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

SAN FRANCISCO, Aug. 17, 2017 /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, 2017.

Globant logo

Please see highlights below, including certain Non-IFRS measures. Note that reconciliations between Non-IFRS financial measures and IFRS operating results are disclosed at the end of this press release.

Second quarter 2017 highlights

  • Revenue increased to a record $99.6 million, representing 24.6% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $37.9 million (38.1% Non-IFRS Adjusted Gross Profit Margin), an increase of $3.8 million compared to $34.1 million for the second quarter of 2016 (42.6% Non-IFRS Adjusted Gross Profit Margin).
  • Non-IFRS Adjusted Net Income was $9.6 million (9.6% Non-IFRS Adjusted Net Income Margin), compared to a profit of $10.2 million for the second quarter of 2016 (12.7% Non-IFRS Adjusted Net Income Margin).
  • Non-IFRS Adjusted Diluted EPS was $0.27 per share (based on an average of 36.0 million diluted shares), compared to Non-IFRS Adjusted Diluted EPS of $0.29 for the second quarter of 2016 (based on an average of 35.2 million diluted shares).

Six months ended June 30, 2017 highlights

  • Revenue for the period increased to $188.3 million, representing 22.9% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $72.5 million (38.5% Non-IFRS Adjusted Gross Profit Margin), an increase of $5.4 million compared to $67.1 million (43.8% Non-IFRS Adjusted Gross Profit Margin) in the first six months of 2016.
  • Non-IFRS Adjusted Net Income was $19.3 million (10.2% Non-IFRS Adjusted Net Income Margin), an increase of $0.7 million, compared to a profit of $18.6 million (12.1% Non-IFRS Adjusted Net Income Margin) in the first six months of 2016.
  • Non-IFRS Adjusted Diluted EPS was $0.54 per share (based on an average of 36.0 million diluted shares during the first six months of the 2017), an increase of $0.01 compared to Non-IFRS Adjusted Diluted EPS of $0.53 for the first six months of 2016 (based on an average of 35.2 million diluted shares during the first six months of the 2016).

"Q2 resulted in another record quarter in terms of revenues and financial results in line with our guidance. Our revenue for the quarter amounted to $99.6 million, representing a robust 24.6% year-over-year growth. Our 50 squared initiative continues to perform according to our expectations. Our European operations expanded aggressively compared to Q2 2016 and, with the recent acquisition of PointSource, we continue expanding our service offerings and footprint in the United States. This quarter, we added a number of high potential accounts in the Banking, Financial services and Insurance industry, among others," said Martín Migoya, Globant's CEO and co-founder.

"During Q2, we continue to see a strong demand coming from companies looking to achieve digital transformations. Organizations keep searching for ways to connect emotionally with their customers through digital journeys, propelled by 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.

"Q2 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 +368 net headcount increase during the quarter. We continue to experience sustained demand for our digital offerings and we also see traction from our strategic accounts. Regarding margins, we experienced some FX headwinds during the first half of 2017 as many of the currencies of the countries in which we operate appreciated against the USD. We will continue diversifying our talent base across regions to manage margins. At the same time, we will maintain disciplined spending and carefully manage our SG&A, while investing in training and developing emerging technologies expertise for the long run," explained Alejandro Scannapieco, Globant's CFO.

Globant completed the second quarter with 6,223 Globers, 5,772 of whom were IT professionals. The geographic revenue breakdown for the second quarter was as follows: 78.5% from North America (top country: US), 12.3% from Europe (top country: Spain) and 9.2% from Latin America and others (top country: Chile). 87.6% of Globant's revenue for the second quarter was denominated in US dollars, and the remaining 12.4% was denominated in other currencies, including GB pounds, Euros and other Latin American currencies.

During the last 12 months ended June 30, 2017, Globant served 331 customers, 76 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top 5 customers and top 10 customers represented 10.1%, 31.6% and 43.9% of second quarter revenues, respectively.

Cash and cash equivalents and investments as of June 30, 2017 decreased to $36.3 million from $59.9 million as of December 31, 2016, while borrowings amounted to $10.3 million as of June 30, 2017 compared to $0.2 million as of December 31, 2016. Current assets as of June 30, 2017 amounted to $131.4 million, accounting for 39.2% of total assets. Finally, as of June 30, 2017, 34.9 million common shares were issued and outstanding.

