Globant Reports Third Quarter Financial Results - Revenue and Earnings Momentum Continues

SAN FRANCISCO, Nov. 10, 2014 /PRNewswire/ -- Globant (NYSE: GLOB), a new-breed technology services provider focused on delivering innovative software solutions by leveraging emerging technologies and trends, today announced results for the three and nine months ending September 30, 2014.

Globant Logo.

Highlights

  • Revenue for the third quarter was $52.0 million, another quarterly record for the company, representing 28.7% year-over-year growth
  • Revenue for the first nine months of the year was $144.5 million, representing 28.9% year-over-year growth
  • IFRS Gross Profit for the third quarter was $20.4 million (39.2% IFRS Gross Profit Margin) and Non-IFRS Adjusted Gross Profit for the third quarter was $21.3 million (41.0% Non-IFRS Adjusted Gross Profit Margin)
  • IFRS Profit for the third quarter was $7.8 million (15.0% IFRS Profit Margin) and Non-IFRS Adjusted Profit for the quarter was $8.4 million (16.1% Non-IFRS Adjusted Profit Margin)
  • IFRS Diluted EPS for the third quarter was $0.23 per share and Non-IFRS Adjusted Diluted EPS for the third quarter was $0.25 per share (assuming 33.4 million average diluted shares for the quarter)

Reconciliations between Non-IFRS / adjusted financial measures and IFRS operating results are included at the end of this press release.

"Many exciting things have happened that enabled us to have another record quarter and the highest quarterly revenue in our history. Our impressive performance was mainly pushed by the solid execution of our strategy by our Studios and business units", described Martin Migoya, CEO and co-founder of Globant. "We continue to see our clients' budgets moving from traditional IT spending into consumer-oriented initiatives involving emerging technologies.  We believe that our Studios model will continue to be the best way to provide innovative software solutions in this changing environment".

"We are also thrilled to announce the expansion of our Agile Pods model, our unique methodology of building software, which our customers have responded to by developing more long-term engagements with Globant", Migoya added. "As more clients see the positive results of our Agile Pods methodology, which is tailored-made to improve their businesses by combining agility and maturity to drive innovation and efficiency, they are choosing to grow their relationships with us. We expect this trend to remain strong in the fourth quarter, as we continue to add key accounts to our portfolio such as AEP Energy, a long-term engagement, closed in October."

Globant finished the quarter with 3,567 Globers, of which 3,217 were IT professionals. Geographic revenue breakdown for the nine months ended September 30, 2014 was as follows: 81% from North America (U.S. top country), 13% from Latin America (Chile top country) and 6% from Europe (U.K. top country).  93% of Globant's revenue for the third quarter was denominated in U.S. dollars, with 1% in British pounds and 6% in other currencies.

We ended the quarter with 299 customers served during the last 12 months. Of these, 45 were customers with revenues of more than $1 million during that period.  For the nine months ending in September 30, 2014, our top customer represented 8.7% of our revenues, our top 5 customers represented 27.7% of our revenues and our top 10 customers represented 43.6% of our revenues.

Cash and investments as of September 30, 2014 increased to $58.6 million and long-term borrowings decreased to $0.9 million.  Total shares outstanding as of September 30, 2014 were 33,345,158 common shares.

Full Year and Fourth Quarter Outlook

For the fourth quarter of 2014, Globant estimates revenue to be between $53 - $55 million.  Non-IFRS Adjusted Profit Margin for the quarter is estimated to be between 11% - 12%, with Non-IFRS Adjusted Diluted EPS in the range of $0.17 - $0.21 (assuming 34.5 million average diluted shares outstanding for the quarter).

For the full year 2014, Globant estimates revenue to be between $197 - $199 million.  Non-IFRS Adjusted Profit Margin for the year is estimated to be between 11% - 12%, with Non-IFRS Adjusted Diluted EPS in the range of $0.70 - $0.78 (assuming 32.1 million average diluted shares outstanding for the full year).

