Globant Reports 2020 Fourth Quarter and Full Year Financial Results

Solid End to the Year and Robust Outlook

  • Fourth quarter revenues of $232.6 million, up 26.2% year-over-year
  • IFRS Diluted EPS of $0.46 for the fourth quarter
  • Non-IFRS Diluted EPS of $0.70 for the fourth quarter

LUXEMBOURG, Feb. 18, 2021 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three months and year ended December 31, 2020.

Globant New 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.

Fourth quarter 2020 highlights

  • Revenues rose to $232.6 million, representing 26.2% year-over-year growth compared to the fourth quarter of 2019.
  • IFRS Gross Profit margin was 38.2% compared to 37.9% in the fourth quarter of 2019.
  • Non-IFRS Adjusted Gross Profit Margin was 39.6% compared to 39.9% in the fourth quarter of 2019.
  • IFRS Profit from Operations Margin was 11.7% compared to 10.9% in the fourth quarter of 2019.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.3% compared to 16.5% in the fourth quarter of 2019.
  • IFRS Diluted EPS was $0.46 compared to $0.35 in the fourth quarter of 2019.
  • Non-IFRS Adjusted Diluted EPS was $0.70 compared to $0.64 in the fourth quarter of 2019.

Full year ended December 31, 2020 highlights

  • Revenues rose to $814.1 million, representing 23.5% year-over-year growth.
  • IFRS Gross Profit margin was 37.4% compared to 38.5% for the full year 2019.
  • Non-IFRS Adjusted Gross Profit Margin was 39.1% compared to 40.4% for the full year 2019.
  • IFRS Profit from Operations Margin was 10.3% compared to 12.2% for the full year 2019.
  • Non-IFRS Adjusted Profit from Operations Margin was 15.2% compared to 17.0% for the full year 2019.
  • IFRS Diluted EPS was $1.37 compared to $1.43 for the full year 2019.
  • Non-IFRS Adjusted Diluted EPS was $2.45 compared to $2.29 for the full year 2019.

Other Metrics as of and for the quarter ended December 31, 2020

  • Cash and cash equivalents and current investments were $298.2 million as of December 31, 2020, an increase of $215.7 million from $82.5 million as of December 31, 2019. As of December 31, 2020, we had $25 million drawn on our credit facility.
  • Globant completed the fourth quarter with 16,251 Globers, 15,290 of whom were technology, design and innovation professionals.
  • The geographic revenue breakdown for the fourth quarter was as follows: 65.9% from North America (top country: US), 24.3% from Latin America and others (top country: Argentina) and 9.8% from Europe (top country: Spain).
  • In terms of currencies, 85.8% of Globant's revenues for the fourth quarter were denominated in US dollars.
  • During the year ended December 31, 2020, Globant served a total of 798 customers and continued to increase its wallet share, having 129 accounts with more than $1 million of annual revenues, compared to 107 for the same period one year ago.
  • Globant's top customer, top five customers and top ten customers represented 10.7%, 30.0% and 42.9% of fourth quarter revenues, respectively.

"2020 was a very challenging year for the whole world, but at the same time it brought an amazing opportunity for us, as more organizations faced the need for profound transformation. We kept pushing the boundaries of our industry, bringing more value to our customers and helping them reinvent themselves. In this context, we delivered a robust 23.5% year over year revenue growth in 2020", said Martín Migoya, Globant's CEO and co-founder. "With our Studios and our AI-accelerators, we will continue to bring together strategy, sustainable business models, digital trends, AI and inclusive culture to unleash our customers' potential."

"Our future-centric vision means putting sustainability at the forefront to deliver digital and cognitive transformations. This vision puts a focus on rethinking business models with our clients", Migoya added. "On this line, we took a step further in December, as we announced the acquisition of consultancy-firm Bluecap, which will be key to help us reinforce our strategic capabilities worldwide".

"I am very satisfied with our overall results for the fourth quarter and full year 2020. We started the year on very strong footing, but faced some challenges from COVID-19 during the first half of the second quarter of 2020. However, since then, the demand environment and our overall business continued to improve throughout the rest of 2020, and we ended the year at a robust 23.5% year over year revenue growth, ahead of market expectations. In addition, our hiring remains strong, our attrition remains at historic lows, and our adjusted operating margins are trending back up. All this bodes well for a very positive 2021," explained Juan Urthiague, Globant's CFO.