2017 Third Quarter and Full Year Outlook

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

  • Third quarter revenue is estimated to be between $103-$105 million, implying 26.3% year-over-year growth at the midpoint of the range.
  • Third quarter 2017 Non-IFRS diluted EPS is estimated to be in the range of $0.32-$0.36 (assuming an average of 36.2 million diluted shares outstanding during the third quarter).
  • Fiscal year 2017 revenue is estimated to be in the range of $397-$403 million, implying 23.9% year-over-year revenue 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 36.2 million diluted shares outstanding during 2017).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the Q2 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 6,223 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, should be considered together with its unaudited interim consolidated statement of financial position as of June 30, 2017 and December 31, 2016 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and six month periods ended June 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

   

Six months ended

   

 June 30, 2017

 

 June 30, 2016

   

 June 30, 2017

 

 June 30, 2016

                   

Revenues 

 

99,589

 

79,926

   

188,331

 

153,252

Cost of revenues 

 

(65,243)

 

(47,163)

   

(120,737)

 

(88,521)

Gross profit

 

34,346

 

32,763

   

67,594

 

64,731

                   

Selling, general and administrative expenses 

 

(29,128)

 

(20,319)

   

(53,023)

 

(38,088)

Impairment of tax credits

 

(1,586)

 

-

   

(1,586)

 

-

Profit from operations

 

3,632

 

12,444

   

12,985

 

26,643

                   

Finance income

 

2,037

 

4,203

   

4,122

 

11,089

Finance expense

 

(3,301)

 

(5,686)

   

(5,436)

 

(13,133)

Finance expense, net

 

(1,264)

 

(1,483)

   

(1,314)

 

(2,044)

                   

Other income, net

 

680

 

651

   

2,408

 

654

Profit before income tax

 

3,048

 

11,612

   

14,079

 

25,253

                   

Income tax

 

(950)

 

(2,674)

   

(3,125)

 

(8,399)

Net income for the period

 

2,098

 

8,938

   

10,954

 

16,854

                   

Other comprehensive income, net of income tax effects

                 

Items that may be reclassified subsequently to profit and loss:

                 

- Exchange differences on translating foreign operations

 

(238)

 

742

   

(78)

 

1,151

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

 

(2)

 

(948)

   

5

 

(20)

Total comprehensive income for the period

 

1,858

 

8,732

   

10,881

 

17,985

                   

Net income attributable to:

                 

Owners of the Company

 

2,120

 

742

   

10,987

 

1,151

Non-controlling interest

 

(22)

 

(948)

   

(33)

 

(20)

Net income for the period

 

2,098

 

(206)

   

10,954

 

1,131

                   

Total comprehensive income for the period attributable to:

                 

Owners of the Company

 

1,880

 

8,923

   

10,914

 

16,863

Non-controlling interest

 

(22)

 

15

   

(33)

 

(9)

Total comprehensive income for the period

 

1,858

 

8,938

   

10,881

 

16,854

                   
                   

Earnings per share 

                 

Basic

 

0.06

 

0.26

   

0.32

 

0.49

Diluted

 

0.06

 

0.25

   

0.30

 

0.48

Weighted average of outstanding shares (in thousands)

                 

Basic

 

34,794

 

34,317

   

34,738

 

34,270

Diluted

 

36,034

 

35,230

   

35,979

 

35,182

 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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

         
   

June 30, 2017

 

 December 31, 2016

ASSETS

   

Current assets

       

Cash and cash equivalents 

 

29,841

 

50,532

Investments

 

6,437

 

9,355

Trade receivables

 

77,230

 

54,170

Other receivables 

 

16,990

 

18,869

Other financial assets

 

900

 

900

Total current assets

 

131,398

 

133,826

         

Non-current assets

       

Other receivables 

 

35,347

 

27,465

Deferred tax assets

 

10,414

 

7,691

Investment in associates

 

1,550

 

800

Other financial assets

 

555

 

319

Property and equipment

 

38,759

 

35,676

Intangible assets

 

13,911

 

13,791

Goodwill

 

103,097

 

65,180

Total non-current assets

 

203,633

 

150,922

TOTAL ASSETS

 

335,031

 

284,748

         

LIABILITIES

       

Current liabilities

       

Trade payables 

 

8,631

 

5,603

Payroll and social security taxes payable

 

30,570

 

30,328

Borrowings

 

10,280

 

217

Other financial liabilities

 

26,584

 

12,602

Tax liabilities

 

3,698

 

6,249

Other liabilities 

 

8

 