Conference Call and Webcast

Martin Migoya and Alejandro Scannapieco will discuss the three and nine month 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/index.php?s=19&item=8

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

About Globant

Globant (NYSE: GLOB) is a new-breed technology services provider focused on delivering innovative software solutions by leveraging emerging technologies and trends.  Globant combines the engineering and technical rigor of IT services providers with the creative approach and culture of digital agencies. Customers select Globant as the place where engineering, design and innovation meet scale.  In only 11 years, Globant has grown into a company with more than 3,500 professionals working for companies like Google, Linkedin, JWT, EA and Coca-Cola, among others, has been recognized as one of the Top 10 Most Innovative Companies in South America by FastCompany, was included in the 2010 Cool Vendor in Business Process Services Report by Gartner, and has been featured as case study at Harvard, MIT and Stanford.  For more information visit www.globant.com.

Non-IFRS Financial Information

Globant provides non-IFRS financial measures to complement reported IFRS results. 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, amortization of purchased intangible assets, and provisions resulting from changes in valuation allowances. Because the company's reported 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 consolidated financial statements, which are prepared according to IFRS.

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, 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, the level of attrition of our IT professionals; the pricing structures we use for our client contracts; 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 the 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 the final prospectus for our initial public offering and other documents 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.

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

     

Sept 30, 2014

 

Sept 30, 2013

 

Sept 30, 2014

 

Sept 30, 2013

                   

Revenues 

   

144,488

 

112,089

 

51,959

 

40,367

Cost of revenues 

   

(87,333)

 

(70,273)

 

(31,596)

 

(24,686)

Gross profit

   

57,155

 

41,816

 

20,363

 

15,681

                   

Selling, general and administrative expenses 

   

(41,436)

 

(38,738)

 

(15,103)

 

(13,904)

Impairment of tax credits

   

(821)

 

-

 

(40)

 

-

Profit from operations

   

14,898

 

3,078

 

5,220

 

1,777

                   

Gain on transactions with bonds 

   

10,023

 

20,819

 

5,244

 

9,525

Finance income

   

8,077

 

257

 

2,992

 

134

Finance expense

   

(9,725)

 

(4,031)

 

(3,263)

 

(1,804)

Finance expense, net

   

(1,648)

 

(3,774)

 

(271)

 

(1,670)

                   

Other income and expenses, net

   

(50)

 

1,703

 

(23)

 

1,703

Profit before income tax

   

23,223

 

21,826

 

10,170

 

11,335

                   

Income tax

   

(6,108)

 

(4,215)

 

(2,380)

 

(1,718)

Profit for the period

   

17,115

 

17,611

 

7,790

 

9,617

                   

Other comprehensive loss net of income tax

                 

Items that may be reclassified subsequently to profit and loss:

                 

- Exchange differences on translating foreign operations

   

(172)

 

(276)

 

(376)

 

(207)

Total comprehensive income for the period

   

16,943

 

17,335

 

7,414

 

9,410

                   

Profit attributable to:

                 

Owners of the Company

   

17,058

 

17,611

 

7,785

 

9,617

Non-controlling interest

   

57

 

-

 

5

 

-

Profit for the period

   

17,115

 

17,611

 

7,790

 

9,617

                   

Total comprehensive income for the period attributable to:

                 

Owners of the Company

   

16,886

 

17,335

 

7,409

 

9,410

Non-controlling interest

   

57

 

-

 

5

 

-

Total comprehensive income for the period

   

16,943

 

17,335

 

7,414

 

9,410

                   
                   

Earnings per share 

                 

Basic

   

0.57

 

0.63

 

0.24

 

0.36

Diluted

   

0.55

 

0.59

 

0.23

 

0.33

Weighted average of outstanding shares (in thousands)

                 

Basic

   

30,099

 

27,772

 

32,294

 

27,818

Diluted

   

31,177

 

29,784

 

33,372

 

29,830

 

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

 

     

Sept 30, 2014

 

Dec 31, 2013

 

ASSETS

         

Current assets

         

Cash and cash equivalents 

   

43,277

 

17,051

Restricted cash equivalent

   

1,689

 

-

Investments

   

13,640

 

9,634

Trade receivables

   

38,043

 

34,418

Other receivables 

   

10,552

 

6,346

Total current assets

   

107,201

 

67,449

           

Non-current assets

         

Other receivables 

   

5,027

 

5,987

Deferred tax assets

   

3,213

 

3,117

Investment in associates

   

490

 

-

Other financial assets

   

