Globant Reports 2016 Third Quarter Financial Results
Robust Revenue Growth and Operating Performance

SAN FRANCISCO, Nov. 14, 2016 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three and nine months ended September 30, 2016.

Globant Logo

Third quarter 2016 highlights

  • Revenue increased to a record $82.4 million, representing 22.7% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $34.2 million (41.5% Non-IFRS Adjusted Gross Profit Margin), an increase of $8.0 million compared to $26.2 million (and an increase of 250 basis points compared to 39.0% Non-IFRS Adjusted Gross Profit Margin) in 2015.
  • Non-IFRS Adjusted Net Income was $10.5 million (12.8% Non-IFRS Adjusted Net Income Margin), an increase of $1.4 million, or 15.4%, compared to a profit of $9.1 million for the third quarter of 2015.
  • Non-IFRS Adjusted Diluted EPS was $0.30 per share (based on an average of 35.5 million average diluted shares during the third quarter), an increase of $0.04 compared to Non-IFRS Adjusted Diluted EPS of $0.26 for the third quarter of 2015.

Nine months ended September 30, 2016 highlights

  • Revenue for the period increased to $235.6 million, representing 29.3% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $101.3 million (43.0% Non-IFRS Adjusted Gross Profit Margin), an increase of $30.7 million compared to $70.6 million (and an increase of 420 basis points compared to 38.8% Non-IFRS Adjusted Gross Profit Margin) in 2015.
  • Non-IFRS Adjusted Net Income was $29.1 million (12.4% Non-IFRS Adjusted Net Income Margin), an increase of $3.8 million, or 15.0%, compared to a profit of $25.3 million for the first nine months of 2015.
  • Non-IFRS Adjusted Diluted EPS was $0.82 per share (based on an average of 35.3 million diluted shares during the first nine months of the 2016), an increase of $0.10 compared to Non-IFRS Adjusted Diluted EPS of $0.72 for the first nine months of 2015.

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

"Third quarter 2016 was another robust quarter for Globant. Our revenues reached a new quarterly record of $82.4 million, with an implied 22.7% year-over-year growth," said Martín Migoya, Globant's CEO and co-founder. "Traditional companies keep on investing heavily in digital transformation projects as they face increased competition from digitally native companies. To address this trend, we continuously work to evolve our Digital Journeys process, based on two pillars: Stay Relevant and Build to Discover. With this approach we are able to create the most innovative experiences and products by simultaneously learning and adapting from consumer and market behaviour. We believe that our positioning as a pure play in digital services gives us the required skillset to successfully partner with organizations facing digital transformation challenges."

"On top of that, to reinforce our positioning as one of the leaders in the digital services space, we are glad to announce the acquisition of L4, a leading digital services company that creates innovative and meaningful experiences to engage people across every screen. L4 is a US-based organization with headquarters in Seattle, focused on ideating, designing and developing robust digital products and complex software, with a strong focus on innovation and quality assurance. The company has a team of 65 professionals, including some of the best mobile and media minds in the industry. Today, they work for a wide list of recognized brands, such as Sesame Workshop, Chicago Public Media and Sony Pictures Television. This acquisition enables us to expand our US footprint and to bring experienced professionals to the team. We found in L4 a group of people that share our same passion for building the best experiences for our customers, so we are really excited to have them on board", Migoya added. 

"I am delighted with our financial performance for this quarter. Both our revenue growth and our gross, operating and net income margins continue to be very healthy. Growth is evenly spread among our customer base, with top 10 accounts increasing over 25% year over year, and not top 10 accounts growing above 20%," explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 5,421 Globers, 4,983 of whom were IT professionals. The geographic revenue breakdown for the third quarter was as follows: 81.4% from North America (top country: US), 9.4% from Latin America and others (top country: Chile) and 9.2% from Europe (top country: UK). 89.7% of Globant's revenue for the third quarter was denominated in US dollars, and the remaining 10.3% was denominated in other currencies.

During the 12 months ended September 30, 2016, Globant served 354 customers, 61 of which accounted for more than $1 million of Globant's revenues.  Globant's top customer, top 5 customers and top 10 customers represented 10.4%, 33.9% and 46.8% of third quarter revenues, respectively.

Cash and cash equivalents and investments as of September 30, 2016 decreased to $54.5 million from $62.4 million as of December 31, 2015, while borrowings amounted to $0.3 million. Current assets as of September 30, 2016 amounted to $130.2 million, accounting for 49.6% of total assets. Finally, as of September 30, 2016, 34.5 million common shares were issued and outstanding.

2016 Fourth Quarter and Full Year Outlook

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

  • Fourth quarter revenue is estimated to be in the range of $84.5-$86.5 million.
  • Fourth quarter Non-IFRS diluted EPS is estimated to be in the range of $0.30-$0.33 (assuming an average of 35.7 million diluted shares outstanding during the fourth quarter).
  • Fiscal year 2016 revenue is estimated to be between $320.0-$322.0 million
  • Fiscal year 2016 Non-IFRS diluted EPS is estimated to be in the range of $1.12-$1.15 (assuming an average of 35.4 million average diluted shares outstanding during 2016).

