Globant Reports 2018 Second Quarter Financial Results
Solid Revenue Growth and Robust Operating Performance

LUXEMBOURG, Aug. 23, 2018 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2018.

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 2018 highlights

  • Revenues increased to a record $127.9 million, representing 28.4% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $51.3 million (40.1% Non-IFRS Adjusted Gross Profit Margin), an increase of $13.4 million compared to $37.9 million for the second quarter of 2017 (38.1% Non-IFRS Adjusted Gross Profit Margin).
  • Non-IFRS Adjusted Net Income was $14.5 million (11.4% Non-IFRS Adjusted Net Income Margin), compared to a profit of $9.5 million for the second quarter of 2017 (9.5% Non-IFRS Adjusted Net Income Margin).
  • Non-IFRS Adjusted Diluted EPS was $0.40 per share (based on an average of 36.7 million diluted shares), compared to Non-IFRS Adjusted Diluted EPS of $0.26 for the second quarter of 2017 (based on an average of 36.0 million diluted shares).

Six months ended June 30, 2018 highlights

  • Revenue for the period increased to $247.6 million, representing 31.5% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit was $98.2 million (39.6% Non-IFRS Adjusted Gross Profit Margin), an increase of $25.6 million compared to $72.5 million (38.5% Non-IFRS Adjusted Gross Profit Margin) in the first six months of 2017.
  • Non-IFRS Adjusted Net Income was $28.4 million (11.5% Non-IFRS Adjusted Net Income Margin), an increase of $10.0 million, compared to a profit of $18.4 million (9.8% Non-IFRS Adjusted Net Income Margin) in the first six months of 2017.
  • Non-IFRS Adjusted Diluted EPS was $0.78 per share (based on an average of 36.5 million diluted shares during the first six months of the 2018), an increase of $0.27 compared to Non-IFRS Adjusted Diluted EPS of $0.51 for the first six months of 2017 (based on an average of 36.0 million diluted shares during the first six months of 2017).

"We are very pleased with our second quarter performance. Our revenues for the quarter amounted to $127.9 million, representing an outstanding 28.4% year-over-year growth. We continue to experience strong momentum in the business, with our top 10 and our non-top 10 accounts, increasing by 30.5% and 26.8%, respectively, compared to the second quarter of 2017," explained Martín Migoya, Globant's CEO and co-founder.

"We are experiencing two disruptive technology revolutions happening at the same time: the digital and cognitive revolutions. Organizations need to move quickly to adapt their businesses as users demand new types of engagement and Globant is in a great position to capture these opportunities," explained Martin Migoya. "Creating solutions for the digital and cognitive transformation is a totally different game than traditional IT projects. We believe that it begins with cultural behavioral and organizational change and then delivering the right blend of engineering, design and innovation in the same way successful software companies in the Silicon Valley do," added Martín Migoya."

"During 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 second quarter with 7,279 Globers, 6,775 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the second quarter was as follows: 78.4% from North America (top country: US), 13.1% from Latin America and others (top country: Argentina) and 8.5% from Europe (top country: Spain). 86.4% of Globant's revenue for the second quarter was denominated in US dollars, and the remaining 13.6% was denominated in other currencies, including Euros, GB pounds and other Latin American currencies.

During the last twelve months ended June 30, 2018, Globant served 355 customers, 92 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 11.1%, 32.5% and 44.6% of second quarter revenues, respectively.

Cash and bank balances and Investments as of June 30, 2018 amounted to $57.3 million, while current assets amounted to $175.1 million, accounting for 45.6% of total assets for the same period. Finally, as of June 30, 2018, 35.8 million common shares were issued and outstanding.

2018 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 2018:

  • Third quarter 2018 Revenues are estimated to be between $131.5-$133.5 million, implying 20.8% year-over-year growth at the midpoint of the range.
  • Third quarter 2018 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $0.41-$0.45 (assuming an average of 37.0 million diluted shares outstanding during the third quarter).
  • Fiscal year 2018 Revenues are estimated to be in the range of $514-$518 million, implying 24.8% year-over-year revenue growth at the midpoint of the range.
  • Fiscal year 2018 Non-IFRS Adjusted Diluted EPS is estimated to be in the range of $1.65-$1.69 (assuming an average of 36.9 million diluted shares outstanding during 2018).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the Q2 2018 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 (NYSE: GLOB)

We are a digitally native technology services company where innovation, design and engineering meet scale. We use some of the latest technologies in the digital and cognitive field to empower organizations in every aspect.

We have more than 7,200 professionals in 13 countries working for companies like Google, LinkedIn, BBVA, EA and Coca Cola, among others.

