Globant Reports 2021 Second Quarter Financial Results

Strong Performance Amid Robust Demand Environment

  • Second quarter revenues of $305.3 million, up 67.1% year-over-year
  • IFRS Diluted EPS of $0.48 for the second quarter
  • Non-IFRS Diluted EPS of $0.88 for the second quarter

LUXEMBOURG, Aug. 12, 2021 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2021.

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 2021 Financial Highlights

  • Revenues rose to $305.3 million, representing 67.1% year-over-year growth compared to the second quarter of 2020.
  • IFRS Gross Profit margin was 38.0% compared to 36.3% in the second quarter of 2020.
  • Non-IFRS Adjusted Gross Profit Margin was 39.3% compared to 38.2% in the second quarter of 2020.
  • IFRS Profit from Operations Margin was 10.1% compared to 8.1% in the second quarter of 2020.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.2% compared to 13.5% in the second quarter of 2020.
  • IFRS Diluted EPS was $0.48 compared to $0.26 in the second quarter of 2020.
  • Non-IFRS Adjusted Diluted EPS was $0.88 compared to $0.45 in the second quarter of 2020.

Six months ended June 30, 2021 Financial Highlights

  • Revenues rose to $575.4 million, representing 53.7% year-over-year growth compared to the first six months of 2020.
  • IFRS Gross Profit margin was 38.1% compared to 37.0% in the first six months of 2020.
  • Non-IFRS Adjusted Gross Profit Margin was 39.4% compared to 38.9% in the first six months of 2020.
  • IFRS Profit from Operations Margin was 10.6% compared to 8.9% in the first six months of 2020
  • Non-IFRS Adjusted Profit from Operations Margin was 16.4% compared to 14.6% in the first six months of 2020.
  • IFRS Diluted EPS was $1.01 compared to $0.60 in the first six months of 2020.
  • Non-IFRS Adjusted Diluted EPS was $1.71 compared to $1.04 in the first six months of 2020.

Other Metrics as of and for the quarter ended June 30, 2021

  • Cash and cash equivalents and Short-term investments totaled $465.0 million as of June 30, 2021, an increase of $166.8 million from $298.2 million as of December 31, 2020. During the second quarter of 2021, we raised approximately $286.2 million in net proceeds from our equity offering of 1.38 million shares. As of June 30, 2021, our credit facility was fully undrawn.
  • Globant completed the second quarter of 2021 with 19,428 Globers, 18,350 of whom were technology, design and innovation professionals.
  • The geographic revenue breakdown for the second quarter of 2021 was as follows: 63.8% from North America (top country: US), 21.6% from Latin America and others (top country: Argentina), 13.2% from Europe (top country: Spain) and 1.4% from Asia (top country: Japan).
  • In terms of currencies, 76.4% of Globant's revenues for the second quarter of 2021 were denominated in US dollars.
  • During the twelve months ended June 30, 2021, Globant served a total of 941 customers and continued to increase its wallet share, having 154 accounts with more than $1 million of annual revenues, compared to 113 for the same period one year ago.
  • Globant's top customer, top five customers and top ten customers for the second quarter of 2021 represented 10.3%, 26.4% and 39.8% of revenues, respectively.

"Organizations continue to face the need to adapt to new demands. According to the IDC, the number of companies that embrace a digital transformation strategy is up 43% since 2019. This continues to present a unique opportunity to us, as we help our clients seek reinvention and create their way forward", said Martín Migoya. "As a reflection of our vision, we have seen an amazing expansion during the first half of the year, and it's the first time Globant's revenues have surpassed $1 billion over the last twelve months. We will continue working to scale our dream of reinventing this industry."

"In the second quarter we recorded a robust 67.1% year over year revenue growth, with strong margins, leading to both top and bottom line beats. In addition, we accelerated our hiring in Q2, with IT professionals up 58.6% year over year and 12.7% quarter over quarter. Our revenues, adj. EPS and IT headcount, all recorded the strongest year over year growth since we are a public company. We also materially raised our full-year guidance. As we exit the Covid-19 pandemic, we are witnessing a demand environment stronger than before the pandemic. Moreover, our robust pipeline makes us believe we can deliver strong and elevated levels of growth for the foreseeable future," explained Juan Urthiague, Globant's CFO.

