Globant Reports 2022 Second Quarter Financial Results

Another Quarter of Strong Results

Second quarter revenues of $429.3 million, up 40.6% year-over-year

IFRS Diluted EPS of $0.87 for the second quarter

Non-IFRS Diluted EPS of $1.22 for the second quarter

LUXEMBOURG, Aug. 18, 2022 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2022.

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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 2022 Financial Highlights

  • Revenues rose to $429.3 million, representing 40.6% year-over-year growth.
  • IFRS Gross Profit Margin was 37.6% compared to 38.0% in the second quarter of 2021.
  • Non-IFRS Adjusted Gross Profit Margin was 39.1% compared to 39.3% in the second quarter of 2021.
  • IFRS Profit from Operations Margin was 11.4% compared to 10.1% in the second quarter of 2021.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.1% compared to 16.2% in the second quarter of 2021.
  • IFRS Diluted EPS was $0.87 compared to $0.48 in the second quarter of 2021.
  • Non-IFRS Adjusted Diluted EPS was $1.22 compared to $0.88 in the second quarter of 2021.

Six months ended June 30, 2022 Financial Highlights

  • Revenues rose to $830.6 million, representing 44.4% year-over-year growth.
  • IFRS Gross Profit Margin was 37.8% compared to 38.1% in the first six months of 2021.
  • Non-IFRS Adjusted Gross Profit Margin was 39.3% compared to 39.4% in the first six months of 2021.
  • IFRS Profit from Operations Margin was 12.0% compared to 10.6% in the first six months of 2021.
  • Non-IFRS Adjusted Profit from Operations Margin was 16.5% compared to 16.4% in the first six months of 2021.
  • IFRS Diluted EPS was $1.72 compared to $1.01 in the first six months of 2021.
  • Non-IFRS Adjusted Diluted EPS was $2.41 compared to $1.71 in the first six months of 2021.

Other Metrics as of and for the quarter ended June 30, 2022

  • Cash and cash equivalents and Short-term investments were $361.7 million as of June 30, 2022, a decrease of $98.7 million from $460.4 million as of December 31, 2021, driven by seasonal impacts of tax and bonus payments, and M&A earnout payments. As of June 30, 2022, our credit facility was fully undrawn.
  • Globant completed the second quarter of 2022 with 25,924 Globers, 24,410 of whom were technology, design and innovation professionals.
  • The geographic revenue breakdown for the second quarter of 2022 was as follows: 64.5% from North America (top country: US), 23.8% from Latin America (top country: Argentina), 9.7% from EMEA (top country: Spain) and 2.0% from Asia and Oceania (top country: India).
  • In terms of currencies, 79.0% of Globant's revenues for the second quarter of 2022 were denominated in US dollars.
  • During the twelve months ended June 30, 2022, Globant served a total of 1,043 customers (with revenues over $10,000 in the last twelve months) and continued to increase its wallet share, with 233 accounts generating more than $1 million of annual revenues, compared to 154 for the same period one year ago.
  • Globant's top customer, top five customers and top ten customers for the second quarter of 2022 represented 10.5%, 25.7% and 36.7% of revenues, respectively.

"In the eight years since our IPO, Globant has consistently delivered industry leading growth with an approximate 31% revenue CAGR. We will keep to our growth mindset as Globant expands in its geographies, reinvention offering and array of platforms. We continue to experience increasing demand for our services. Business leaders are seeking new and improved ways to reach broader audiences and gain efficiencies. To address this demand, we have recently launched our new Retail and Automotive Studios, which will expand the scope of our offerings, and our new Fast Code Studio, addressing a profound transformation in software development," said Martín Migoya, Globant's CEO and co-founder.

"We are happy to share with you our solid financial results for the second quarter of 2022. We delivered another quarter of industry-leading revenue growth, coupled with high levels of profitability and cash generation. Second quarter revenues reached $429.3 million, an increase of 40.6% compared to the second quarter of 2021. On a constant currency basis, second quarter revenue growth was 42.1% year over year; 1.5 percentage points above our headline figure. In organic terms, we posted a 36.6% year-over-year top-line growth. This elevated level of top-line growth continues to reflect the robust demand for our services. Clients continue to choose Globant for our technical capabilities, the speed in which we deliver value to our customers, and the scale of the digital engagements we are able to provide. With this in mind, we continue to be confident in our ability to drive strong growth and robust levels of profitability, as well as maintain a solid balance sheet position," explained Juan Urthiague, Globant's CFO.

