Globant Reports 2019 Full Year and Fourth Quarter Financial Results: Strong Finish To The Year; Robust Outlook

Fourth quarter revenues of $184.3 million, up 31.5% year-over-year
IFRS Diluted EPS of $0.35 for the fourth quarter
Non-IFRS Diluted EPS of $0.64 for the fourth quarter

LUXEMBOURG, Feb. 20, 2020 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for three months and year ended December 31, 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.

Fourth quarter 2019 highlights

  • Revenues rose to $184.3 million, representing 31.5% year-over-year growth compared to the fourth quarter of 2018.
  • IFRS Gross Profit margin was 37.9% compared to 40.2% in the fourth quarter of 2018.
  • Non-IFRS Adjusted Gross Profit Margin was 39.9% compared to 41.7% in the fourth quarter of 2018.
  • IFRS Profit from Operations Margin was 10.9% compared to 12.8% in the fourth quarter of 2018.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.5% compared to 16.7% in the fourth quarter of 2018.
  • IFRS Diluted EPS was $0.35 compared to $0.31 in the fourth quarter of 2018.
  • Non-IFRS Adjusted Diluted EPS was $0.64 compared to $0.50 in the fourth quarter of 2018.

 

Full year ended December 31, 2019 highlights

  • Revenues rose to $659.3 million, representing 26.2% year-over-year growth.
  • IFRS Gross Profit margin was 38.5% compared to 39.0% for the full year 2018.
  • Non-IFRS Adjusted Gross Profit Margin was 40.4% compared to 40.6% for the full year 2018.
  • IFRS Profit from Operations Margin was 12.2% compared to 12.8% for the full year 2018.
  • Non-IFRS Adjusted Profit from Operations Margin was 17.0% compared to 16.1% for the full year 2018.
  • IFRS Diluted EPS was $1.43 compared to $1.41 for the full year 2018.
  • Non-IFRS Adjusted Diluted EPS was $2.29 compared to $1.74 for the full year 2018.

"2019 was another very successful year for our company. Our full year revenues for 2019 amounted to $659.3 million, representing 26.2% year-over-year growth. It is our 5th year since we are a public company with growth above 26%. At the same time, revenues for the fourth quarter of 2019 amounted to $184.3 million, a new record for the company and an outstanding increase of 31.5% compared to the fourth quarter of 2018," said Martín Migoya, Globant's CEO and co-founder. 

"With Gartner's estimate of 3.9 trillion dollars to be spent on IT alone in 2020, we continue to see an enormous opportunity for growth, since we are a unique player in the field delivering digital and cognitive transformations. We have a strong focus on innovation, on building an agile culture and applying AI to everything we do," Migoya added. "On top of that, with our Be Kind initiative, we are deepening our commitment to being a sustainable organization, conscious about generating positive impact for all our stakeholders as we grow. Within Be Kind, we have set specific goals to fight climate change and to work even harder on diversity, inclusion and cultural wellness. These goals will focus us as we continue to expand."

"I am very satisfied with our overall results for the fourth quarter and full year 2019. During this year we continued our growth journey while at the same time significantly improving our profitability. Finally, hirings continue to be strong, combined with further decrease in attrition levels, a positive signal towards the beginning of 2020" explained Juan Urthiague, Globant's CFO.

Globant completed the fourth quarter with 11,855 Globers, 11,021 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the fourth quarter was as follows: 75.0% from North America (top country: US), 20.0% from Latin America and others (top country: Argentina) and 5.1% from Europe (top country: Spain). In terms of currencies, 86.7% of Globant's revenues for the fourth quarter was denominated in US dollars.

During the year ended December 31, 2019, Globant served a total of 822 customers and continued to increase its wallet share, having 107 accounts with more than $1 million of annual revenues, 26 accounts over $5 million and 14 accounts above $10 million. Globant's top customer, top five customers and top ten customers represented 11.7%, 27.0% and 38.5% of fourth quarter revenues, respectively.

Cash and bank balances and Investments as of December 31, 2019 amounted to $82.5 million, while borrowings amounted to $51.4 million. Finally, as of December 31, 2019, 37.0 million common shares were issued and outstanding.