942

 

1,284

Property and equipment

   

16,095

 

14,723

Intangible assets

   

5,712

 

6,141

Goodwill

   

12,943

 

13,046

Total non-current assets

   

44,422

 

44,298

TOTAL ASSETS

   

151,623

 

111,747

           

LIABILITIES

         

Current liabilities

         

Trade payables 

   

4,242

 

8,016

Payroll and social security taxes payable

   

19,491

 

17,823

Borrowings

   

2,928

 

1,048

Other financial liabilities

   

1,413

 

6,023

Tax liabilities

   

3,749

 

5,190

Other liabilities 

   

876

 

24

Total current liabilities

   

32,699

 

38,124

           

Non-current liabilities

         

Borrowings

   

858

 

10,747

Other financial liabilities

   

2,214

 

2,740

Other liabilities 

   

114

 

-

Provisions for contingencies

   

515

 

271

Total non-current liabilities

   

3,701

 

13,758

TOTAL LIABILITIES

   

36,400

 

51,882

           

Capital and reserves

         

Issued and paid-in capital

   

40,014

 

34,794

Additional paid-in capital

   

45,663

 

12,468

Foreign currency translation reserve

   

(450)

 

(278)

Retained earnings

   

29,447

 

12,389

Total equity attributable to owners of the Company

   

114,674

 

59,373

Non-controlling interests

   

549

 

492

Total equity

   

115,223

 

59,865

TOTAL EQUITY AND LIABILITIES

   

151,623

 

111,747

           

 

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

     

Nine months ended

 

Three months ended

     

Sept 30, 2014

 

Sept 30, 2013

 

Sept 30, 2014

 

Sept 30, 2013

                   

Reconciliation of adjusted gross profit

                 

Gross Profit

   

57,155

 

41,816

 

20,363

 

15,681

Adjustments

                 

Depreciation and amortization

   

2,651

 

2,122

 

949

 

863

Share-based compensation expense

   

35

 

73

 

1

 

32

Adjusted gross profit

   

59,841

 

44,011

 

21,313

 

16,576

Adjusted gross profit margin

   

41.4%

 

39.3%

 

41.0%

 

41.1%

                   

Reconciliation of adjusted gross profit margin

                 

Gross Profit margin

   

39.6%

 

37.3%

 

39.2%

 

38.8%

Adjustments

                 

Depreciation and amortization as % of revenues

   

1.8%

 

1.9%

 

1.8%

 

2.1%

Share-based compensation expense as % of revenues

   

0.0%

 

0.1%

 

0.0%

 

0.1%

Adjusted gross profit margin

   

41.4%

 

39.3%

 

41.0%

 

41.0%

                   

Reconciliation of selling, general and administrative expenses

               

Selling, general and administrative expenses

   

(41,436)

 

(38,738)

 

(15,103)

 

(13,904)

Adjustments

                 

Depreciation and amortization

   

3,048

 

3,026

 

1,114

 

973

Share-based compensation expense

   

582

 

451

 

569

 

390

Adjusted selling, general and administrative expenses

   

(37,806)

 

(35,261)

 

(13,420)

 

(12,541)

Adjusted selling, general and administrative expenses as % of revenues

-26.2%

 

-31.5%

 

-25.8%

 

-31.1%

                   

Reconciliation of adjusted profit from operations

                 

Operating Profit

   

14,898

 

3,078

 

5,220

 

1,777

Adjustments

                 

Impairment of tax credits

   

821

 

-

 

40

 

-

Share-based compensation expense

   

617

 

524

 

570

 

422

Adjusted profit from operations

   

16,336

 

3,602

 

5,830

 

2,199

Adjusted operating profit margin

   

11.3%

 

3.2%

 

11.2%

 

5.4%

                   

Reconciliation of profit for the period

                 

Profit for the Period

   

17,115

 

17,611

 

7,790

 

9,617

Adjustments

                 

Share-based compensation expense

   

617

 

524

 

570

 

422

Adjusted profit for the period

   

17,732

 

18,135

 

8,360

 

10,039

Adjusted profit for the period as % of revenues

   

12.3%

 

16.2%

 

16.1%

 

24.9%

                   

 

 

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

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

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SOURCE Globant