Globant Reports 2019 Third Quarter Financial Results

Robust Results, Backed By Strong Demand Environment
Third quarter revenues of $171.3 million, up 27.3% year-over-year
IFRS Diluted EPS of $0.40 for the third quarter
Non-IFRS Diluted EPS of $0.62 for the third quarter

LUXEMBOURG, Nov. 14, 2019 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and nine months ended September 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.

Third quarter 2019 highlights

  • Revenue rose to $171.3 million, representing 27.3% year-over-year growth compared to the third quarter of 2018.
  • IFRS Gross Profit margin was 38.7% compared to 39.5% in the third quarter of 2018.
  • Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to 41.2% in the third quarter of 2018.
  • IFRS Profit from Operations Margin was 13.4% compared to 14.1% in the third quarter of 2018.
  • Non-IFRS Adjusted Profit from Operations Margin was 18.1% compared to 17.3% in the third quarter of 2018.
  • IFRS Diluted EPS was $0.40, compared to $0.42 in the third quarter of 2018.
  • Non-IFRS Adjusted Diluted EPS was $0.62, compared to $0.46 in the third quarter of 2018.

Nine months ended September 30, 2019 highlights

  • Revenue rose to $475.0 million, representing 24.3% year-over-year growth compared to the first nine months of 2018.
  • IFRS Gross Profit margin was 38.8% compared to 38.6% in the first nine months of 2018.
  • Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to 40.2% in the first nine months of 2018.
  • IFRS Profit from Operations Margin was 12.8% compared to 12.8% in the first nine months of 2018.
  • Non-IFRS Adjusted Profit from Operations Margin was 17.2% compared to 15.9% in the first nine months of 2018.
  • IFRS Diluted EPS was $1.08, compared to $1.09 in the first nine months of 2018.
  • Non-IFRS Adjusted Diluted EPS was $1.65, compared to $1.24 in the first nine months of 2018.

"Third quarter 2019 was another robust quarter for Globant in terms of revenues and profitability. Our revenues reached a new quarterly record of $171.3 million, representing a solid 27.3% year over year growth." said Martín Migoya, Globant's CEO and co-founder. 

"Consumer expectations are going faster than technology, continuing to expand the market opportunity. According to a Globant study, 87% of organizations are currently pursuing a digital transformation initiative, but only one third say they are innovative and their digital maturity is cutting edge," added Martín Migoya. "As a pure play in digital and cognitive transformation, we are ready to help companies reinvent themselves to face these future challenges. By leveraging technologies like AI we can augment the organizations' capabilities to enhance their business models, internal experiences, and processes."

"I am very pleased with our third quarter financial performance. During this quarter we delivered solid revenue growth while improving our operating and net income margins. Additionally, net additions of Globers continue to be strong, combined with further decrease in attrition levels," explained Juan Urthiague, Globant's CFO.

Globant completed the third quarter with 11,283 Globers, 10,462 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the third quarter was as follows: 77.1% from North America (top country: US), 17.0% from Latin America and others (top country: Argentina) and 5.9% from Europe (top country: Spain). In terms of currencies, 86.3% of Globant's revenues for the third quarter was denominated in US dollars.

During the last twelve months ended September 30, 2019, Globant served 744 customers, 104 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%, 26.1% and 38.6% of third quarter revenues, respectively.

Cash and bank balances and Investments as of September 30, 2019 amounted to $59.5 million and current assets amounted to $246.4 million, accounting for 38.7% of total assets for the same period. Finally, as of September 30, 2019, 36.8 million common shares were issued and outstanding.

2019 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 2019:

  • Fourth quarter 2019 Revenues are estimated to be between $182-$184 million, implying 30.6% year-over-year growth at the midpoint of the range.
  • Fourth quarter 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $0.58-$0.62 (assuming an average of 38.0 million diluted shares outstanding during the fourth quarter).
  • Fiscal year 2019 Revenues are estimated to be in the range of $657-$659 million, implying 26.0% 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 $2.23-$2.27 (assuming an average of 37.7 million diluted shares outstanding during 2019).

Conference Call and Webcast

Martín Migoya and Juan Urthiague will discuss the Q3 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 (NYSE: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 11,200 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 September 30, 2019 and December 31, 2018 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and nine months ended September 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)


Nine months ended


Three months ended


September 30, 2019


September 30, 2018


September 30, 2019


September 30, 2018









Revenues 

475,019


382,172


171,334


134,568

Cost of revenues 

(290,663)


(234,757)


(105,047)


(81,353)

Gross profit

184,356


147,415


66,287


53,215









Selling, general and administrative expenses 

(122,283)


(97,647)


(43,091)


(33,767)

Net impairment losses on financial assets

(616)


(894)


459


(460)

Other operating expense, net

(720)


-


(720)


-

Profit from operations

60,737


48,874


22,935


18,988









Finance income

9,397


20,217


6,705


4,199

Finance expense

(18,276)


(24,257)


(10,230)


(5,296)

Finance expense, net

(8,879)


(4,040)


(3,525)


(1,097)









Share of results of investment in associates

(183)


-


(183)


-









Other income, net

35


7,594


27


3,073

Profit before income tax

51,710


52,428


19,254


20,964









Income tax

(11,148)


(12,341)


(4,176)


(5,443)

Net income for the period

40,562


40,087


15,078


15,521









Other comprehensive income, net of income tax effects








Items that may be reclassified subsequently to profit and loss:








- Exchange differences on translating foreign operations

(958)


(1,322)


(799)


(199)

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

(372)


(7)


(399)


2

- Gains and losses on cash flow hedges

(234)


-


(667)


-

Total comprehensive income for the period

38,998


38,758


13,213


15,324









Net income attributable to:








