Robust Results, Backed By Strong Demand
Environment
Third quarter revenues of $171.3 million, up 27.3%
year-over-year
IFRS Diluted EPS of $0.40 for the third quarter
Non-IFRS
Diluted EPS of $0.62 for the third
quarter
LUXEMBOURG, Nov. 14, 2019 /PRNewswire/ -- Globant (NYSE:
GLOB), a digitally native technology services
company, today announced results for the three and nine months
ended September 30, 2019.
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.
Third quarter 2019 highlights
- Revenue rose to $171.3 million,
representing 27.3% year-over-year growth compared to the third
quarter of 2018.
- IFRS Gross Profit margin was 38.7% compared to 39.5% in the
third quarter of 2018.
- Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to
41.2% in the third quarter of 2018.
- IFRS Profit from Operations Margin was 13.4% compared to 14.1%
in the third quarter of 2018.
- Non-IFRS Adjusted Profit from Operations Margin was 18.1%
compared to 17.3% in the third quarter of 2018.
- IFRS Diluted EPS was $0.40,
compared to $0.42 in the third
quarter of 2018.
- Non-IFRS Adjusted Diluted EPS was $0.62, compared to $0.46 in the third quarter of 2018.
Nine months ended September 30,
2019 highlights
- Revenue rose to $475.0 million,
representing 24.3% year-over-year growth compared to the first nine
months of 2018.
- IFRS Gross Profit margin was 38.8% compared to 38.6% in the
first nine months of 2018.
- Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to
40.2% in the first nine months of 2018.
- IFRS Profit from Operations Margin was 12.8% compared to 12.8%
in the first nine months of 2018.
- Non-IFRS Adjusted Profit from Operations Margin was 17.2%
compared to 15.9% in the first nine months of 2018.
- IFRS Diluted EPS was $1.08,
compared to $1.09 in the first nine
months of 2018.
- Non-IFRS Adjusted Diluted EPS was $1.65, compared to $1.24 in the first nine months of 2018.
"Third quarter 2019 was another robust quarter for Globant in
terms of revenues and profitability. Our revenues reached a new
quarterly record of $171.3 million,
representing a solid 27.3% year over year growth." said Martín
Migoya, Globant's CEO and co-founder.
"Consumer expectations are going faster than technology,
continuing to expand the market opportunity. According to a Globant
study, 87% of organizations are currently pursuing a digital
transformation initiative, but only one third say they are
innovative and their digital maturity is cutting edge," added
Martín Migoya. "As a pure play in digital and cognitive
transformation, we are ready to help companies reinvent themselves
to face these future challenges. By leveraging technologies like AI
we can augment the organizations' capabilities to enhance their
business models, internal experiences, and processes."
"I am very pleased with our third quarter financial performance.
During this quarter we delivered solid revenue growth while
improving our operating and net income margins. Additionally, net
additions of Globers continue to be strong, combined with further
decrease in attrition levels," explained Juan Urthiague, Globant's
CFO.
Globant completed the third quarter with
11,283 Globers, 10,462 of whom were technology, design
and innovation professionals. The geographic revenue breakdown for
the third quarter was as follows: 77.1% from North America (top country: US), 17.0% from
Latin America and others (top
country: Argentina) and 5.9% from
Europe (top country: Spain). In terms of currencies, 86.3% of
Globant's revenues for the third quarter was denominated in US
dollars.
During the last twelve months ended September 30, 2019, Globant served
744 customers, 104 of which accounted for more than
$1 million of Globant's revenues.
Globant's top customer, top five customers and top
ten customers represented 11.9%, 26.1% and 38.6% of
third quarter revenues, respectively.
Cash and bank balances and Investments as of September 30, 2019 amounted to $59.5 million and current assets amounted to
$246.4 million, accounting for
38.7% of total assets for the same period. Finally, as of
September 30, 2019, 36.8 million
common shares were issued and outstanding.
2019 Fourth Quarter and Full Year Outlook
Based on current market conditions, Globant is providing the
following estimates for the fourth quarter and the full year of
2019:
- Fourth quarter 2019 Revenues are estimated to be between
$182-$184
million, implying 30.6% year-over-year growth at the
midpoint of the range.
- Fourth quarter 2019 Non-IFRS Adjusted Diluted EPS is estimated
to be in the range of $0.58-$0.62
(assuming an average of 38.0 million diluted shares outstanding
during the fourth quarter).
- Fiscal year 2019 Revenues are estimated to be in the range of
$657-$659
million, implying 26.0% year-over-year revenue growth at the
midpoint of the range.