-

Total current liabilities

 

79,771

 

54,999

         

Non-current liabilities

       

Other financial liabilities

 

21,093

 

19,224

Other liabilities 

 

20

 

20

Provisions for contingencies

 

1,216

 

1,945

Total non-current liabilities

 

22,329

 

21,189

TOTAL LIABILITIES

 

102,100

 

76,188

         

Capital and reserves

       

Issued and paid-in capital

 

41,911

 

41,576

Additional paid-in capital

 

75,945

 

62,790

Other reserves

 

(1,034)

 

(961)

Retained earnings

 

116,106

 

105,119

Total equity attributable to owners of the Company

 

232,928

 

208,524

Non-controlling interests

 

3

 

36

Total equity

 

232,931

 

208,560

TOTAL EQUITY AND LIABILITIES

 

335,031

 

284,748

         

 

 

Globant S.A.

Supplemental Non-IFRS Financial Information

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

                   
   

Three months ended

   

Six months ended

   

 June 30, 2017

 

 June 30, 2016

   

 June 30, 2017

 

 June 30, 2016

                   

Reconciliation of adjusted gross profit

                 

Gross Profit

 

34,346

 

32,763

   

67,594

 

64,731

Depreciation and amortization expense

 

1,097

 

1,015

   

2,199

 

1,929

Share-based compensation expense

 

2,452

 

304

   

2,730

 

448

Adjusted gross profit

 

37,895

 

34,082

   

72,523

 

67,108

Adjusted gross profit margin

 

38.1%

 

42.6%

   

38.5%

 

43.8%

                   

Reconciliation of selling, general and administrative expenses

                 

Selling, general and administrative expenses

 

(29,128)

 

(20,319)

   

(53,023)

 

(38,088)

Depreciation and amortization expense

 

2,885

 

1,433

   

5,481

 

2,767

Share-based compensation expense

 

3,429

 

935

   

4,028

 

1,286

Adjusted selling, general and administrative expenses

 

(22,814)

 

(17,951)

   

(43,514)

 

(34,035)

Adjusted selling, general and administrative expenses as % of revenues

 

(22.9)%

 

(22.5)%

   

(23.1)%

 

(22.2)%

                   

Reconciliation of Adjusted Profit from Operations

                 

Operating Profit

 

3,632

 

12,444

   

12,985

 

26,643

Impairment of tax credits

 

1,586

 

-

   

1,586

 

-

Share-based compensation expense

 

5,881

 

1,239

   

6,758

 

1,734

Adjusted Profit from Operations

 

11,099

 

13,683

   

21,329

 

28,377

Adjusted Profit from Operations margin

 

11.1%

 

17.1%

   

11.3%

 

18.5%

                   

Reconciliation of Net income for the period

                 

Net income for the period

 

2,098

 

8,938

   

10,954

 

16,854

Impairment of tax credits

 

1,586

 

-

   

1,586

 

-

Share-based compensation expense

 

5,881

 

1,239

   

6,758

 

1,734

Adjusted Net income 

 

9,565

 

10,177

   

19,298

 

18,588

Adjusted Net income margin

 

9.6%

 

12.7%

   

10.2%

 

12.1%

                   

Calculation of Adjusted Diluted EPS

                 

Adjusted Net income 

 

9,565

 

10,177

   

19,298

 

18,588

Diluted shares

 

36,034

 

35,230

   

35,979

 

35,182

Adjusted Diluted EPS

 

0.27

 

0.29

   

0.54

 

0.53

 

Globant S.A.

Schedule of Supplemental Information (unaudited)

           
           

Metrics

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

           

Total Employees

5,380

5,421

5,631

5,855

6,223

IT Professionals

4,932

4,983

5,219

5,421

5,772

           

North America Revenue %

81.1

81.4

78.9

78.9

78.5

Latin America and Others Revenue % 

10.7

9.4

9.6

9.9

9.2

Europe Revenue %

8.2

9.2

11.5

11.2

12.3

           

USD Revenue %

90.9

89.7

88.0

88.6

87.6

Other Currencies Revenue %

9.1

10.3

12.0

11.4

12.4

           

Top Customer %

10.0

10.4

9.4

9.7

10.1

Top 5 Customers %

34.2

33.9

33.3

31.1

31.6

Top 10 Customers %

46.4

46.8

45.8

43.7

43.9

           

Customers Served (Last Twelve Months)

366

354

340

336

331

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

57

61

60

67

76

 

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