2020 First Quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the first quarter and the full year of 2020:

  • First quarter 2020 Revenues are estimated to be at least $188 million, implying at least 28.6% year-over-year growth.
  • First quarter 2020 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 16%-17%.
  • First quarter 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at least $0.62 (assuming an average of 38.2 million diluted shares outstanding during the first quarter).
  • Fiscal year 2020 Revenues are estimated to be at least $810 million, implying at least 22.9% year-over-year revenue growth.
  • Fiscal year 2020 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 16.5%-17.5%.
  • Fiscal year 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at least $2.74 (assuming an average of 38.5 million diluted shares outstanding during 2020).

Conference Call and Webcast

Martín Migoya and Juan Urthiague will discuss the full year and fourth quarter 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/

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 11,800 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 for the fourth quarter and applicable to financial statements for the full year, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting" nor a financial statement as defined by International Accounting Standards 1 "Presentation of Financial Statements". 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 IFRS. 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 consolidated statement of financial position as of December 31, 2019 and December 31, 2018 and its unaudited consolidated statement of profit or loss and other comprehensive income for the three years ended December 31, 2019, prepared in accordance with IFRS issued by IASB.

Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Profit from Operations Margin or 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)


Year ended


Three months ended


December 31, 2019


December 31, 2018


December 31, 2019


December 31, 2018









Revenues 

659,325


522,310


184,306


140,138

Cost of revenues 

(405,164)


(318,554)


(114,501)


(83,797)

Gross profit

254,161


203,756


69,805


56,341









Selling, general and administrative expenses 

(172,478)


(133,187)


(50,195)


(35,540)

Net impairment losses on financial assets

(228)


(3,469)


388


(2,575)

Other operating expense, net

(720)


(306)


-


(306)

Profit from operations

80,735


66,794


19,998


17,920









Gains on transactions with bonds

1,569


-


1,569


-









Finance income

13,643


11,418


4,246


1,643

Finance expense

(26,801)


(16,968)


(8,525)


(3,153)

Finance expense, net

(13,158)


(5,550)


(4,279)


(1,510)









Share of results of investment in associates

(224)


-


(41)


-









Other income, net

110


6,220


75


(1,374)

Profit before income tax

69,032


67,464


17,322


15,036









Income tax

(15,017)


(15,868)


(3,869)


(3,527)

Net income for the period

54,015


51,596


13,453


11,509









Other comprehensive income, net of income tax effects








Items that may be reclassified subsequently to profit and loss:








- Exchange differences on translating foreign operations

(400)


(871)


558


451

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

(373)


(12)


(1)


(5)

- Gains and losses on cash flow hedges

352


-


586


-

Total comprehensive income for the period

53,594


50,713


14,596


11,955









Net income attributable to:








Owners of the Company

54,015


51,677


13,453


11,509

Non-controlling interest

-


(81)


-


-

Net income for the period

54,015


51,596


13,453


11,509









Total comprehensive income for the period attributable to:








Owners of the Company

53,594


50,794


14,596


11,955

Non-controlling interest

-


(81)


-


-

Total comprehensive income for the period

53,594


50,713


14,596


11,955

















Earnings per share 








Basic

1.48


1.45


0.36


0.32

Diluted

1.43


1.41


0.35


0.31









Weighted average of outstanding shares (in thousands)








Basic

36,586


35,746


36,897


35,961

Diluted

37,674


36,685


37,985


36,899


 