2021 First Quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the first quarter and the full year of 2021:

  • First quarter 2021 Revenues are estimated to be at least $258 million, implying at least 34.7% year-over-year growth.
  • First quarter 2021 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15%-17%.
  • First quarter 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at least $0.79 (assuming an average of 41.2 million diluted shares outstanding during the first quarter).
  • Fiscal year 2021 Revenues are estimated to be at least $1,047 million, implying at least 28.6% year-over-year revenue growth.
  • Fiscal year 2021 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15%-17%.
  • Fiscal year 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at least $3.20 (assuming an average of 41.5 million diluted shares outstanding during 2021).

Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the full year and fourth quarter 2020 results in a conference call today beginning at 4:30pm ET.

Video conference call access information is:
https://more.globant.com/F4Q20EarningsCall 
Webcast http://investors.globant.com/

About Globant (NYSE:GLOB)
We are a digitally native company where innovation, design and engineering meet scale. We use the latest technologies in the digital and cognitive field to empower organizations in every aspect.

We have more than 16,200 employees and are present in 16 countries working for companies like Google, Rockwell Automation, Electronic Arts and Santander, among others.

We were named a Worldwide Leader in CX Improvement by IDC MarketScape report. We were also featured as a business case study at Harvard, MIT, and Stanford. We are a member of the Cybersecurity Tech Accord.

For more information, please visit www.globant.com

Non-IFRS Financial Measures

While the financial figures included in this press release have been computed in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting" nor a financial statement as defined by International Accounting Standards 1 "Presentation of Financial Statements". The financial information in this press release has not been audited.

Globant provides non-IFRS financial measures in addition to reported IFRS results prepared in accordance with IFRS. Management believes these measures help illustrate underlying trends in the company's business and uses the non-IFRS financial 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 measures that exclude share-based compensation expense, depreciation and amortization, impairment of non-financial assets, acquisition-related charges and COVID-19 related expenses. 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 consolidated statements of financial position as of December 31, 2020 and 2019 and its consolidated statement of comprehensive income for the three months and year ended December 31, 2020 and 2019, prepared in accordance with IFRS as issued by IASB.

Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Profit from Operations Margin or 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 non-financial assets, acquisition-related charges and COVID-19 related expenses. 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. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "will," "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 our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: the impact and duration of the COVID-19 pandemic; our ability to maintain current resource utilization rates and productivity levels; our ability to manage attrition and attract and retain highly-skilled IT professionals; our ability to accurately price our client contracts; our ability to achieve our anticipated growth; our ability to effectively manage our rapid growth; our ability to retain our senior management team and other key employees; our ability to continue to innovate and remain at the forefront of emerging technologies and related market trends; our ability to retain our business relationships and client contracts; our ability to manage the impact of global adverse economic conditions; our ability to manage uncertainty concerning the instability in the current economic, political and social environment in Latin America; and other factors discussed under the heading "Risk Factors" in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission and any other risk factors we include in subsequent reports on Form 6-K.

Because of these uncertainties, you should not make any investment decisions based on our 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.

 

Globant S.A.

Consolidated Statement of Comprehensive Income

(In thousands of U.S. dollars, except per share amounts, unaudited)

         
   

Year ended

 

Three months ended

   

December 31, 2020

 

December 31, 2019

 

December 31, 2020

 

December 31, 2019

Revenues

 

814,139

 

659,325

 

232,636

 

184,306

Cost of revenues

 

(509,812)

 

(405,164)

 

(143,723)

 

(114,501)

Gross profit

 

304,327

 

254,161

 

88,913

 

69,805

                 

Selling, general and administrative expenses

 

(217,222)

 

(172,478)

 

(61,972)

 

(50,195)

Net impairment losses on financial assets

 

(3,080)

 

(228)

 

445

 

388

Other operating expense, net

 

(83)

 

(720)

 

(83)

 

Profit from operations

 

83,942

 

80,735

 

27,303

 

19,998

                 
                 
                 

Finance income

 

1,920

 

958

 

543

 

330

Finance expense

 

(10,430)

 

(6,653)

 

(2,991)

 

(2,545)

Other financial results, net

 

3,601

 

(5,894)

 

1,429

 

(495)

Financial results, net

 

(4,909)

 

(11,589)

 

(1,019)

 

