Globant Reports 2017 First Quarter Financial Results
Solid Revenue Growth, Expansion Continues in Europe and the United States

SAN FRANCISCO, May 18, 2017 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three months ended March 31, 2017.

Globant Logo.

First quarter 2017 highlights

  • Revenue increased to a record $88.7 million, representing 21.0% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $34.6 million (39.0% Non-IFRS Adjusted Gross Profit Margin), an increase of $1.6 million compared to $33.0 million for the first quarter of 2016 (45.0% Non-IFRS Adjusted Gross Profit Margin).
  • Non-IFRS Adjusted Net Income was $9.7 million (11.0% Non-IFRS Adjusted Net Income Margin), an increase of $1.3 million, or 15.7%, compared to a profit of $8.4 million for the first quarter of 2016 (11.5% Non-IFRS Adjusted Net Income Margin).
  • Non-IFRS Adjusted Diluted EPS was $0.27 per share (based on an average of 35.6 million average diluted shares), an increase of $0.03 compared to Non-IFRS Adjusted Diluted EPS of $0.24 for the first quarter of 2016 (based on an average of 35.2 million average diluted shares).

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

"Q1 resulted in another strong set of financial results. Our revenues for the quarter amounted to $88.7 million, representing a robust 21.0% year-over-year growth. Our 50 squared initiative continues to perform according to our expectations. Our European operations expanded aggressively compared to Q1 2016 and with the recent acquisition of Ratio, we are creating a new hub in Seattle to complement our operations in the United States. This quarter we added a number of high potential accounts in the financial industry and the media and entertainment industry, among others," said Martín Migoya, Globant's CEO and co-founder.

"During Q1, we continue to see a strong demand coming from companies looking to achieve digital transformations. Organizations keep searching for ways to create the optimal digital journey for their customers through emerging technologies, such as artificial intelligence. Our Studio model continues to be a key driver to hold a leadership position, making us an ideal partner when facing these transformations," added Martín Migoya.

"Q1 was another quarter of revenue growth above 20% and, more importantly, one where demand for our services continued to expand. This translated into an aggressive +224 net headcount increase during the quarter. Political and macroeconomic uncertainty in our target markets has diminished and we are optimistic for the rest of the year. Regarding margins, we experienced some FX headwinds during Q1 as many of the currencies of the countries where we operate appreciated against the USD. We will continue diversifying our talent base across the regions, managing carefully our SG&A while investing in training for the long term," explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 5,855 Globers, 5,421 of whom were IT professionals. The geographic revenue breakdown for the first quarter was as follows: 78.9% from North America (top country: US), 11.2% from Europe (top country: Spain) and 9.9% from Latin America and others (top country: Chile). 88.6% of Globant's revenue for the first quarter was denominated in US dollars, and the remaining 11.4% was denominated in other currencies, including GB pounds, Euros and other Latin American currencies.

During the 12 months ended March 31, 2017, Globant served 336 customers, 67 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top 5 customers and top 10 customers represented 9.7%, 31.1% and 43.7% of first quarter revenues, respectively.

Cash and cash equivalents and investments as of March 31, 2017 decreased to $41.2 million from $59.9 million as of December 31, 2016, while borrowings amounted to $0.2 million. Current assets as of March 31, 2017 amounted to $130.2 million, accounting for 43.4% of total assets. Finally, as of March 31, 2017, 34.7 million common shares were issued and outstanding.

2017 Full Year and Second Quarter Outlook

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

  • Fiscal year 2017 revenue is estimated to be between $386.0-$394.0 million, implying 20.8% 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 $1.22-$1.30 (assuming an average of 35.8 million diluted shares outstanding during 2017).
  • Second quarter revenue is estimated to be in the range of $95.0-$97.0 million
  • Second quarter Non-IFRS diluted EPS is estimated to be in the range of $0.26-$0.28 (assuming an average of 35.7 million diluted shares outstanding during the second quarter).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the Q1 2017 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 5,855 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 and depreciation and amortization. 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 March 31, 2017 and December 31, 2016 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three-month periods ended March 31, 2017 and 2016, 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 Form 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)

       
     

Three months ended

     

 March 31, 2017

 

 March 31, 2016

           

Revenues 

   

88,742

 

73,326

Cost of revenues 

   

(55,494)

 

(41,358)

Gross profit

   

33,248

 

31,968

           

Selling, general and administrative expenses 

   

(23,895)

 

(17,769)

Profit from operations

   

9,353

 

14,199

           

Finance income

   

2,085

 

6,886

Finance expense

   

(2,135)

 

(7,447)

Finance expense, net

   

(50)

 

(561)

           

Other income, net

   

1,728

 

3

Profit before income tax

   

11,031

 

13,641

           

Income tax

   

(2,175)

 

(5,725)

Net income for the period

   

8,856

 

7,916

           

Other comprehensive income, net of income tax effects

         

Items that may be reclassified subsequently to profit and loss:

         

- Exchange differences on translating foreign operations

   

160

 

409

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

   

7

 

928

Total comprehensive income for the period

   

9,023

 

9,253

           

Net income attributable to:

         

Owners of the Company

   

8,867

 

7,940

Non-controlling interest

   

