Globant Reports 2016 Full Year and Fourth Quarter Financial Results
Robust Revenue Growth and Solid Operating Performance for 2016

SAN FRANCISCO, Feb. 16, 2017 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three and twelve months ended December 31, 2016.

Full Year 2016 Highlights

  • Revenue increased to $322.9 million, the company's highest annual revenue to date, representing 27.2% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $137.1 million (42.5% Non-IFRS Adjusted Gross Profit Margin), an increase of $38.4 million compared to $98.7 million for 2015 (and an increase of 360 basis points compared to 38.9% Non-IFRS Adjusted Gross Profit Margin for 2015).
  • Non-IFRS Adjusted Net Income was $40.3 million (12.5% Non-IFRS Adjusted Net Income Margin), an increase of $6.0 million, or 17.5%, compared to a profit of $34.3 million for 2015 (13.5% Non-IFRS Adjusted Net Income Margin).
  • Non-IFRS Adjusted Diluted EPS was $1.14 per share (based on an average of 35.4 million diluted shares during 2016), an increase of $0.16 compared to Non-IFRS Adjusted Diluted EPS of $0.98 for 2015.

Fourth quarter 2016 highlights

  • Revenue increased to a record $87.3 million, representing 21.9% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $35.8 million (41.0% Non-IFRS Adjusted Gross Profit Margin), an increase of $7.7 million compared to $28.1 million for the fourth quarter of 2015, and an increase of 180 basis points compared to 39.2% Non-IFRS Adjusted Gross Profit Margin for the fourth quarter of 2015.
  • Non-IFRS Adjusted Net Income was $11.2 million (12.8% Non-IFRS Adjusted Net Income Margin), an increase of $2.2 million, or 24.4%, compared to a profit of $9.0 million for the fourth quarter of 2015 (12.6% Non-IFRS Adjusted Net Income Margin).
  • Non-IFRS Adjusted Diluted EPS was $0.31 per share (based on an average of 35.6 million average diluted shares during the fourth quarter), an increase of $0.05 compared to Non-IFRS Adjusted Diluted EPS of $0.26 for the fourth quarter of 2015.

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

"I am very pleased with our 2016 performance. Our revenues for 2016 reached almost $323 million, a solid 27.2% year-over-year growth. This significant growth was mainly driven by our top accounts, while we have started seeing strong results from our 50 squared initiative. During the year, we also initiated a sustained expansion of our European and US operations, with many new customers coming from industries like Travel, Finance and Media & Entertainment," said Martín Migoya, Globant's CEO and co-founder.

"During 2016, demand for digital solutions came from every industry, and we are seeing increased interest for company-wide digital transformation programs. We expect this trend to expand in the coming years, as more companies embark in these processes. Our focus and leadership position on emerging technologies continue to resonate in the market and are significant differentiators when choosing a partner to face these massive transformations," added Martín Migoya. "To reinforce our positioning, we continue to invest in new trends and technologies, such as deep learning and virtual and augmented reality, to remain ahead of the curve and help our customers stay fit for future challenges."

"I am very satisfied with our financial results for this quarter. In a quarter characterized by political and macroeconomic uncertainty, we continued our growth journey and our revenues grew almost 22% compared to the fourth quarter of 2015. At the same time, both our gross and operating margins expanded compared to the same period last year. Finally, hirings increased during Q4 compared to the last 2 quarters, a positive signal towards the rest of 2017" explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 5,631 Globers, 5,219 of whom were IT professionals. The geographic revenue breakdown for the fourth quarter was as follows: 78.9% from North America (top country: US), 11.5% from Europe (top country: Spain) and 9.6% from Latin America and others (top country: Chile). 88.0% of Globant's revenue for the fourth quarter was denominated in US dollars, and the remaining 12.0% was denominated in other currencies, including GB pounds, Euros and other Latin American currencies.

During the 12 months ended December 31, 2016, Globant served 340 customers, 60 of which accounted for more than $1 million of Globant's revenues.  Globant's top customer, top 5 customers and top 10 customers represented 9.4%, 33.3% and 45.8% of fourth quarter revenues, respectively.

Cash and cash equivalents and investments as of December 31, 2016 decreased to $59.9 million from $62.4 million as of December 31, 2015, while borrowings amounted to $0.2 million. Current assets as of December 31, 2016 amounted to $133.4 million, accounting for 46.9% of total assets. Finally, as of December 31, 2016, 34.6 million common shares were issued and outstanding.