2022 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 2022:

  • Third quarter 2022 Revenues are estimated to be at least $456 million, or 33.4% year-over-year growth. This expected growth includes a negative FX impact of 2.0 percentage points.
  • Third quarter 2022 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 16%-17%.
  • Third quarter 2022 Non-IFRS Adjusted Diluted EPS is estimated to be at least $1.24 (assuming an average of 42.9 million diluted shares outstanding during the third quarter).
  • Fiscal year 2022 Revenues are estimated to be at least $1,775 million, or 36.8% year-over-year growth. This expected revenue growth includes a negative FX impact of 3.0 percentage points.
  • Fiscal year 2022 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 16%-17%.
  • Fiscal year 2022 Non-IFRS Adjusted Diluted EPS is estimated to be at least $5.03 (assuming an average of 42.9 million diluted shares outstanding during 2022).

Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the second quarter 2022 results in a video conference call today beginning at 4:30pm ET.

Video conference call access information is:
https://more.globant.com/F2Q22EarningsCall
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 25,900 employees and we are present in 20 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 charges 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, 2022 and December 31, 2021 and its condensed interim consolidated statement of comprehensive income for the three and six months ended June 30, 2022 and 2021, 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, 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, 2022


June 30, 2021


June 30, 2022


June 30, 2021









Revenues

830,635


575,427


429,257


305,257

Cost of revenues

(516,937)


(356,249)


(267,970)


(189,276)

Gross profit

313,698


219,178


161,287


115,981









Selling, general and administrative expenses

(213,316)


(154,097)


(111,678)


(82,206)

Net impairment losses on financial assets

(744)


(4,003)


(707)


(2,904)

Other operating income and expenses, net


11



Profit from operations

99,638


61,089


48,902


30,871









Finance income

624


330


334


7

Finance expense

(7,352)


(5,943)


(3,323)


(3,331)

Other financial results, net

1,256


(655)


818


(1,526)

Financial results, net

(5,472)


(6,268)


(2,171)


(4,850)









Share of results of investment in associates


(233)



(233)

Other income and expenses, net

2,074


(443)


1,200


(481)

Profit before income tax

96,240


54,145


47,931


25,307









Income tax

(22,279)


(12,531)


(10,777)


(5,360)

Net income for the period

73,961


41,614


37,154


19,947









Other comprehensive income, net of income tax effects








Items that may be reclassified subsequently to profit and loss:








- Exchange differences on translating foreign operations

(23,114)


(2,438)


(20,679)


(714)

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

(2,092)



(2,091)


- Gains and losses on cash flow hedges

(4,211)


96


(4,344)


(74)

Total comprehensive income for the period

44,544


39,272


10,040


19,159









Net income attributable to:








Owners of the Company

73,715


41,614


37,092


19,947

Non-controlling interest

246



62


Net income for the period

73,961


41,614


37,154


19,947









Total comprehensive income for the period attributable to:








Owners of the Company

44,298


39,272


9,978


19,159

Non-controlling interest

246



62


Total comprehensive income for the period

44,544


39,272


10,040


19,159

Earnings per share








Basic

1.76


1.03


0.89


0.49

Diluted

1.72


1.01


0.87


0.48

Weighted average of outstanding shares (in thousands)








Basic

41,788


40,212


41,829


40,522

Diluted

42,737


41,354


42,778


41,664

 

 

Globant S.A.
Condensed Interim Consolidated Statements of Financial Position as of June 30, 2022 and December 31, 2021
(In thousands of U.S. dollars, unaudited)



June 30, 2022


December 31, 2021

ASSETS





Current assets





Cash and cash equivalents


323,577


427,804

Investments


38,105


32,581

Trade receivables


368,407


300,109

Other assets


7,562


7,855

Other receivables


64,926


49,194

Other financial assets


4,810


2,057

Total current assets


807,387


819,600






Non-current assets





Investments


1,517


1,027

Other assets


9,036


8,583

Other receivables


19,393


24,263

Deferred tax assets


37,973


58,404

Investment in associates


1,391


Other financial assets


24,500


25,233

Property and equipment


138,999


133,373

Intangible assets


104,133


102,016

Right-of-use assets


153,823


144,581

Goodwill


580,042


567,451

Total non-current assets


1,070,807


1,064,931

TOTAL ASSETS


1,878,194


1,884,531






LIABILITIES





Current liabilities





Trade payables


54,556


63,210

Payroll and social security taxes payable


159,165


184,464

Borrowings


8,641


10,305

Other financial liabilities


57,133


63,059

Lease liabilities


33,380


25,917

Tax liabilities


18,577


18,071

Income tax payable


3,687


20,318

Other liabilities


230


955

Total current liabilities


335,369


386,299






Non-current liabilities





Trade payables


4,459


6,387

Borrowings


788


1,935

Other financial liabilities


30,115


61,226

Lease liabilities


108,862


108,568

Deferred tax liabilities


2,076


1,289

Income tax payable


4,053


877

Payroll and social security taxes payable


917


Provisions for contingencies


12,563


9,637

Total non-current liabilities


163,833


189,919

TOTAL LIABILITIES


499,202


576,218






Capital and reserves





Issued capital


50,339


50,080

Additional paid-in capital


898,840


872,030

Other reserves


(35,812)