Conference Call and Webcast

Martín 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

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 5,420 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

The financial information in this press release has been prepared consistently with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and as adopted by the European Union. The interim financial information included in this announcement has been also prepared in accordance with IFRS applicable to interim periods, however this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting". The numbers in this press release have 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, 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, with its unaudited interim consolidated statement of financial position as of September 30, 2016 and December 31, 2015 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the nine-month and three-month periods ended September 30, 2016 and 2015, prepared in accordance with IAS.

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 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,
2016

 

September 30,
2015

 

September 30,
2016

 

September 30,
2015

                   

Revenues 

   

235,602

 

182,233

 

82,350

 

67,117

Cost of revenues 

   

(138,194)

 

(115,481)

 

(49,673)

 

(42,474)

Gross profit

   

97,408

 

66,752

 

32,677

 

24,643

                   

Selling, general and administrative expenses 

   

(58,998)

 

(52,123)

 

(20,910)

 

(18,705)

Impairment of tax credits, net of recoveries

   

-

 

1,820

 

-

 

-

Profit from operations

   

38,410

 

16,449

 

11,767

 

5,938

                   

Gain on transactions with bonds 

   

-

 

13,331

 

-

 

4,980

Finance income

   

13,504

 

10,308

 

2,415

 

3,808

Finance expense

   

(15,314)

 

(8,518)

 

(2,181)

 

(3,415)

Finance (expense) income, net

   

(1,810)

 

1,790

 

234

 

393

                   

Other income and (expenses), net

   

1,053

 

(11)

 

399

 

(8)

Profit before income tax

   

37,653

 

31,559

 

12,400

 

11,303

                   

Income tax

   

(11,271)

 

(8,251)

 

(2,872)

 

(3,073)

Net income for the period

   

26,382

 

23,308

 

9,528

 

8,230

                   

Other comprehensive income, net of income tax effects

                 

Items that may be reclassified subsequently to profit and loss:

                 

- Exchange differences on translating foreign operations

   

1,115

 

(1,296)

 

(36)

 

(867)

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

   

(45)

 

-

 

(25)

 

-

Total comprehensive income for the period

   

27,452

 

22,012

 

9,467

 

7,363

                   

Net income attributable to:

                 

Owners of the Company

   

26,400

 

23,308

 

9,537

 

8,230

Non-controlling interest

   

(18)

 

-

 

(9)

 

-

Net income for the period

   

26,382

 

23,308

 

9,528

 

8,230

                   

Total comprehensive income for the period attributable to:

                 

Owners of the Company

   

27,470

 

22,012

 

9,476

 

7,363

Non-controlling interest

   

(18)

 

-

 

(9)

 

-

Total comprehensive income for the period

   

27,452

 

22,012

 

9,467

 

7,363

                   
                   

Earnings per share 

                 

Basic

   

0.77

 

0.69

 

0.28

 

0.24

Diluted

   

0.75

 

0.67

 

0.27

 

0.23

Weighted average of outstanding shares (in thousands)

                 

Basic

   

34,335

 

33,887

 

34,464

 

34,080

Diluted

   

35,328

 

34,950

 

35,457

 

35,143

 

 

 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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

 
     

September 30,
2016

 

December 31,
2015

ASSETS

     

Current assets

         

Cash and cash equivalents 

   

16,706

 

36,720

Investments

   

37,803

 

25,660

Trade receivables

   

56,741

 

45,952

Other receivables 

   

18,036

 

18,570

Other financial assets

   

900

 

900

Total current assets

   

130,186

 

127,802

           

Non-current assets

         

Other receivables 

   

27,023

 

20,122

Deferred tax assets

   

9,831

 

7,983

Investment in associates

   

800

 

300

Other financial assets

   

285

 

1,221

Property and equipment

   

34,124

 

25,720

Intangible assets

   

11,133

 

7,209

Goodwill

   

49,060

 

32,532

Total non-current assets

   

132,256

 

95,087

TOTAL ASSETS

   

262,442

 

222,889

           

LIABILITIES

         

Current liabilities

         

Trade payables 

   

5,106

 

4,436

Payroll and social security taxes payable

   

28,295

 

25,551

Borrowings

   

241

 

280

Other financial liabilities

   

10,648

 

6,240

Tax liabilities

   

6,941

 

10,225

Other liabilities 

   

-

 

9

Total current liabilities

   

51,231

 

46,741

           

Non-current liabilities

         

Borrowings

   

43

 

268

Other financial liabilities

   

13,819

 

15,045

Other liabilities 

   

20

 

-

Provisions for contingencies

   

142

 

650

Total non-current liabilities

   

14,024

 

15,963

TOTAL LIABILITIES

   

65,255

 

62,704

           