2017 Full Year and First Quarter Outlook

Based on current market conditions, Globant is providing the following estimates for the full year and the first quarter of 2017:

  • Fiscal year 2017 revenue is estimated to be between $383.0-$393.0 million, implying 20.2% year-over-year growth at the midpoint of the range.
  • Fiscal year 2017 Non-IFRS diluted EPS is estimated to be in the range of $1.29-$1.39 (assuming an average of 35.9 million average diluted shares outstanding during 2017).
  • First quarter revenue is estimated to be in the range of $86.0-$88.0 million
  • First quarter Non-IFRS diluted EPS is estimated to be in the range of $0.24-$0.28 (assuming an average of 35.7 million diluted shares outstanding during the first quarter).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the three and twelve-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 5,631 professionals in 12 countries working for companies like Google, 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 Accounting Standards 34, "Interim Financial Reporting". The financial information 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 December 31, 2016 and December 31, 2015 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the twelve-month and three-month periods ended December 31, 2016 and 2015, prepared in accordance with 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, 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)

 
     

Twelve months ended

 

Three months ended

     

 December 31, 2016

 

 December 31, 2015

 

 December 31, 2016

 

 December 31, 2015

                   

Revenues 

   

322,856

 

253,796

 

87,254

 

71,563

Cost of revenues 

   

(190,935)

 

(160,292)

 

(52,741)

 

(44,811)

Gross profit

   

131,921

 

93,504

 

34,513

 

26,752

                   

Selling, general and administrative expenses 

   

(81,346)

 

(71,594)

 

(22,348)

 

(19,471)

Impairment of tax credits, net of recoveries

   

-

 

1,820

 

-

 

-

Profit from operations

   

50,575

 

23,730

 

12,165

 

7,281

                   

Gain on transactions with bonds 

       

19,102

 

-

 

5,771

Finance income

   

16,215

 

27,555

 

2,711

 

17,247

Finance expense

   

(19,227)

 

(20,952)

 

(3,913)

 

(12,434)

Finance (expense) income, net

   

(3,012)

 

6,603

 

(1,202)

 

4,813

                   

Other income and (expenses), net

   

3,629

 

605

 

2,576

 

616

Profit before income tax

   

51,192

 

50,040

 

13,539

 

18,481

                   

Income tax

   

(14,485)

 

(18,420)

 

(3,214)

 

(10,169)

Net income for the period

   

36,707

 

31,620

 

10,325

 

8,312

                   

Other comprehensive income, net of income tax effects

                 

Items that may be reclassified subsequently to profit and loss:

                 

- Exchange differences on translating foreign operations

   

1,103

 

(1,353)

 

(12)

 

(57)

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

   

(52)

 

52

 

(7)

 

52

Total comprehensive income for the period

   

37,758

 

30,319

 

10,306

 

8,307

                   

Net income attributable to:

                 

Owners of the Company

   

36,721

 

31,653

 

10,321

 

8,345

Non-controlling interest

   

(14)

 

(33)

 

4

 

(33)

Net income for the period

   

36,707

 

31,620

 

10,325

 

8,312

                   

Total comprehensive income for the period attributable to:

                 

Owners of the Company

   

37,772

 

30,352

 

10,302

 

8,340

Non-controlling interest

   

(14)

 

(33)

 

4

 

(33)

Total comprehensive income for the period

   

37,758

 

30,319

 

10,306

 

8,307

                   
                   

Earnings per share 

                 

Basic

   

1.07

 

0.93

 

0.30

 

0.24

Diluted

   

1.04

 

0.90

 

0.29

 

0.24

Weighted average of outstanding shares (in thousands)

                 

Basic

   

34,402

 

33,960

 

34,601

 

34,177

Diluted

   

35,413

 

35,013

 

35,612

 

35,230

 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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

 
     

 December
31, 2016

 

December 31,
2015

ASSETS

     

Current assets

         

Cash and cash equivalents 

   

50,532

 

36,720

Investments

   

9,355

 

25,660

Trade receivables

   

54,170

 

45,952

Other receivables 

   

18,470

 

18,570

Other financial assets

   

900

 

900

Total current assets

   

133,427

 

127,802

           

Non-current assets

         

Other receivables 

   

27,364

 

20,122

Deferred tax assets

   

7,691

 

7,983

Investment in associates

   

800

 

300

Other financial assets

   

819

 

1,221

Property and equipment

   

35,676

 

25,720

Intangible assets

   

13,616

 

7,209

Goodwill

   

65,355

 

32,532

Total non-current assets

   

151,321

 

95,087

TOTAL ASSETS

   

284,748

 

222,889

           

LIABILITIES

         

Current liabilities

         

Trade payables 

   

5,603

 

4,436

Payroll and social security taxes payable

   

30,328

 

25,551

Borrowings

   

217

 

280

Other financial liabilities

   

12,602

 

6,240

Tax liabilities

   