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


December

31, 2019


December

31, 2018

ASSETS


Current assets




Cash and bank balances

62,721


77,606

Investments

19,780


8,635

Trade receivables

156,676


110,898

Other assets

13,439


-

Other receivables 

19,308


15,341

Other financial assets

4,527


550

Total current assets

276,451


213,030





Non-current assets




Investments

418


527

Other assets

7,796


-

Other receivables 

8,810


34,197

Deferred tax assets

26,868


16,916

Investment in associates

3,776


4,000

Other financial assets

1,683


345

Property and equipment

87,533


51,460

Intangible assets

27,110


11,778

Right-of-use asset

58,781


-

Goodwill

188,538


104,846

Total non-current assets

411,313


224,069

TOTAL ASSETS

687,764


437,099





LIABILITIES




Current liabilities




Trade payables 

31,487


17,578

Payroll and social security taxes payable

72,252


58,535

Borrowings

1,198


-

Other financial liabilities

8,937


9,347

Lease liabilities

19,439


-

Tax liabilities

12,510


7,399

Other liabilities 

368


44

Total current liabilities

146,191


92,903





Non-current liabilities




Trade payables

5,500


-

Borrowings

50,188


-

Other financial liabilities

1,617


3,418

Lease liabilities

41,924


-

Other liabilities 

1,028


-

Provisions for contingencies

2,602


2,862

Total non-current liabilities

102,859


6,280

TOTAL LIABILITIES

249,050


99,183





Capital and reserves




Issued capital

44,356


43,158

Additional paid-in capital

157,537


109,559

Other reserves

(2,557)


(2,136)

Retained earnings

239,378


187,335

Total equity

438,714


337,916

TOTAL EQUITY AND LIABILITIES

687,764


437,099

 

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


Year ended


Three months ended


December 31, 2019


December 31, 2018


December 31, 2019


December 31, 2018









Reconciliation of adjusted gross profit








Gross Profit

254,161


203,756


69,805


56,341

Depreciation and amortization expense

7,350


4,022


2,369


967

Share-based compensation expense

4,976


4,248


1,309


1,095

Adjusted gross profit

266,487


212,026


73,483


58,403

Adjusted gross profit margin

40.4%


40.6%


39.9%


41.7%









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(172,478)


(133,187)


(50,195)


(35,540)

Depreciation and amortization expense

16,905


16,521


4,393


4,638

Share-based compensation expense

14,912


8,665


4,541


2,327

Acquisition-related charges (a)

9,571


3,516


4,121


1,543

Adjusted selling, general and administrative expenses

(131,090)


(104,485)


(37,140)


(27,032)

Adjusted selling, general and administrative expenses as % of revenues

(19.9)%


(20.0)%


(20.2)%


(19.3)%









Reconciliation of Adjusted Profit from Operations








Profit from Operations

80,735


66,794


19,998


17,920

Share-based compensation expense

19,888


12,913


5,850


3,422

Acquisition-related charges (a)

10,695


4,273


4,631


1,733

Impairment of assets (b)

673


354


(47)


306

Adjusted Profit from Operations

111,991


84,334


30,432


23,381

Adjusted Profit from Operations margin

17.0%


16.1%


16.5%


16.7%









Reconciliation of Net income for the period








Net income for the period

54,015


51,596


13,453


11,509

Share-based compensation expense

19,888


12,913


5,850


3,422

Acquisition-related charges (a)

11,518


(2,177)


4,970


2,459

Impairment of assets (b)

673


1,154


(47)


1,106

Expenses related to secondary share offering (c)

-


251


-


-

Adjusted Net income 

86,094


63,737


24,226


18,496

Adjusted Net income margin

13.1%


12.2%


13.1%


13.2%









Calculation of Adjusted Diluted EPS








Adjusted Net income 

86,094


63,737


24,226


18,496

Diluted shares

37,674


36,685


37,985


36,899

Adjusted Diluted EPS

2.29


1.74


0.64


0.50

 

(a)  Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our consolidated statements of profit or loss and other comprehensive income, 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

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019







Total Employees

8,384

9,259

9,905

11,283

11,855

IT Professionals

7,821

8,609

9,215

10,462

11,021







North America Revenues %

77.4

73.7

75.2

77.1

75.0

Latin America and Others Revenues % 

13.5

17.0

16.1

17.0

20.0

Europe Revenues %

9.1

9.3

8.7

5.9

5.1







USD Revenues %

85.6

83.3

88.7

86.3

86.7

Other Currencies Revenues %

14.4

16.7

11.3

13.7

13.3







Top Customer %

10.9

10.5

10.4

11.9

11.7

Top 5 Customers %

30.9

28.9

27.2

26.1

27.0

Top 10 Customers %

42.7

40.8

41.0

38.6

38.5







Customers Served (Last Twelve Months)

373

472

585

744

822

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

90

91

97

104

107

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