2021 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 2021:

  • Third quarter 2021 Revenues are estimated to be at least $325 million, or 56.8% year over year growth.
  • Third quarter 2021 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15.5%-17%.
  • Third quarter 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at least $0.92 (assuming an average of 42.7 million diluted shares outstanding during the third quarter).
  • Fiscal year 2021 Revenues are estimated to be at least $1,236 million, or 51.8% year over year growth.
  • Fiscal year 2021 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15.5%-17%.
  • Fiscal year 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at least $3.58 (assuming an average of 42.0 million diluted shares outstanding during 2021).

Conference Call and Webcast

Martín Migoya and Juan Urthiague will discuss the second quarter 2021 results in a video conference call today beginning at 4:30pm ET.

Video conference call access information is: https://more.globant.com/F2Q21EarningsCall

Webcast http://investors.globant.com/

About Globant (NYSE:GLOB)

We are a digitally native company that helps organizations reinvent themselves to create a way forward and unleash their potential. We are the place where innovation, design and engineering meet scale.

We have more than 19,400 employees and we are present in 18 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") applicable to interim periods, 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, COVID-19 related expenses and the related effect on income taxes of the pre-tax adjustments. 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 condensed interim consolidated statements of financial position as of June 30, 2021 and December 31, 2020 and its condensed interim consolidated statement of comprehensive income for the three and six months ended June 30, 2021 and 2020, prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting.

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 assets, acquisition-related charges COVID-19 related expenses and the tax effect of non-IFRS adjustments. 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.

Condensed Interim Consolidated Statement of Comprehensive Income

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








Six months ended


Three months ended



June 30, 2021


June 30, 2020


June 30, 2021


June 30, 2020










Revenues


575,427



374,280



305,257



182,708


Cost of revenues


(356,249)



(235,836)



(189,276)



(116,467)


Gross profit


219,178



138,444



115,981



66,241











Selling, general and administrative expenses


(154,097)



(101,454)



(82,206)



(49,582)


Net impairment losses on financial assets


(4,003)



(3,544)



(2,904)



(1,927)


Other operating income


11








Profit from operations


61,089



33,446



30,871



14,732











Finance income


330



707



7



451


Finance expense


(5,943)



(5,106)



(3,331)



(2,651)


Other financial results, net


(655)



3,624



(1,526)



907


Financial results, net


(6,268)



(775)



(4,850)



(1,293)











Share of results of investment in associates


(233)



(82)



(233)



(82)











Other income and expenses, net


(443)



43



(481)



27


Profit before income tax


54,145



32,632



25,307



13,384











Income tax


(12,531)



(9,443)



(5,360)



(3,365)


Net income for the period


41,614



23,189



19,947



10,019











- Exchange differences on translating foreign operations


(2,438)



(1,537)



(714)



567


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




(23)





91


- Gains and losses on cash flow hedges


96



(834)



(74)



1,235


Total comprehensive income for the period


39,272



20,795



19,159



11,912











Net income attributable to:









Owners of the Company


41,614



23,189



19,947



10,019


Net income for the period


41,614



23,189



19,947



10,019











Total comprehensive income for the period attributable to:









Owners of the Company


39,272



20,795



19,159



11,912


Total comprehensive income for the period


39,272



20,795



19,159



11,912


Earnings per share









Basic


1.03



0.62



0.49



0.27


Diluted


1.01



0.60



0.48



0.26


Weighted average of outstanding shares (in thousands)









Basic


40,212



37,347



40,522



37,686


Diluted


41,354



38,420



41,664



38,759


 

Globant S.A.

Condensed Interim Consolidated Statements of Financial Position as of June 30, 2021 and December 31, 2020

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








June 30, 2021


December 31, 2020

ASSETS





Current assets





Cash and cash equivalents


431,373



278,939


Investments


33,673



19,284


Trade receivables


281,422



196,020


Other assets


7,097



8,146


Other receivables


58,485



31,633


Other financial assets


2,265



1,577


Total current assets


814,315



535,599







Non-current assets





Trade Receivables




5,644


Investments


823



615


Other assets


5,429



6,954


Other Receivables


12,874



9,629


Deferred tax assets


42,906



41,507


Investment in associates




3,154


Other financial assets


26,233



15,147


Property and equipment


108,388



101,027


Intangible assets


89,082



86,721


Right-of-use assets


97,899



90,010


Goodwill


450,946



392,760


Total non-current assets


834,580



753,168


TOTAL ASSETS


1,648,895



1,288,767







LIABILITIES





Current liabilities





Trade payables


42,135



35,266


Payroll and social security taxes payable


121,114



111,881


Borrowings


250



907


Other financial liabilities


47,103



19,822


Lease liabilities


8,950



15,358


Tax liabilities


14,383



11,804


Income tax payable


10,199



10,511


Other liabilities


472



81


Total current liabilities


244,606



205,630







Non-current liabilities





Trade payables


4,528



5,240


Borrowings


902



25,061


Other financial liabilities


51,151



74,376


Lease liabilities


84,333



72,240


Deferred tax liabilities


8,337



13,698


Provisions for contingencies


21,529



12,583


Total non-current liabilities


170,780



203,198


TOTAL LIABILITIES


415,386



408,828







Capital and reserves





Issued capital


49,856



47,861


Additional paid-in capital


853,460



541,157


Other reserves


(5,016)