(6,395)

Retained earnings


463,375


389,660

Total equity attributable to owners of the Company


1,376,742


1,305,375

Non-controlling interests


2,250


2,938

Total equity


1,378,992


1,308,313

TOTAL EQUITY AND LIABILITIES


1,878,194


1,884,531

 

Globant S.A.
Selected Cash Flow Data
(In thousands of U.S. dollars, unaudited)


Three months ended


June 30, 2022


June 30, 2021

Net Income for the period

37,154


19,947

Non-cash adjustments, taxes and others

37,899


23,720

Changes in working capital

(30,074)


(15,550)

Cash flows from operating activities

44,979


28,117

Capital expenditures

(27,783)


(17,628)

Cash flows from investing activities

(51,465)


(24,757)

Cash flows from financing activities

(9,753)


279,414

Net increase in cash & cash equivalents

(16,239)


282,774

 

Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)


Six Months Ended


Three months ended


June 30, 2022


June 30, 2021


June 30, 2022


June 30, 2021









Reconciliation of adjusted gross profit








Gross Profit

313,698


219,178


161,287


115,981

Depreciation and amortization expense

10,800


5,883


5,582


3,082

Share-based compensation expense - Equity settled

1,914


1,830


1,114


815

Adjusted gross profit

326,412


226,891


167,983


119,878

Adjusted gross profit margin

39.3 %


39.4 %


39.1 %


39.3 %









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(213,316)


(154,097)


(111,678)


(82,206)

Depreciation and amortization expense

28,933


21,745


14,778


11,907

Share-based compensation expense - Equity settled

23,477


15,791


13,116


8,109

Acquisition-related charges (a)

5,710


6,596


3,233


3,962

Adjusted selling, general and administrative expenses

(155,196)


(109,965)


(80,551)


(58,228)

Adjusted selling, general and administrative expenses as % of revenues

(18.7) %


(19.1) %


(18.8) %


(19.1) %









Reconciliation of Adjusted Profit from Operations








Profit from Operations

99,638


61,089


48,902


30,871

Share-based compensation expense - Equity settled

25,391


17,621


14,230


8,924

Impairment of tax credits


(11)



Acquisition-related charges (a)

11,715


13,473


6,075


7,399

COVID-19-related charges (b)


2,228



2,228

Adjusted Profit from Operations

136,744


94,400


69,207


49,422

Adjusted Profit from Operations margin

16.5 %


16.4 %


16.1 %


16.2 %









Reconciliation of Net income for the period








Net income for the period

73,715


41,614


37,092


19,947

Share-based compensation expense - Equity settled

25,391


17,621


14,230


8,924

Acquisition-related charges (a)

10,598


16,202


4,289


9,549

COVID-19-related charges (b)


2,228



2,228

Impairment of tax credits


(11)



Tax effect of non-IFRS adjustments

(6,767)


(6,928)


(3,474)


(4,169)

Adjusted Net income

102,937


70,726


52,137


36,479

Adjusted Net income margin

12.4 %


12.3 %


12.1 %


12.0 %









Calculation of Adjusted Diluted EPS








Adjusted Net income

102,937


70,726


52,137


36,479

Diluted shares

42,737


41,354


42,778


41,664

Adjusted Diluted EPS

2.41


1.71


1.22


0.88

                                                               

(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.

Globant S.A.
Schedule of Supplemental Information (unaudited)

Metrics

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022







Total Employees

19,428

21,849

23,526

24,504

25,924

IT Professionals

18,350

20,573

22,167

23,158

24,410







North America Revenues %

63.9

65.2

63.9

64.1

64.5

Latin America  Revenues %

20.6

21.6

23.1

23.5

23.8

EMEA Revenues %

13.2

11.1

10.7

10.1

9.7

Asia and Oceania Revenues %

2.3

2.1

2.3

2.3

2.0







USD Revenues %

76.4

74.8

73.4

80.6

79.0

Other Currencies Revenues %

23.6

25.2

26.6

19.4

21.0







Top Customer %

10.3

11.5

11.0

11.0

10.5

Top 5 Customers %

26.4

27.6

26.8

28.0

25.7

Top 10 Customers %

39.8

39.7

37.6

38.6

36.7







Customers Served (Last Twelve Months)*

734

816

921

982

1,043

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

154

162

185

206

233







(*) Represents customers with more than $10,000 in revenues in the last twelve months.

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

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

 

SOURCE Globant