Globant Reports 2016 Second Quarter Financial Results Solid Revenue Growth and Operating Performance

SAN FRANCISCO, Aug. 10, 2016 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three and six months ended June 30, 2016.

Globant Logo

Second quarter 2016 highlights

  • Revenue increased to a record $79.9 million, representing 31.9% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $34.1 million (42.6% Non-IFRS Adjusted Gross Profit Margin), an increase of $10.7 million compared to $23.4 million (and an increase of 390 basis points compared to 38.7% Non-IFRS Adjusted Gross Profit Margin) in 2015.
  • Non-IFRS Adjusted Net Income was $10.2 million (12.7% Non-IFRS Adjusted Net Income Margin), an increase of $1.6 million, or 18.6%, compared to a profit of $8.6 million for the second quarter of 2015.
  • Non-IFRS Adjusted Diluted EPS was $0.29 per share (based on an average of 35.2 million average diluted shares during the second quarter), an increase of $0.04 compared to Non-IFRS Adjusted Diluted EPS of $0.25 for the second quarter of 2015.

Six months ended June 30, 2016 highlights

  • Revenue for the period increased to $153.3 million, representing 33.1% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $67.1 million (43.8% Non-IFRS Adjusted Gross Profit Margin), an increase of $22.6 million compared to $44.5 million (and an increase of 520 basis points compared to 38.6% Non-IFRS Adjusted Gross Profit Margin) in 2015.
  • Non-IFRS Adjusted Net Income was $18.6 million (12.1% Non-IFRS Adjusted Net Income Margin), an increase of $2.4 million, or 14.8%, compared to a profit of $ $16.2 million the first six months of 2015.
  • Non-IFRS Adjusted Diluted EPS was $0.53 per share (based on an average of 35.2 million diluted shares during the first six months of the 2016), an increase of $0.06 compared to Non-IFRS Adjusted Diluted EPS of $0.47 for the first six months of 2015.

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

"We are very pleased with our second quarter performance. We continue to experience strong momentum in the business. Our revenues increased to a record $79.9 million, a solid 31.9% year-over-year growth," said Martín Migoya, Globant's CEO and co-founder.

"The market continues to rely on the growth of digital services' demand, where we maintain our positioning as leader. This can be seen in the latest IDC MarketScape report, which recognized us as a worldwide leader of digital strategy consulting services," Migoya added. "To reinforce our positioning and focus on strategy and digital transformation, we announced the acquisition of WAE, an innovative service design company with operations in the UK and the US. We are confident that our portfolio of services is well positioned to continue creating innovative digital journeys for our customers".

"I am very pleased with our financial performance for this quarter. We delivered solid revenue growth, strong gross and operating income margins, and a healthy net income. These positive numbers, coupled with increased diversification in terms of customers and delivery centers, are extremely important to enable us to achieve our financial and operational targets," explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 5,380 Globers, 4,932 of whom were IT professionals. The geographic revenue breakdown for the second quarter was as follows: 81.1% from North America (top country: U.S.), 10.7% from Latin America and others (top country: Chile) and 8.2% from Europe (top country: UK). 90.9% of Globant's revenue for the second quarter was denominated in U.S. dollars, and the remaining 9.1% was denominated in other currencies.

During the 12 months ended June 30, 2016, Globant served 366 customers, 57 of which accounted for more than $1 million of Globant's revenues.  Globant's top customer, top 5 customers and top 10 customers represented 10.0%, 34.2% and 46.4% of the second quarter revenues, respectively.

Cash and cash equivalents and investments as of June 30, 2016 decreased to $55.7 million from $62.4 million as of December 31, 2015, while borrowings amounted to $0.3 million. Current assets as of June 30, 2016 amounted to $124.8 million, accounting for 49.1% of total assets. Finally, as of June 30, 2015, 34.4 million common shares were issued and outstanding.

2016 Third Quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the third quarter and for the full year 2016:

  • Third quarter revenue is estimated to be in the range of $80-$82 million.
  • Third quarter Non-IFRS diluted EPS is estimated to be in the range of $0.27-$0.31 (assuming an average of 35.4 million diluted shares outstanding during the third quarter).
  • Fiscal year 2016 revenue is estimated to be between $318-$322 million
  • Fiscal year 2016 Non-IFRS diluted EPS is estimated to be in the range of $1.14-$1.20 (assuming an average of 35.6 million average diluted shares outstanding during 2016).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the three and six-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/

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

About Globant

Globant (NYSE: GLOB) is a digitally native technology services company that creates digital journeys for its customers, which impact millions of consumers. Globant is the place where engineering, design, and innovation meet scale.