- Fiscal year 2019 Non-IFRS Adjusted Diluted EPS is estimated to
be in the range of $2.23-$2.27 (assuming an average of 37.7 million
diluted shares outstanding during 2019).
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the Q3 2019
results in a conference call today beginning at 4:30pm ET.
Conference call access information is:
US & Canada +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 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 11,200 employees and we are present in 17
countries working for companies like Google, Southwest Airlines, EA
and BBVA, 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. We are a member of the
Cybersecurity Tech Accord (2019).
For more information, 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". 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 IAS 34 "Interim
Financial Reporting". 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 assets 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 September 30, 2019 and December 31, 2018 and its unaudited interim
consolidated statement of profit or loss and other comprehensive
income for the three and nine months ended September 30, 2019 and 2018, 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 assets
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. 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: 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.
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 Profit or
Loss and Other Comprehensive Income
(In thousands of U.S.
dollars, except per share amounts, unaudited)
|
Nine months
ended
|
|
Three months
ended
|
|
September 30,
2019
|
|
September 30,
2018
|
|
September 30,
2019
|
|
September 30,
2018
|
|
|
|
|
|
|
|
|
Revenues
|
475,019
|
|
382,172
|
|
171,334
|
|
134,568
|
Cost of
revenues
|
(290,663)
|
|
(234,757)
|
|
(105,047)
|
|
(81,353)
|
Gross
profit
|
184,356
|
|
147,415
|
|
66,287
|
|
53,215
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(122,283)
|
|
(97,647)
|
|
(43,091)
|
|
(33,767)
|
Net impairment losses
on financial assets
|
(616)
|
|
(894)
|
|
459
|
|
(460)
|
Other operating
expense, net
|
(720)
|
|
-
|
|
(720)
|
|
-
|
Profit from
operations
|
60,737
|
|
48,874
|
|
22,935
|
|
18,988
|
|
|
|
|
|
|
|
|
Finance
income
|
9,397
|
|
20,217
|
|
6,705
|
|
4,199
|
Finance
expense
|
(18,276)
|
|
(24,257)
|
|
(10,230)
|
|
(5,296)
|
Finance expense,
net
|
(8,879)
|
|
(4,040)
|
|
(3,525)
|
|
(1,097)
|
|
|
|
|
|
|
|
|
Share of results of
investment in associates
|
(183)
|
|
-
|
|
(183)
|
|
-
|
|
|
|
|
|
|
|
|
Other income,
net
|
35
|
|
7,594
|
|
27
|
|
3,073
|
Profit before
income tax
|
51,710
|
|
52,428
|
|
19,254
|
|
20,964
|
|
|
|
|
|
|
|
|
Income tax
|
(11,148)
|
|
(12,341)
|
|
(4,176)
|
|
(5,443)
|
Net income for the
period
|
40,562
|
|
40,087
|
|
15,078
|
|
15,521
|
|
|
|
|
|
|
|
|
Other comprehensive
income, net of income tax effects
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit and loss:
|
|
|
|
|
|
|
|
- Exchange
differences on translating foreign operations
|
(958)
|
|
(1,322)
|
|
(799)
|
|
(199)
|
- Net change in fair
value on financial assets measured at FVOCI
|
(372)
|
|
(7)
|
|
(399)
|
|
2
|
- Gains and losses on
cash flow hedges
|
(234)
|
|
-
|
|
(667)
|
|
-
|
Total
comprehensive income for the period
|
38,998
|
|
38,758
|
|
13,213
|
|
15,324
|
|
|
|
|
|
|
|
|
Net income
attributable to:
|
|
|
|
|
|
|
|
Owners of the
Company
|
40,562
|
|
40,168
|
|
15,078
|
|
15,585
|
Non-controlling
interest
|
-
|
|
(81)
|
|
-
|
|
(64)
|
Net income for the
period
|
40,562
|
|
40,087
|
|
15,078
|
|
15,521
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
|
|
|
|
Owners of the
Company
|
38,998
|
|
38,839
|
|
13,213
|
|
15,388
|
Non-controlling
interest
|
-
|
|
(81)
|
|
-
|
|
(64)
|
Total
comprehensive income for the period
|
38,998
|
|
38,758
|
|
13,213
|
|
15,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
Basic
|
1.11
|
|
1.12
|
|
0.41
|
|
0.43
|
Diluted
|
1.08
|
|
1.09
|
|
0.40
|
|
0.42
|
|
|
|
|
|
|
|
|
Weighted average
of outstanding shares (in thousands)
|
|
|
|
|
|
|
|
Basic
|
36,481
|
|
35,674
|
|
36,718
|
|
35,851
|
Diluted
|
37,595
|
|
36,624
|
|
37,831
|
|
36,802
|
Globant S.A.
