comprehensive income for the period attributable to:








Owners of the Company

38,839


19,173


15,388


8,259

Non-controlling interest

(81)


(53)


(64)


(20)

Total comprehensive income for the period

38,758


19,120


15,324


8,239

















Earnings per share 








Basic

1.12


0.54


0.43


0.23

Diluted

1.09


0.53


0.42


0.22









Weighted average of outstanding shares (in thousands)








Basic

35,674


34,833


35,851


35,020

Diluted

36,624


36,067


36,802


36,254









 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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




September
30, 2018


 December
31, 2017

ASSETS


Current assets




Cash and bank balances

74,264


52,525

Investments

4,972


8,147

Trade receivables

102,076


80,078

Other receivables 

14,685


14,357

Other financial assets

538


873

Total current assets

196,535


155,980





Non-current assets




Other receivables 

31,734


31,736

Deferred tax assets

15,412


13,186

Investment in associates

4,800


1,550

Other financial assets

-


555

Property and equipment

49,834


43,879

Intangible assets

12,817


11,365

Goodwill

98,557


98,926

Total non-current assets

213,154


201,197

TOTAL ASSETS

409,689


357,177





LIABILITIES




Current liabilities




Trade payables 

19,268


11,640

Payroll and social security taxes payable

51,550


40,472

Borrowings

-


6,011

Other financial liabilities

7,027


10,664

Tax liabilities

5,123


5,253

Other liabilities 

40


20

Total current liabilities

83,008


74,060





Non-current liabilities




Other financial liabilities

3,262


18,574

Provisions for contingencies

1,452


1,179

Total non-current liabilities

4,714


19,753

TOTAL LIABILITIES

87,722


93,813





Capital and reserves




Issued capital

43,132


42,271

Additional paid-in capital

105,712


86,728

Other reserves

(2,582)


(1,253)

Retained earnings

175,826


135,658

Total equity attributable to owners of the Company

322,088


263,404

Non-controlling interests

(121)


(40)

Total equity

321,967


263,364

TOTAL EQUITY AND LIABILITIES

409,689


357,177





 

Globant S.A.

Supplemental Non-IFRS Financial Information

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




Nine months ended


Three months ended


 September 30, 2018


 September 30, 2017


 September 30, 2018


 September 30, 2017









Reconciliation of adjusted gross profit








Gross Profit

147,415


107,536


53,215


39,942

Depreciation and amortization expense

3,055


3,268


1,052


1,069

Share-based compensation expense

3,153


4,501


1,200


1,771

Adjusted gross profit

153,623


115,305


55,467


42,782

Adjusted gross profit margin

40.2%


38.7%


41.2%


39.0%









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(97,647)


(81,908)


(33,767)


(28,522)

Depreciation and amortization expense

11,883


8,485


4,404


3,004

Share-based compensation expense

6,338


6,766


2,135


2,738

Acquisition-related charges (a)

1,973


585


708


298

Adjusted selling, general and administrative expenses

(77,454)


(66,072)


(26,521)


(22,482)

Adjusted selling, general and administrative expenses as % of revenues

(20.3)%


(22.2)%


(19.7)%


(20.5)%









Reconciliation of Adjusted Profit from Operations








Operating Profit

48,874


24,145


18,988


11,160

Share-based compensation expense

9,491


11,267


3,335


4,509

Impairment of tax credits

48


1,586


-


-

Acquisition-related charges (a)

2,540


1,874


891


745

Adjusted Profit from Operations

60,953


38,872


23,214


16,414

Adjusted Profit from Operations margin

15.9%


13.0%


17.3%


15.0%









Reconciliation of Net income for the period








Net income for the period

40,087


18,943


15,521


7,989

Share-based compensation expense

9,491


11,267


3,335


4,509

Impairment of tax credits

48


1,586


-


-

Acquisition-related charges (a)

(4,636)


134


(2,051)


1,059

Expenses related to secondary share offering (b)

251


-


17


-

Adjusted Net income 

45,241


31,930


16,822


13,557

Adjusted Net income margin

11.8%


10.7%


12.5%


12.4%









Calculation of Adjusted Diluted EPS








Adjusted Net income 

45,241


31,930


16,822


13,557

Diluted shares

36,624


36,067


36,802


36,254

Adjusted Diluted EPS

1.24


0.89


0.46


0.37









Notes:

(a)  Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in the 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)  Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held by WPP Luxembourg Gamma Three S.àr.l.

 

Globant S.A.

Schedule of Supplemental Information (unaudited)



Metrics

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018







Total Employees

6,397

6,753

6,940

7,279

7,807

IT Professionals

5,925

6,279

6,462

6,775

7,285







North America Revenues %

79.1

78.6

78.6

78.4

77.5

Latin America and Others Revenues % 

13.3

14.6

13.8

13.1

12.5

Europe Revenues %

7.6

6.8

7.6

8.5

10.0







USD Revenues %

85.4

82.5

85.5

86.4

85.1

Other Currencies Revenues %

14.6

17.5

14.5

13.6

14.9







Top Customer %

10.3

10.4

11.1

11.1

11.9

Top 5 Customers %

26.8

28.5

31.3

32.5

33.4

Top 10 Customers %

40.7

43.2

44.5

44.6

45.8







Customers Served (Last Twelve Months)

346

356

348

355

344

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

78

82

89

92

90







 

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

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

SOURCE Globant


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