(2,710)

                 

Share of results of investment in associates

 

(622)

 

(224)

 

(247)

 

(41)

                 

Other income and expenses, net

 

(1,887)

 

110

 

1,737

 

75

Profit before income tax

 

76,524

 

69,032

 

27,774

 

17,322

                 

Income tax

 

(22,307)

 

(15,017)

 

(9,085)

 

(3,869)

Net income for the year / period

 

54,217

 

54,015

 

18,689

 

13,453

                 

Other comprehensive income (loss) net of income tax effects

               

Items that may be reclassified subsequently to profit and loss:

               

- Exchange differences on translating foreign operations

 

(398)

 

(400)

 

2,141

 

558

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

 

 

(373)

 

 

(1)

- Gains and losses on cash flow hedges

 

281

 

352

 

1,129

 

586

Total comprehensive income for the year / period

 

54,100

 

53,594

 

21,959

 

14,596

                 

Net income attributable to:

               

Owners of the Company

 

54,217

 

54,015

 

18,689

 

13,453

Non-controlling interest

 

 

 

 

Net income for the year / period

 

54,217

 

54,015

 

18,689

 

13,453

                 

Total comprehensive income for the year attributable to:

               

Owners of the Company

 

54,100

 

53,594

 

21,959

 

14,596

Non-controlling interest

 

 

 

 

Total comprehensive income for the year / period

 

54,100

 

53,594

 

21,959

 

14,596

                 
                 
                 
                 
                 

Earnings per share

               

Basic

 

1.41

 

1.48

 

0.47

 

0.36

Diluted

 

1.37

 

1.43

 

0.46

 

0.35

Weighted average of outstanding shares (in thousands)

               

Basic

 

38,515

 

36,586

 

39,713

 

36,897

Diluted

 

39,717

 

37,674

 

40,914

 

37,985

 

 

 

   

Globant S.A.

Consolidated Statements of Financial Position as of December 31, 2020 and December 31, 2019

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

     
 

December 31, 2020

December 31, 2019

ASSETS

   

Current assets

   

Cash and cash equivalents 

278,939

62,721

Investments

19,284

19,780

Trade receivables

196,020

156,676

Other assets

8,146

13,439

Other receivables

31,633

19,308

Other financial assets 

1,577

4,527

Total current assets

535,599

276,451

     

Non-current assets

   

Trade receivables

5,644

Investments

615

418

Other assets

6,954

7,796

Other receivables

9,629

8,810

Deferred tax assets

41,507

26,868

Investment in associates

3,154

3,776

Other financial assets 

15,147

1,683

Property and equipment

101,027

87,533

Intangible assets

86,721

27,110

Right-of-use asset

90,010

58,781

Goodwill

392,760

188,538

Total non-current assets

753,168

411,313

TOTAL ASSETS

1,288,767

687,764

     

LIABILITIES

   

Current liabilities

   

Trade payables

35,266

31,487

Payroll and social security taxes payable

111,881

72,252

Borrowings

907

1,198

Other financial liabilities 

19,822

8,937

Lease liabilities

15,358

19,439

Tax liabilities

11,804

7,898

Income tax payable

10,511

4,612

Other liabilities 

81

368

Total current liabilities

205,630

146,191

     

Non-current liabilities

   

Trade payables

5,240

5,500

Borrowings

25,061

50,188

Other financial liabilities

74,376

1,617

Lease liabilities

72,240

41,924

Deferred tax liabilities

13,698

1,028

Provisions for contingencies

12,583

2,602

Total non-current liabilities

203,198

102,859

TOTAL LIABILITIES

408,828

249,050

     

Capital and reserves

   

Issued capital

47,861

44,356

Additional paid-in capital

541,157

157,537

Other reserves

(2,674)

(2,557)

Retained earnings 

293,595

239,378

Total equity attributable to owners of the Company

879,939

438,714

TOTAL EQUITY AND LIABILITIES

1,288,767

687,764

     

 

 

Globant S.A.