Consolidated Statement of Financial
Position
(In thousands of U.S. dollars,
unaudited)
|
September 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
Current
assets
|
|
|
|
Cash and bank
balances
|
57,105
|
|
77,606
|
Investments
|
2,349
|
|
8,635
|
Trade
receivables
|
157,896
|
|
110,898
|
Other
assets
|
10,171
|
|
-
|
Other
receivables
|
14,822
|
|
15,341
|
Other financial
assets
|
4,052
|
|
550
|
Total current
assets
|
246,395
|
|
213,030
|
|
|
|
|
Non-current
assets
|
|
|
|
Investments
|
602
|
|
527
|
Other
assets
|
7,479
|
|
-
|
Other
receivables
|
37,044
|
|
34,197
|
Deferred tax
assets
|
21,823
|
|
16,916
|
Investment in
associates
|
3,817
|
|
4,000
|
Other financial
assets
|
595
|
|
345
|
Property and
equipment
|
56,194
|
|
51,460
|
Intangible
assets
|
12,677
|
|
11,778
|
Right-of-use
asset
|
51,885
|
|
-
|
Goodwill
|
197,698
|
|
104,846
|
Total non-current
assets
|
389,814
|
|
224,069
|
TOTAL
ASSETS
|
636,209
|
|
437,099
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Trade
payables
|
23,685
|
|
17,578
|
Payroll and social
security taxes payable
|
63,823
|
|
58,535
|
Borrowings
|
30,759
|
|
-
|
Other financial
liabilities
|
5,045
|
|
9,347
|
Lease
liabilities
|
17,924
|
|
-
|
Tax
liabilities
|
7,714
|
|
7,399
|
Other
liabilities
|
296
|
|
44
|
Total current
liabilities
|
149,246
|
|
92,903
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Trade
payables
|
6,156
|
|
-
|
Borrowings
|
25,711
|
|
-
|
Other financial
liabilities
|
2,522
|
|
3,418
|
Lease
liabilities
|
35,747
|
|
-
|
Tax
liabilities
|
257
|
|
-
|
Other
liabilities
|
456
|
|
-
|
Provisions for
contingencies
|
2,470
|
|
2,862
|
Total non-current
liabilities
|
73,319
|
|
6,280
|
TOTAL
LIABILITIES
|
222,565
|
|
99,183
|
|
|
|
|
Capital and
reserves
|
|
|
|
Issued
capital
|
44,175
|
|
43,158
|
Additional paid-in
capital
|
147,244
|
|
109,559
|
Other
reserves
|
(3,700)
|
|
(2,136)
|
Retained
earnings
|
225,925
|
|
187,335
|
Total
equity
|
413,644
|
|
337,916
|
TOTAL EQUITY AND
LIABILITIES
|
636,209
|
|
437,099
|
Globant S.A.
Supplemental Non-IFRS Financial
Information
(In thousands of U.S. dollars,
unaudited)
|
Nine months
ended
|
|
Three months
ended
|
|
September 30,
2019
|
|
September 30,
2018
|
|
September 30,
2019
|
|
September 30,
2018
|
|
|
|
|
|
|
|
|
Reconciliation of
adjusted gross profit
|
|
|
|
|
|
|
|
Gross
Profit
|
184,356
|
|
147,415
|
|
66,287
|
|
53,215
|
Depreciation and
amortization expense
|
4,981
|
|
3,055
|
|
2,061
|
|
1,052
|
Share-based
compensation expense
|
3,667
|
|
3,153
|
|
1,214
|
|
1,200
|
Adjusted gross
profit
|
193,004
|
|
153,623
|
|
69,562
|
|
55,467
|
Adjusted gross
profit margin
|
40.6%
|
|
40.2%
|
|
40.6%
|
|
41.2%
|
|
|
|
|
|
|
|
|
Reconciliation of
selling, general and administrative expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(122,283)
|
|
(97,647)
|
|
(43,091)
|
|
(33,767)
|
Depreciation and
amortization expense
|
12,512
|
|
11,883
|
|
3,985
|
|
4,404
|
Share-based
compensation expense
|
10,371
|
|
6,338
|
|
3,537
|
|
2,135
|
Acquisition-related
charges (a)
|
5,450
|
|
1,973
|
|
2,285
|
|
708
|
Adjusted selling,