We were named a Worldwide Leader of Digital Strategy Consulting Services by IDC MarketScape report (2016 and 2017). We were also featured as a business case study at Harvard, MIT, and Stanford.

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 has 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, impairment of tax credits, expenses related to secondary share offering and acquisition-related charges. 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, 2018 and December 31, 2017 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and six months ended June 30, 2018 and 2017, prepared in accordance with IAS 34.

Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Diluted EPS to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, share-based compensation expense, impairment of tax credits and acquisition-related charges. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.

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)

           
               
 

Six months ended

 

Three months ended

 

 June 30, 2018

 

 June 30, 2017

 

 June 30, 2018

 

 June 30, 2017

               

Revenues 

247,604

 

188,331

 

127,892

 

99,589

Cost of revenues 

(153,404)

 

(120,737)

 

(78,861)

 

(65,243)

Gross profit

94,200

 

67,594

 

49,031

 

34,346

               

Selling, general and administrative expenses 

(63,880)

 

(53,386)

 

(32,681)

 

(29,131)

Net impairment (losses) gain on financial assets

(434)

 

(1,223)

 

(423)

 

(1,583)

Profit from operations

29,886

 

12,985

 

15,927

 

3,632

               

Finance income

16,018

 

4,122

 

13,665

 

2,037

Finance expense

(18,961)

 

(5,436)

 

(15,717)

 

(3,301)

Finance expense, net

(2,943)

 

(1,314)

 

(2,052)

 

(1,264)

               

Other income, net

4,521

 

2,408

 

4,507

 

680

Profit before income tax

31,464

 

14,079

 

18,382

 

3,048

               

Income tax

(6,898)

 

(3,125)

 

(3,957)

 

(950)

Net income for the period

24,566

 

10,954

 

14,425

 

2,098

               

Other comprehensive income, net of income tax effects

             

Items that may be reclassified subsequently to profit and loss:

             

- Exchange differences on translating foreign operations

(1,123)

 

(78)

 

(1,294)

 

(238)

- Net change in fair value on financial assets measured at FVOCI

(9)

 

5

 

(3)

 

(2)

Total comprehensive income for the period

23,434

 

10,881

 

13,128

 

1,858

               

Net income attributable to:

             

Owners of the Company

24,583

 

10,987

 

14,413

 

2,120

Non-controlling interest

(17)

 

(33)

 

12

 

(22)

Net income for the period

24,566

 

10,954

 

14,425

 

2,098

               

Total comprehensive income for the period attributable to:

             

Owners of the Company

23,451

 

10,914

 

13,116

 

1,880

Non-controlling interest

(17)

 

(33)

 

12

 

(22)

Total comprehensive income for the period

23,434

 

10,881

 

13,128

 

1,858

               
               

Earnings per share 

             

Basic

0.69

 

0.32

 

0.40

 

0.06

Diluted

0.67

 

0.30

 

0.39

 

0.06

               

Weighted average of outstanding shares (in thousands)

             

Basic

35,584

 

34,738

 

35,735

 

34,794

Diluted

36,510

 

35,979

 

36,661

 

36,034

 

Globant S.A.

Condensed Interim Consolidated Statement of Financial Position

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

     
       
 

 June 30, 2018

 

 December 31, 2017

ASSETS

 

Current assets

     

Cash and bank balances

49,228

 

52,525

Investments

8,033

 

8,147

Trade receivables

96,829

 

80,078

Other receivables 

20,088

 

14,357

Other financial assets

885

 

873

Total current assets

175,063

 

155,980

       

Non-current assets

     

Other receivables 

31,577

 

31,736

Deferred tax assets

14,641

 

13,186

Investment in associates

4,800

 

1,550

Other financial assets

455

 

555

Property and equipment

45,524

 

43,879

Intangible assets

12,918

 

11,365

Goodwill

98,609

 

98,926

Total non-current assets

208,524

 

201,197

TOTAL ASSETS

383,587

 

357,177

       

LIABILITIES

     

Current liabilities

     

Trade payables 

14,306

 

11,640

Payroll and social security taxes payable

40,997

 

40,472

Borrowings

6,026

 

6,011

Other financial liabilities

7,536

 

10,664

Tax liabilities

5,424

 

5,253

Other liabilities 

1,179

 

20

Total current liabilities

75,468

 

74,060

       

Non-current liabilities

     

Other financial liabilities

7,025

 

18,574

Provisions for contingencies

1,404

 

1,179

Total non-current liabilities

8,429

 

19,753

TOTAL LIABILITIES

83,897

 

93,813

       

Capital and reserves

     

Issued capital

42,920

 

42,271

Additional paid-in capital

98,971

 

86,728

Other reserves

(2,385)

 

(1,253)

Retained earnings

160,241

 

135,658

Total equity attributable to owners of the Company

299,747

 

263,404

Non-controlling interests

(57)

 

(40)

Total equity

299,690

 

263,364

TOTAL EQUITY AND LIABILITIES

383,587

 

357,177

 

Globant S.A.