Globant has more than 5,350 professionals in 12 countries working for companies like Google, Linkedin, JWT, EA, and Coca Cola, among others.

Globant was named a Worldwide Leader of Digital Strategy Consulting Services by IDC MarketScape Report (2016), and its client work has been featured as business case studies at Harvard University, Massachusetts Institute of Technology, and Stanford University.  For more information visit www.globant.com.

Non-IFRS Financial Information

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, acquisition related expenses and impairments of tax credits. 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 financial statements, which are prepared according to IAS 34.

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 our most recent 20-F 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)

             
     

Six months ended

 

Three months ended

 
     

June 30, 2016

 

June 30, 2015

 

June 30, 2016

 

June 30, 2015

 
                     

Revenues 

   

153,252

 

115,116

 

79,926

 

60,604

 

Cost of revenues 

   

(88,521)

 

(73,007)

 

(47,163)

 

(38,393)

 

Gross profit

   

64,731

 

42,109

 

32,763

 

22,211

 
                     

Selling, general and administrative expenses 

   

(38,088)

 

(33,418)

 

(20,319)

 

(17,961)

 

Impairment of tax credits, net of recoveries

   

-

 

1,820

 

-

 

-

 

Profit from operations

   

26,643

 

10,511

 

12,444

 

4,250

 
                     

Gain on transactions with bonds 

   

-

 

8,351

 

-

 

4,367

 

Finance income

   

11,089

 

6,500

 

4,203

 

3,943

 

Finance expense

   

(13,133)

 

(5,103)

 

(5,686)

 

(2,367)

 

Finance (expense) income, net

   

(2,044)

 

1,397

 

(1,483)

 

1,576

 
                     

Other income and (expenses), net

   

654

 

(3)

 

651

 

-

 

Profit before income tax

   

25,253

 

20,256

 

11,612

 

10,193

 
                     

Income tax

   

(8,399)

 

(5,178)

 

(2,674)

 

(2,620)

 

Net income for the period

   

16,854

 

15,078

 

8,938

 

7,573

 
                     

Other comprehensive income, net of income tax effects

                   

Items that may be reclassified subsequently to profit and loss:

                   

- Exchange differences on translating foreign operations

   

1,151

 

(429)

 

742

 

175

 

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

   

(20)

 

-

 

(948)

 

-

 

Total comprehensive income for the period

   

17,985

 

14,649

 

8,732

 

7,748

 
                     

Net income attributable to:

                   

Owners of the Company

   

16,863

 

15,078

 

8,923

 

7,573

 

Non-controlling interest

   

(9)

 

-

 

15

 

-

 

Net income for the period

   

16,854

 

15,078

 

8,938

 

7,573

 
                     

Total comprehensive income for the period attributable to:

                   

Owners of the Company

   

17,994

 

14,649

 

8,717

 

7,748

 

Non-controlling interest

   

(9)

 

-

 

15

 

-

 

Total comprehensive income for the period

   

17,985

 

14,649

 

8,732

 

7,748

 
                     
                     

Earnings per share 

                   

Basic

   

0.49

 

0.45

 

0.26

 

0.22

 

Diluted

   

0.48

 

0.43

 

0.25

 

0.22

 

Weighted average of outstanding shares (in thousands)

                   

Basic

   

34,270

 

33,788

 

34,317

 

33,952

 

Diluted

   

35,182

 

34,735

 

35,230

 

34,899

 

   

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

           
     

June 30, 2016

 

Dec 31, 2015

ASSETS

         

Current assets

         

Cash and cash equivalents 

   

18,765

 

36,720

Investments

   

36,973

 

25,660

Trade receivables

   

51,820

 

45,952

Other receivables 

   

16,335

 

18,570

Other financial assets

   

900

 

900

Total current assets

   

124,793

 

127,802

           

Non-current assets

         

Other receivables 

   

25,885

 

20,122

Deferred tax assets

   

8,440

 

7,983

Investment in associates

   

800

 

300

Other financial assets

   

1,186

 

1,221

Property and equipment

   

33,481

 

25,720

Intangible assets

   

10,557

 

7,209

Goodwill

   

49,081

 

32,532

Total non-current assets

   

129,430

 

95,087

TOTAL ASSETS

   

254,223

 

222,889

           

LIABILITIES

         

Current liabilities

         

Trade payables 

   

7,347

 

4,436

Payroll and social security taxes payable

   

25,306

 

25,551

Borrowings

   

249

 

280

Other financial liabilities

   

6,456

 

6,240

Tax liabilities

   

5,656

 

10,225

Other liabilities 

   

10

 

9

Total current liabilities

   

45,024

 

46,741

           

Non-current liabilities

         

Borrowings

   

90

 