general and administrative expenses
|
(93,950)
|
|
(77,454)
|
|
(33,284)
|
|
(26,521)
|
Adjusted selling,
general and administrative expenses as % of revenues
|
(19.8)%
|
|
(20.3)%
|
|
(19.4)%
|
|
(19.7)%
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Profit from Operations
|
|
|
|
|
|
|
|
Profit from
Operations
|
60,737
|
|
48,874
|
|
22,935
|
|
18,988
|
Share-based
compensation expense
|
14,038
|
|
9,491
|
|
4,751
|
|
3,335
|
Acquisition-related
charges (a)
|
6,064
|
|
2,540
|
|
2,530
|
|
891
|
Impairment of assets
(b)
|
720
|
|
48
|
|
720
|
|
-
|
Adjusted Profit
from Operations
|
81,559
|
|
60,953
|
|
30,936
|
|
23,214
|
Adjusted Profit
from Operations margin
|
17.2%
|
|
15.9%
|
|
18.1%
|
|
17.3%
|
|
|
|
|
|
|
|
|
Reconciliation of
Net income for the period
|
|
|
|
|
|
|
|
Net income for the
period
|
40,562
|
|
40,087
|
|
15,078
|
|
15,521
|
Share-based
compensation expense
|
14,038
|
|
9,491
|
|
4,751
|
|
3,335
|
Acquisition-related
charges (a)
|
6,548
|
|
(4,636)
|
|
2,917
|
|
(2,051)
|
Impairment of assets
(b)
|
720
|
|
48
|
|
720
|
|
-
|
Expenses related to
secondary share offering (c)
|
-
|
|
251
|
|
-
|
|
17
|
Adjusted Net
income
|
61,868
|
|
45,241
|
|
23,466
|
|
16,822
|
Adjusted Net
income margin
|
13.0%
|
|
11.8%
|
|
13.7%
|
|
12.5%
|
|
|
|
|
|
|
|
|
Calculation of
Adjusted Diluted EPS
|
|
|
|
|
|
|
|
Adjusted Net
income
|
61,868
|
|
45,241
|
|
23,466
|
|
16,822
|
Diluted
shares
|
37,595
|
|
36,624
|
|
37,831
|
|
36,802
|
Adjusted Diluted
EPS
|
1.65
|
|
1.24
|
|
0.62
|
|
0.46
|
(a) Acquisition-related charges include, when applicable,
amortization of purchased intangible assets included in
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) Impairment of assets include, when applicable, charges for
impairment of intangible assets, charges for impairment of
investments in associates and charges for impairment of tax
credits, net of recoveries.
(c) Expenses related to secondary share offering include
expenses related to the secondary offering in the United States of
our common shares held WPP Luxembourg Gamma Three S.àr.l.
("WPP").
Globant S.A.
Schedule of Supplemental Information
(unaudited)
Metrics
|
Q3
2018
|
Q4
2018
|
Q1
2019
|
Q2
2019
|
Q3
2019
|
|
|
|
|
|
|
Total
Employees
|
7,807
|
8,384
|
9,259
|
9,905
|
11,283
|
IT
Professionals
|
7,285
|
7,821
|
8,609
|
9,215
|
10,462
|
|
|
|
|
|
|
North America
Revenues %
|
77.5
|
77.4
|
73.7
|
75.2
|
77.1
|
Latin America and
Others Revenues %
|
12.5
|
13.5
|
17.0
|
16.1
|
17.0
|
Europe Revenues
%
|
10.0
|
9.1
|
9.3
|
8.7
|
5.9
|
|
|
|
|
|
|
USD Revenues
%
|
85.1
|
85.6
|
83.3
|
88.7
|
86.3
|
Other Currencies
Revenues %
|
14.9
|
14.4
|
16.7
|
11.3
|
13.7
|
|
|
|
|
|
|
Top Customer
%
|
11.9
|
10.9
|
10.5
|
10.4
|
11.9
|
Top 5 Customers
%
|
33.4
|
30.9
|
28.9
|
27.2
|
26.1
|
Top 10 Customers
%
|
45.8
|
42.7
|
40.8
|
41.0
|
38.6
|
|
|
|
|
|
|
Customers Served
(Last Twelve Months)
|
344
|
373
|
472
|
585
|
744
|
Customers with
>$1M in Revenues (Last Twelve Months)
|
90
|
90
|
91
|
97
|
104
|
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
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SOURCE Globant