Owners of the Company

40,562


40,168


15,078


15,585

Non-controlling interest

-


(81)


-


(64)

Net income for the period

40,562


40,087


15,078


15,521









Total comprehensive income for the period attributable to:








Owners of the Company

38,998


38,839


13,213


15,388

Non-controlling interest

-


(81)


-


(64)

Total comprehensive income for the period

38,998


38,758


13,213


15,324

















Earnings per share 








Basic

1.11


1.12


0.41


0.43

Diluted

1.08


1.09


0.40


0.42









Weighted average of outstanding shares (in thousands)








Basic

36,481


35,674


36,718


35,851

Diluted

37,595


36,624


37,831


36,802

 

Globant S.A.
Consolidated Statement of Financial Position
(In thousands of U.S. dollars, unaudited)


September 30, 2019


December 31, 2018

ASSETS


Current assets




Cash and bank balances

57,105


77,606

Investments

2,349


8,635

Trade receivables

157,896


110,898

Other assets

10,171


-

Other receivables 

14,822


15,341

Other financial assets

4,052


550

Total current assets

246,395


213,030





Non-current assets




Investments

602


527

Other assets

7,479


-

Other receivables 

37,044


34,197

Deferred tax assets

21,823


16,916

Investment in associates

3,817


4,000

Other financial assets

595


345

Property and equipment

56,194


51,460

Intangible assets

12,677


11,778

Right-of-use asset

51,885


-

Goodwill

197,698


104,846

Total non-current assets

389,814


224,069

TOTAL ASSETS

636,209


437,099





LIABILITIES




Current liabilities




Trade payables 

23,685


17,578

Payroll and social security taxes payable

63,823


58,535

Borrowings

30,759


-

Other financial liabilities

5,045


9,347

Lease liabilities

17,924


-

Tax liabilities

7,714


7,399

Other liabilities 

296


44

Total current liabilities

149,246


92,903





Non-current liabilities




Trade payables

6,156


-

Borrowings

25,711


-

Other financial liabilities

2,522


3,418

Lease liabilities

35,747


-

Tax liabilities

257


-

Other liabilities 

456


-

Provisions for contingencies

2,470


2,862

Total non-current liabilities

73,319


6,280

TOTAL LIABILITIES

222,565


99,183





Capital and reserves




Issued capital

44,175


43,158

Additional paid-in capital

147,244


109,559

Other reserves

(3,700)


(2,136)

Retained earnings

225,925


187,335

Total equity

413,644


337,916

TOTAL EQUITY AND LIABILITIES

636,209


437,099

 

Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)


Nine months ended


Three months ended


September 30, 2019


September 30, 2018


September 30, 2019


September 30, 2018









Reconciliation of adjusted gross profit








Gross Profit

184,356


147,415


66,287


53,215

Depreciation and amortization expense

4,981


3,055


2,061


1,052

Share-based compensation expense

3,667


3,153


1,214


1,200

Adjusted gross profit

193,004


153,623


69,562


55,467

Adjusted gross profit margin

40.6%


40.2%


40.6%


41.2%









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(122,283)


(97,647)


(43,091)


(33,767)

Depreciation and amortization expense

12,512


11,883


3,985


4,404

Share-based compensation expense

10,371


6,338


3,537


2,135

Acquisition-related charges (a)

5,450


1,973


2,285


708

Adjusted selling, general and administrative expenses

(93,950)


(77,454)


(33,284)


(26,521)

Adjusted selling, general and administrative expenses as % of revenues

(19.8)%


(20.3)%


(19.4)%


(19.7)%









Reconciliation of Adjusted Profit from Operations








Profit from Operations

60,737


48,874


22,935


18,988

Share-based compensation expense

14,038


9,491


4,751


3,335

Acquisition-related charges (a)

6,064


2,540


2,530


891

Impairment of assets (b)

720


48


720


-

Adjusted Profit from Operations

81,559


60,953


30,936


23,214

Adjusted Profit from Operations margin

17.2%


15.9%


18.1%


17.3%









Reconciliation of Net income for the period








Net income for the period

40,562


40,087


15,078


15,521

Share-based compensation expense

14,038


9,491


4,751


3,335

Acquisition-related charges (a)

6,548


(4,636)


2,917


(2,051)

Impairment of assets (b)

720


48


720


-

Expenses related to secondary share offering (c)

-


251


-


17

Adjusted Net income 

61,868


45,241


23,466


16,822

Adjusted Net income margin

13.0%


11.8%


13.7%


12.5%









Calculation of Adjusted Diluted EPS








Adjusted Net income 

61,868


45,241


23,466


16,822

Diluted shares

37,595


36,624


37,831


36,802

Adjusted Diluted EPS

1.65


1.24


0.62


0.46

 

(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

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019







Total Employees

7,807

8,384

9,259

9,905

11,283

IT Professionals

7,285

7,821

8,609

9,215

10,462







North America Revenues %

77.5

77.4

73.7

75.2

77.1

Latin America and Others Revenues % 

12.5

13.5

17.0

16.1

17.0

Europe Revenues %

10.0

9.1

9.3

8.7

5.9







USD Revenues %

85.1

85.6

83.3

88.7

86.3

Other Currencies Revenues %

14.9

14.4

16.7

11.3

13.7







Top Customer %

11.9

10.9

10.5

10.4

11.9

Top 5 Customers %

33.4

30.9

28.9

27.2

26.1

Top 10 Customers %

45.8

42.7

40.8

41.0

38.6







Customers Served (Last Twelve Months)

344

373

472

585

744

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

90

90

91

97

104

 

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

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

SOURCE Globant