Capital and reserves

         

Issued and paid-in capital

   

41,449

 

41,050

Additional paid-in capital

   

61,005

 

51,854

Other reserves

   

(942)

 

(2,012)

Retained earnings

   

95,643

 

69,243

Total equity attributable to owners of the Company

   

197,155

 

160,135

Non-controlling interests

   

32

 

50

Total equity

   

197,187

 

160,185

TOTAL EQUITY AND LIABILITIES

   

262,442

 

222,889

 

 

 

Supplemental Non-IFRS Financial Information

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

 
     

Nine months ended

 

Three months ended

     

September 30,
2016

 

September 30,
2015

 

September 30,
2016

 

September 30,
2015

                   

Reconciliation of adjusted gross profit

                 

Gross Profit

   

97,408

 

66,752

 

32,677

 

24,643

Adjustments

                 

  Depreciation and amortization expense

   

3,189

 

3,347

 

1,260

 

1,073

  Share-based compensation expense

   

711

 

517

 

263

 

445

Adjusted gross profit

   

101,308

 

70,616

 

34,200

 

26,161

Adjusted gross profit margin

   

43.0%

 

38.8%

 

41.5%

 

39.0%

                   

Reconciliation of selling, general and administrative expenses

                 

Selling, general and administrative expenses

   

(58,998)

 

(52,123)

 

(20,910)

 

(18,705)

Adjustments

                 

  M&A Expenses

                 

  Depreciation and amortization expense

   

4,536

 

3,769

 

1,769

 

1,297

  Acquisition related costs

   

-

 

337

 

-

 

-

  Share-based compensation expense

   

2,042

 

1,146

 

756

 

471

Adjusted selling, general and administrative expenses

   

(52,420)

 

(46,871)

 

(18,385)

 

(16,937)

Adjusted selling, general and administrative expenses as % of revenues

 

(22.2)%

 

(25.7)%

 

(22.3)%

 

(25.2)%

                   

Reconciliation of Adjusted Profit from Operations

                 

Operating Profit

   

38,410

 

16,449

 

11,767

 

5,938

Adjustments

                 

  M&A Expenses

                 

  Impairment of tax credits, net of recoveries

   

-

 

(1,820)

 

-

 

-

  Acquisition related costs

   

-

 

337

 

-

 

-

  Share-based compensation expense

   

2,753

 

1,663

 

1,019

 

916

Adjusted Profit from Operations

   

41,163

 

16,629

 

12,786

 

6,854

Adjusted Profit from Operations margin

   

17.5%

 

9.1%

 

15.5%

 

10.2%

                   

Reconciliation of Net income for the period

                 

Net income for the period

   

26,382

 

23,308

 

9,528

 

8,230

Adjustments

                 

  M&A Expenses

                 

  Share-based compensation expense

   

2,753

 

1,663

 

1,019

 

916

  Acquisition related costs

   

-

 

337

 

-

 

-

Adjusted Net income 

   

29,135

 

25,308

 

10,547

 

9,146

Adjusted Net income margin

   

12.4%

 

13.9%

 

12.8%

 

13.6%

                   

Calculation of Adjusted Diluted EPS

                 

Adjusted Net income 

   

29,135

 

25,308

 

10,547

 

9,146

Diluted shares

   

35,328

 

34,950

 

35,457

 

35,143

Adjusted Diluted EPS

   

0.82

 

0.72

 

0.30

 

0.26

 

 

 

Globant S.A.

Schedule of Supplemental Information (unaudited)

 

Metric

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

               

Total Employees

4,040

4,512

4,724

5,041

5,285

5,380

5,421

IT Professionals

3,694

4,121

4,327

4,613

4,847

4,932

4,983

               

North America Revenue %

84.1

85.2

84.1

81.7

82.2

81.1

81.4

Latin America and Others Revenue % 

10.1

9.7

11.5

12.2

10.8

10.7

9.4

Europe Revenue %

5.8

5.1

4.4

6.0

7.0

8.2

9.2

               

USD Revenue %

95.0

94.6

93.3

90.8

91.9

90.9

89.7

GBP Revenue %

1.0

0.8

1.4

2.4

0.4

1.2

2.8

Other Currencies Revenue %

4.0

4.6

5.3

6.8

7.8

7.9

7.5

               

Top Customer %

10.2

12.3

13.4

12.7

11.6

10.0

10.4

Top 5 Customers %

30.8

32.8

33.2

34.4

36.4

34.2

33.9

Top 10 Customers %

47.8

47.7

45.9

46.4

48.4

46.4

46.8

               

Customers Served (Last Twelve Months)

292

344

343

344

359

366

354

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

43

43

47

51

49

57

61

 

 

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

Media Contact:
Ivette Almeida, Paragon PR
Geena De Rose, Paragon PR
globant@paragonpr.com
(877) 215-5230

Logo - https://photos.prnewswire.com/prnh/20120802/MX50844LOGO

SOURCE Globant