(11)

 

(24)

Net income for the period

   

8,856

 

7,916

           

Total comprehensive income for the period attributable to:

         

Owners of the Company

   

9,034

 

9,277

Non-controlling interest

   

(11)

 

(24)

Total comprehensive income for the period

   

9,023

 

9,253

           
           

Earnings per share 

         

Basic

   

0.26

 

0.23

Diluted

   

0.25

 

0.23

Weighted average of outstanding shares (in thousands)

         

Basic

   

34,682

 

34,223

Diluted

   

35,583

 

35,151

           

 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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

           
     

 March 31, 2017

 

 December 31, 2016

ASSETS

     

Current assets

         

Cash and cash equivalents 

   

29,439

 

50,532

Investments

   

11,777

 

9,355

Trade receivables

   

68,381

 

54,170

Other receivables 

   

19,747

 

18,869

Other financial assets

   

900

 

900

Total current assets

   

130,244

 

133,826

           

Non-current assets

         

Other receivables 

   

33,075

 

27,465

Deferred tax assets

   

8,336

 

7,691

Investment in associates

   

1,550

 

800

Other financial assets

   

455

 

319

Property and equipment

   

37,443

 

35,676

Intangible assets

   

13,590

 

13,791

Goodwill

   

75,483

 

65,180

Total non-current assets

   

169,932

 

150,922

TOTAL ASSETS

   

300,176

 

284,748

           

LIABILITIES

         

Current liabilities

         

Trade payables 

   

6,351

 

5,603

Payroll and social security taxes payable

   

32,245

 

30,328

Borrowings

   

160

 

217

Other financial liabilities

   

17,050

 

12,602

Tax liabilities

   

5,675

 

6,249

Total current liabilities

   

61,481

 

54,999

           

Non-current liabilities

         

Other financial liabilities

   

16,779

 

19,224

Other liabilities 

   

20

 

20

Provisions for contingencies

   

1,071

 

1,945

Total non-current liabilities

   

17,870

 

21,189

TOTAL LIABILITIES

   

79,351

 

76,188

           

Capital and reserves

         

Issued and paid-in capital

   

41,671

 

41,576

Additional paid-in capital

   

65,937

 

62,790

Other reserves

   

(794)

 

(961)

Retained earnings

   

113,986

 

105,119

Total equity attributable to owners of the Company

   

220,800

 

208,524

Non-controlling interests

   

25

 

36

Total equity

   

220,825

 

208,560

TOTAL EQUITY AND LIABILITIES

   

300,176

 

284,748

           

 

Globant S.A.

Supplemental Non-IFRS Financial Information

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

       
     

Three months ended

     

 March 31, 2017

 

 March 31, 2016

           

Reconciliation of adjusted gross profit

         

Gross Profit

   

33,248

 

31,968

Depreciation and amortization expense

   

1,102

 

914

Share-based compensation expense

   

278

 

144

Adjusted gross profit

   

34,628

 

33,026

Adjusted gross profit margin

   

39.0%

 

45.0%

           

Reconciliation of selling, general and administrative expenses

         

Selling, general and administrative expenses

   

(23,895)

 

(17,769)

Depreciation and amortization expense

   

2,596

 

1,334

Share-based compensation expense

   

599

 

351

Adjusted selling, general and administrative expenses

   

(20,700)

 

(16,084)

Adjusted selling, general and administrative expenses as % of revenues

   

(23.3)%

 

(21.9)%

           

Reconciliation of Adjusted Profit from Operations

         

Operating Profit

   

9,353

 

14,199

Share-based compensation expense

   

877

 

495

Adjusted Profit from Operations

   

10,230

 

14,694

Adjusted Profit from Operations margin

   

11.5%

 

20.0%

           

Reconciliation of Net income for the period

         

Net income for the period

   

8,856

 

7,916

Share-based compensation expense

   

877

 

495

Adjusted Net income 

   

9,733

 

8,411

Adjusted Net income margin

   

11.0%

 

11.5%

           

Calculation of Adjusted Diluted EPS

         

Adjusted Net income 

   

9,733

 

8,411

Diluted shares

   

35,583

 

35,151

Adjusted Diluted EPS

   

0.27

 

0.24

           

 

Globant S.A.

Schedule of Supplemental Information (unaudited)

           

Metric

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

           

Total Employees

5,285

5,380

5,421

5,631

5,855

IT Professionals

4,847

4,932

4,983

5,219

5,421

           

North America Revenue %

82.2

81.1

81.4

78.9

78.9

Latin America and Others Revenue % 

10.8

10.7

9.4

9.6

9.9

Europe Revenue %

7.0

8.2

9.2

11.5

11.2

           

USD Revenue %

91.9

90.9

89.7

88.0

88.6

Other Currencies Revenue %

8.1

9.1

10.3

12.0

11.4

           

Top Customer %

11.6

10.0

10.4

9.4

9.7

Top 5 Customers %

36.4

34.2

33.9

33.3

31.1

Top 10 Customers %

48.4

46.4

46.8

45.8

43.7

           

Customers Served (Last Twelve Months)

359

366

354

340

336

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

49

57

61

60

67

           

 

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

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

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SOURCE Globant