268

Other financial liabilities

   

24,780

 

15,045

Other liabilities 

   

20

 

-

Provisions for contingencies

   

788

 

650

Total non-current liabilities

   

25,678

 

15,963

TOTAL LIABILITIES

   

70,702

 

62,704

           

Capital and reserves

         

Issued and paid-in capital

   

41,300

 

41,050

Additional paid-in capital

   

56,955

 

51,854

Other reserves

   

(881)

 

(2,012)

Retained earnings

   

86,106

 

69,243

Total equity attributable to owners of the Company

   

183,480

 

160,135

Non-controlling interests

   

41

 

50

Total equity

   

183,521

 

160,185

TOTAL EQUITY AND LIABILITIES

   

254,223

 

222,889

 

   

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

           
     

Six months ended

 

Three months ended

     

June 30, 2016

 

June 30, 2015

 

June 30, 2016

 

June 30, 2015

                   

Reconciliation of adjusted gross profit

                 

Gross Profit

   

64,731

 

42,109

 

32,763

 

22,211

Adjustments

                 

Depreciation and amortization expense

   

1,929

 

2,274

 

1,015

 

1,167

Share-based compensation expense

   

448

 

72

 

304

 

67

Adjusted gross profit

   

67,108

 

44,455

 

34,082

 

23,445

Adjusted gross profit margin

   

43.8%

 

38.6%

 

42.6%

 

38.7%

                   

Reconciliation of selling, general and administrative expenses

               

Selling, general and administrative expenses

   

(38,088)

 

(33,418)

 

(20,319)

 

(17,961)

Adjustments

                 

Depreciation and amortization expense

   

2,767

 

2,472

 

1,433

 

1,277

Acquisition related costs

   

-

 

337

 

-

 

337

Share-based compensation expense

   

1,286

 

675

 

935

 

666

Adjusted selling, general and administrative expenses

   

(34,035)

 

(29,934)

 

(17,951)

 

(15,681)

Adjusted selling, general and administrative expenses as % of revenues

(22.2)%

 

(26.0)%

 

(22.5)%

 

(25.9)%

                   

Reconciliation of Adjusted Profit from Operations

                 

Operating Profit

   

26,643

 

10,511

 

12,444

 

4,250

Adjustments

                 

Impairment of tax credits, net of recoveries

   

-

 

(1,820)

 

-

 

-

Acquisition related costs

   

-

 

337

 

-

 

337

Share-based compensation expense

   

1,734

 

747

 

1,239

 

733

Adjusted Profit from Operations

   

28,377

 

9,775

 

13,683

 

5,320

Adjusted Operating Profit margin

   

18.5%

 

8.5%

 

17.1%

 

8.8%

                   

Reconciliation of Net income (loss) for the period

                 

Net income for the period

   

16,854

 

15,078

 

8,938

 

7,573

Adjustments

                 

Share-based compensation expense

   

1,734

 

747

 

1,239

 

733

Acquisition related costs

   

-

 

337

 

-

 

337

Adjusted Net income 

   

18,588

 

16,162

 

10,177

 

8,643

Adjusted Net income margin

   

12.1%

 

14.0%

 

12.7%

 

14.3%

                   

Calculation of Adjusted Diluted EPS

                 

Adjusted Net income 

   

18,588

 

16,162

 

10,177

 

8,643

Diluted shares

   

35,182

 

34,735

 

35,230

 

34,899

Adjusted Diluted EPS

   

0.53

 

0.47

 

0.29

 

0.25

      

Globant S.A.
Schedule of Supplemental Information

             

Metric

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

             

Total Employees

4,040

4,512

4,724

5,041

5,285

5,380

IT Professionals

3,694

4,121

4,327

4,613

4,847

4,932

             

North America Revenue %

84.1

85.2

84.1

81.7

82.2

81.1

Latin America and Others Revenue % 

10.1

9.7

11.5

12.2

10.8

10.7

Europe Revenue %

5.8

5.1

4.4

6.0

7.0

8.2

             

USD Revenue %

95.0

94.6

93.3

90.8

91.9

90.9

GBP Revenue %

1.0

0.8

1.4

2.4

0.4

1.2

Other Currencies Revenue %

4.0

4.6

5.3

6.8

7.8

7.9

             

Top Customer %

10.2

12.3

13.4

12.7

11.6

10.0

Top 5 Customers %

30.8

32.8

33.2

34.4

36.4

34.2

Top 10 Customers %

47.8

47.7

45.9

46.4

48.4

46.4

             

LTM Customers Served

292

344

343

344

359

366

LTM Customers with >$1M in Revenue

43

43

47

51

49

57

 

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

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

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SOURCE Globant