6,404

 

10,225

Other liabilities 

   

-

 

9

Total current liabilities

   

55,154

 

46,741

           

Non-current liabilities

         

Borrowings

   

-

 

268

Other financial liabilities

   

19,224

 

15,045

Other liabilities 

   

20

 

-

Provisions for contingencies

   

945

 

650

Total non-current liabilities

   

20,189

 

15,963

TOTAL LIABILITIES

   

75,343

 

62,704

           

Capital and reserves

         

Issued and paid-in capital

   

41,576

 

41,050

Additional paid-in capital

   

62,790

 

51,854

Other reserves

   

(961)

 

(2,012)

Retained earnings

   

105,964

 

69,243

Total equity attributable to owners of the Company

   

209,369

 

160,135

Non-controlling interests

   

36

 

50

Total equity

   

209,405

 

160,185

TOTAL EQUITY AND LIABILITIES

   

284,748

 

222,889

           

 

Supplemental Non-IFRS Financial Information

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

 
     

Twelve months ended

 

Three months ended

     

 December 31, 2016

 

 December 31, 2015

 

 December 31, 2016

 

 December 31, 2015

                   

Reconciliation of adjusted gross profit

                 

Gross Profit

   

131,921

 

93,504

 

34,513

 

26,752

Depreciation and amortization expense

   

4,281

 

4,441

 

1,092

 

1,094

Share-based compensation expense

   

917

 

735

 

206

 

218

Adjusted gross profit

   

137,119

 

98,680

 

35,811

 

28,064

Adjusted gross profit margin

   

42.5%

 

38.9%

 

41.0%

 

39.2%

                   

Reconciliation of selling, general and administrative expenses

               

Selling, general and administrative expenses

   

(81,346)

 

(71,594)

 

(22,348)

 

(19,471)

Depreciation and amortization expense

   

6,637

 

4,860

 

2,101

 

1,091

Acquisition related costs

   

-

 

337

 

-

 

-

Share-based compensation expense

   

2,703

 

1,647

 

661

 

501

Adjusted selling, general and administrative expenses

   

(72,006)

 

(64,750)

 

(19,586)

 

(17,879)

Adjusted selling, general and administrative expenses as % of revenues

(22.3)%

 

(25.5)%

 

(22.4)%

 

(25.0)%

                   

Reconciliation of Adjusted Profit from Operations

                 

Operating Profit

   

50,575

 

23,730

 

12,165

 

7,281

Impairment of tax credits, net of recoveries

   

-

 

(1,820)

 

-

 

-

Acquisition related costs

   

-

 

337

 

-

 

-

Share-based compensation expense

   

3,620

 

2,382

 

867

 

719

Adjusted Profit from Operations

   

54,195

 

24,629

 

13,032

 

8,000

Adjusted Profit from Operations margin

   

16.8%

 

9.7%

 

14.9%

 

11.2%

                   

Reconciliation of Net income for the period

                 

Net income for the period

   

36,707

 

31,620

 

10,325

 

8,312

Share-based compensation expense

   

3,620

 

2,382

 

867

 

719

Acquisition related costs

   

-

 

337

 

-

 

-

Adjusted Net income 

   

40,327

 

34,339

 

11,192

 

9,031

Adjusted Net income margin

   

12.5%

 

13.5%

 

12.8%

 

12.6%

                   

Calculation of Adjusted Diluted EPS

                 

Adjusted Net income 

   

40,327

 

34,339

 

11,192

 

9,031

Diluted shares

   

35,413

 

35,013

 

35,612

 

35,230

Adjusted Diluted EPS

   

1.14

 

0.98

 

0.31

 

0.26

 

Globant S.A.

Schedule of Supplemental Information (unaudited)

 

Metric

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

           

Total Employees

5,041

5,285

5,380

5,421

5,631

IT Professionals

4,613

4,847

4,932

4,983

5,219

           

North America Revenue %

81.7

82.2

81.1

81.4

78.9

Latin America and Others Revenue %

12.2

10.8

10.7

9.4

9.6

Europe Revenue %

6.0

7.0

8.2

9.2

11.5

           

USD Revenue %

90.8

91.9

90.9

89.7

88.0

GBP Revenue %

2.4

0.4

1.2

2.8

1.7

Other Currencies Revenue %

6.8

7.8

7.9

7.5

10.3

           

Top Customer %

12.7

11.6

10.0

10.4

9.4

Top 5 Customers %

34.4

36.4

34.2

33.9

33.3

Top 10 Customers %

46.4

48.4

46.4

46.8

45.8

           

Customers Served (Last Twelve Months)

344

359

366

354

340

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

51

49

57

61

60

 

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

 

SOURCE Globant