Supplemental Non-IFRS Financial Information

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

       
 

Year ended

 

Three months ended

 

December 31, 2020

 

December 31, 2019

 

December 31, 2020

 

December 31, 2019

               

Reconciliation of adjusted gross profit

             

Gross Profit

304,327

 

254,161

 

88,913

 

69,805

Depreciation and amortization expense

9,759

 

7,350

 

2,430

 

2,369

Share-based compensation expense

4,109

 

4,976

 

690

 

1,309

Adjusted gross profit

318,195

 

266,487

 

92,033

 

73,483

Adjusted gross profit margin

39.1  %

 

40.4  %

 

39.6  %

 

39.9  %

               

Reconciliation of selling, general and administrative expenses

             

Selling, general and administrative expenses

(217,222)

 

(172,478)

 

(61,972)

 

(50,195)

Depreciation and amortization expense

22,691

 

16,905

 

7,232

 

4,393

Share-based compensation expense

20,519

 

14,912

 

4,516

 

4,541

Acquisition-related charges (a)

10,096

 

9,571

 

3,969

 

4,121

COVID-19-related charges (b)

(613)

 

 

 

Adjusted selling, general and administrative expenses

(164,529)

 

(131,090)

 

(46,255)

 

(37,140)

Adjusted selling, general and administrative expenses as % of revenues

(20.2)  %

 

(19.9)  %

 

(19.9)  %

 

(20.2)  %

               

Reconciliation of Adjusted Profit from Operations

             

Profit from Operations

83,942

 

80,735

 

27,303

 

19,998

Share-based compensation expense

24,628

 

19,888

 

5,206

 

5,850

Impairment of tax credits

(8)

 

 

 

Acquisition-related charges (a)

12,754

 

10,695

 

5,451

 

4,631

COVID-19-related charges (b)

2,582

 

 

(169)

 

Impairment of assets

83

 

673

 

83

 

(47)

Adjusted Profit from Operations

123,981

 

111,991

 

37,874

 

30,432

Adjusted Profit from Operations margin

15.2  %

 

17.0  %

 

16.3  %

 

16.5  %

               

Reconciliation of Net income for the period

             

Net income for the period

54,217

 

54,015

 

18,689

 

13,453

Share-based compensation expense

24,628

 

19,888

 

5,206

 

5,850

Impairment of tax credits

(8)

 

 

 

Acquisition-related charges (a)

15,796

 

11,518

 

4,733

 

4,970

COVID-19-related charges (b)

2,582

 

 

(169)

 

Impairment of assets

83

 

673

 

83

 

(47)

Adjusted Net income

97,298

 

86,094

 

28,542

 

24,226

Adjusted Net income margin

12.0  %

 

13.1  %

 

12.3  %

 

13.1  %

               

Calculation of Adjusted Diluted EPS

             

Adjusted Net income

97,298

 

86,094

 

28,542

 

24,226

Diluted shares

39,717

 

37,674

 

40,914

 

37,831

Adjusted Diluted EPS

2.45

 

2.29

 

0.70

 

0.64

 

(a)  Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our consolidated statements of comprehensive income, 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)  COVID-19 related charges include, when applicable, bad debt provision related to the effect of COVID-19 on our customers' businesses, donations and other expenses directly attributable to the pandemic that are both incremental to charges incurred prior to the outbreak and not expected to recur once the crisis has subsided and operations return to normal and clearly separable from normal operations. Moreover, these charges also include rent concessions that we were granted due to the pandemic environment.

 

Globant S.A.

Schedule of Supplemental Information (unaudited)

 

Metrics

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

           

Total Employees

11,855

12,538

12,333

14,340

16,251

IT Professionals

11,021

11,755

11,573

13,436

15,290

           

North America Revenues %

75.0

74.5

72.8

70.0

65.9

Latin America and Others Revenues %

20.0

19.5

20.8

22.4

24.3

Europe Revenues %

5.0

6.0

6.4

7.6

9.8

           

USD Revenues %

86.7

86.8

87.0

84.5

85.8

Other Currencies Revenues %

13.3

13.2

13.0

15.5

14.2

           

Top Customer %

11.7

11.7

10.7

10.8

10.7

Top 5 Customers %

27.0

29.1

31.9

32.2

30.0

Top 10 Customers %

38.5

41.0

44.9

45.0

42.9

           

Customers Served (Last Twelve Months)

822

876

805

893

798

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

107

112

113

118

129

           

 

Investor Relations Contact:
Paula Conde & Amit Singh, Globant
investors@globant.com
+1 (877) 215-5230

Media Contact:
Wanda Weigert, Globant
pr@globant.com
+1 (877) 215-5230

 

SOURCE Globant