(2,674)


Retained earnings


335,209



293,595


Total equity attributable to owners of the Company


1,233,509



879,939


TOTAL EQUITY AND LIABILITIES


1,648,895



1,288,767


 

Globant S.A.

Supplemental Non-IFRS Financial Information

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






Six months ended


Three months ended


June 30, 2021


June 30, 2020


June 30, 2021


June 30, 2020









Reconciliation of adjusted gross profit








Gross Profit

219,178



138,444



115,981



66,241


Depreciation and amortization expense

5,883



4,639



3,082



2,349


Share-based compensation expense

1,830



2,328



815



1,207


Adjusted gross profit

226,891



145,411



119,878



69,797


Adjusted gross profit margin

39.4

%


38.9

%


39.3

%


38.2

%









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(154,097)



(101,454)



(82,206)



(49,582)


Depreciation and amortization expense

21,745



9,897



11,907



5,003


Share-based compensation expense

15,791



10,485



8,109



5,327


Acquisition-related charges (a)

6,596



4,248



3,962



1,490


Adjusted selling, general and administrative expenses

(109,965)



(76,824)



(58,228)



(37,762)


Adjusted selling, general and administrative expenses as % of revenues

(19.1)

%


(20.5)

%


(19.1)

%


(20.7)

%









Reconciliation of Adjusted Profit from Operations








Profit from Operations

61,089



33,446



30,871



14,732


Share-based compensation expense

17,621



12,813



8,924



6,534


Acquisition-related charges (a)

13,473



5,040



7,399



1,878


COVID-19-related charges (b)

2,228



3,185



2,228



1,469


Impairment of assets

(11)








Adjusted Profit from Operations

94,400



54,484



49,422



24,613


Adjusted Profit from Operations margin

16.4

%


14.6

%


16.2

%


13.5

%









Reconciliation of Net income for the period








Net income for the period

41,614



23,189



19,947



10,019


Share-based compensation expense

17,621



12,813



8,924



6,534


Acquisition-related charges (a)

16,202



5,143



9,549



1,926


COVID-19-related charges (b)

2,228



3,185



2,228



1,469


Impairment of assets

(11)








Tax effect of non-IFRS adjustments (c)

(6,928)



(4,415)



(4,169)



(2,482)


Adjusted Net income

70,726



39,915



36,479



17,466


Adjusted Net income margin

12.3

%


10.7

%


12.0

%


9.6

%









Calculation of Adjusted Diluted EPS








Adjusted Net income

70,726



39,915



36,479



17,466


Diluted shares

41,354



38,420



41,664



38,759


Adjusted Diluted EPS

1.71



1.04



0.88



0.45


 

(a) Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our condensed interim 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.

(c) Non-IFRS Adjusted net income and adjusted Diluted EPS for Q2 of 2020 reflects the tax impact of non-IFRS adjustments. Non-IFRS Adjusted net income and adjusted Diluted EPS for Q2 2020, previously presented were recast to conform to the current presentation.

 

Globant S.A.

Schedule of Supplemental Information (unaudited)


Metrics

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021







Total Employees

12,333


14,340


16,251


17,267


19,428


IT Professionals

11,573


13,436


15,290


16,284


18,350








North America Revenues %

72.8


70.0


65.9


63.1


63.8


Latin America and Others Revenues %

20.8


22.4


24.3


23.6


21.6


Europe Revenues %

6.4


7.6


9.8


12.0


13.2


Asia Revenues %




1.3


1.4








USD Revenues %

87.0


84.5


85.8


77.7


76.4


Other Currencies Revenues %

13.0


15.5


14.2


22.3


23.6








Top Customer %

10.7


10.8


10.7


10.5


10.3


Top 5 Customers %

31.9


32.2


30.0


28.4


26.4


Top 10 Customers %

44.9


45.0


42.9


41.0


39.8








Customers Served (Last Twelve Months)

805


893


798


860


941


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

113


118


129


139


154








 

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

 

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

SOURCE Globant