Supplemental Non-IFRS Financial Information

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

               
 

Six months ended

 

Three months ended

 

 June 30, 2018

 

 June 30, 2017

 

 June 30, 2018

 

 June 30, 2017

               

Reconciliation of adjusted gross profit

             

Gross Profit

94,200

 

67,594

 

49,031

 

34,346

Depreciation and amortization expense

2,003

 

2,199

 

1,010

 

1,097

Share-based compensation expense

1,953

 

2,730

 

1,292

 

2,452

Adjusted gross profit

98,156

 

72,523

 

51,333

 

37,895

Adjusted gross profit margin

39.6%

 

38.5%

 

40.1%

 

38.1%

               

Reconciliation of selling, general and administrative expenses

             

Selling, general and administrative expenses

(63,880)

 

(53,386)

 

(32,681)

 

(29,131)

Depreciation and amortization expense

7,479

 

5,481

 

3,967

 

2,885

Share-based compensation expense

4,203

 

4,028

 

1,995

 

3,429

Acquisition-related charges (a)

1,265

 

287

 

707

 

-

Adjusted selling, general and administrative expenses

(50,933)

 

(43,590)

 

(26,012)

 

(22,817)

Adjusted selling, general and administrative expenses as % of revenues

(20.6)%

 

(23.1)%

 

(20.3)%

 

(22.9)%

               

Reconciliation of Adjusted Profit from Operations

             

Operating Profit

29,886

 

12,985

 

15,927

 

3,632

Share-based compensation expense

6,156

 

6,758

 

3,287

 

5,881

Impairment of tax credits

48

 

1,586

 

48

 

1,586

Acquisition-related charges (a)

1,649

 

1,135

 

899

 

470

Adjusted Profit from Operations

37,739

 

22,464

 

20,161

 

11,569

Adjusted Profit from Operations margin

15.2%

 

11.9%

 

15.8%

 

11.6%

               

Reconciliation of Net income for the period

             

Net income for the period

24,566

 

10,954

 

14,425

 

2,098

Share-based compensation expense

6,156

 

6,758

 

3,287

 

5,881

Impairment of tax credits

48

 

1,586

 

48

 

1,586

Acquisition-related charges (a)

(2,585)

 

(919)

 

(3,467)

 

(82)

Expenses related to secondary share offering (b)

234

 

-

 

234

 

-

Adjusted Net income 

28,419

 

18,379

 

14,527

 

9,483

Adjusted Net income margin

11.5%

 

9.8%

 

11.4%

 

9.5%

               

Calculation of Adjusted Diluted EPS

             

Adjusted Net income 

28,419

 

18,379

 

14,527

 

9,483

Diluted shares

36,510

 

35,979

 

36,661

 

36,034

Adjusted Diluted EPS

0.78

 

0.51

 

0.40

 

0.26

 

Notes:

(a)  Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in the depreciation and amortization expense line on our consolidated statements of operations, external deal costs, acquisition-related retention bonuses, integration costs, changes in the fair value of contingent consideration liabilities, charges for impairment of acquired intangible assets and other acquisition-related costs. We cannot provide acquisition-related charges on a forward-looking basis without unreasonable effort as such charges may fluctuate based on the timing, size, and complexity of future acquisitions as well as other uncertainty inherent in mergers and acquisitions.

 

(b)  Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held by WPP Luxembourg Gamma Three S.àr.l.

 

Globant S.A.

Schedule of Supplemental Information (unaudited)

       
           

Metrics

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

           

Total Employees

6,223

6,397

6,753

6,940

7,279

IT Professionals

5,772

5,925

6,279

6,462

6,775

           

North America Revenue %

78.5

79.1

78.6

78.6

78.4

Latin America and Others Revenue % 

9.2

13.3

14.6

13.8

13.1

Europe Revenue %

12.3

7.6

6.8

7.6

8.5

           

USD Revenue %

87.6

85.4

82.5

85.5

86.4

Other Currencies Revenue %

12.4

14.6

17.5

14.5

13.6

           

Top Customer %

10.1

10.3

10.4

11.1

11.1

Top 5 Customers %

31.6

26.8

28.5

31.3

32.5

Top 10 Customers %

43.9

40.7

43.2

44.5

44.6

           

Customers Served (Last Twelve Months)

331

346

356

348

355

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

76

78

82

89

92

 

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

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

Source: Globant

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SOURCE Globant