Globant Reports 2017 Full Year and Fourth Quarter Financial Results

SAN FRANCISCO, Feb. 15, 2018 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three and twelve months ended December 31, 2017.

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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.

Fourth quarter 2017 highlights

    --  Revenue increased to a record $115.4 million, representing 32.3%
        year-over-year growth.
    --  Non-IFRS Adjusted Gross Profit was $45.0 million (39.0% Non-IFRS
        Adjusted Gross Profit Margin), an increase of $9.6 million compared to
        $35.4 million for the fourth quarter of 2016 (40.5% Non-IFRS Adjusted
        Gross Profit Margin).
    --  Non-IFRS Adjusted Net Income was $14.1 million (12.2% Non-IFRS Adjusted
        Net Income Margin), compared to a profit of $9.5 million for the fourth
        quarter of 2016 (10.9% Non-IFRS Adjusted Net Income Margin).
    --  Non-IFRS Adjusted Diluted EPS was $0.39 per share (based on an average
        of 36.3 million diluted shares), compared to Non-IFRS Adjusted Diluted
        EPS of $0.27 for the fourth quarter of 2016 (based on an average of 35.6
        million diluted shares).

Full year ended December 31, 2017 highlights

    --  Revenue for the period increased to $413.4 million, representing 28.1%
        year-over-year growth.
    --  Non-IFRS Adjusted Gross Profit was $160.3 million (38.8% Non-IFRS
        Adjusted Gross Profit Margin), an increase of $23.6 million compared to
        $136.7 million (42.3% Non-IFRS Adjusted Gross Profit Margin) for the
        full year 2016.
    --  Non-IFRS Adjusted Net Income was $46.1 million (11.1% Non-IFRS Adjusted
        Net Income Margin), an increase of $7.3 million, compared to a profit of
        $38.8 million (12.0% Non-IFRS Adjusted Net Income Margin) for the full
        year 2016.
    --  Non-IFRS Adjusted Diluted EPS was $1.28 per share (based on an average
        of 36.1 million diluted shares during the full year 2017), an increase
        of $0.19 compared to Non-IFRS Adjusted Diluted EPS of $1.09 for the full
        year 2016 (based on an average of 35.4 million diluted shares during the
        full year 2016).

"I am very pleased with our 2017 performance. Our revenues for the year increased to $413.4 million, a robust 28.1% year-over-year growth. This strong growth was driven by substantial and expanding demand from organizations looking to digitally transform their businesses. As this trend continues growing, it leverages the power of technologies like Artificial Intelligence and others like IoT, UX and more to enable an Augmented Intelligence approach. Our Studios have proven to be one of the most effective ways to address these trends and engage with our accounts. On the vertical front, Financial Services and Media & Entertainment industries had outstanding performances," said Martín Migoya, Globant's CEO and co-founder.

"Looking forward to 2018, we continue to have strong demand from companies looking to achieve digital transformations. We believe that our market approach with our Studios and our 50-Squared model positions us as a leader in this area and makes us an ideal partner for companies facing these transformations," added Martín Migoya.

"I am very satisfied with our overall results for the fourth quarter and full year 2017. Q4 was another strong period of revenue, closing at $115.4 million, representing 32.3% growth compared to the fourth quarter of 2016. Our 50-Squared strategy continues to yield positive results, and we now have nine accounts over $10 million in annual revenues, compared to six accounts for the same period last year. Regarding profitability, we will continue to manage costs carefully in order to keep our gross margins within a stable range while, at the same time, we continue to execute our diversification strategy. We also expect to maintain our focus on dilution of our Adjusted SG&A to keep improving our operating leverage. Finally, hirings during Q4 were also very strong, a positive signal as we enter 2018", explained Alejandro Scannapieco, Globant's CFO.

Globant completed the fourth quarter with 6,753 Globers, 6,279 of whom were IT professionals. The geographic revenue breakdown for the fourth quarter was as follows: 78.6% from North America (top country: US), 14.6% from Latin America and others (top country: Argentina) and 6.8% from Europe (top country: Spain). 82.5% of Globant's revenue for the fourth quarter was denominated in US dollars, and the remaining 17.5% was denominated in other currencies, including Euros, GB pounds and other Latin American currencies.

During the year ended December 31, 2017, Globant served 356 customers, 82 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 10.4%, 28.5% and 43.2% of fourth quarter revenues, respectively.

Cash and cash equivalents and investments as of December 31, 2017 increased to $60.7 million from $59.9 million as of December 31, 2016. Current assets as of December 31, 2017 amounted to $156.1 million, accounting for 43.0% of total assets. Finally, as of December 31, 2017, 35.2 million common shares were issued and outstanding.

2018 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 2018:

    --  First quarter 2018 Revenue is estimated to be between $113-$115 million,
        implying 28.5% year-over-year growth at the midpoint of the range.
    --  First quarter 2018 Non-IFRS Adjusted Diluted EPS is estimated to be in
        the range of $0.31-$0.35 (assuming an average of 36.4 million diluted
        shares outstanding during the first quarter).
    --  Fiscal year 2018 Revenue is estimated to be in the range of $495-$505
        million, implying 20.9% 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 $1.52-$1.62 (assuming an average of 36.7 million diluted shares
        outstanding during 2018).

Conference Call and Webcast
Martín Migoya and Alejandro Scannapieco will discuss the Q4 2017 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. We are passionate about building the new way of being digital. We want to help our clients emotionally connect with consumers and employees, leveraging the power of artificial intelligence for business optimization. We are the place where engineering, design, and innovation meet scale.

Globant has more than 6,700 professionals in 12 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 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 December 31, 2017 and December 31, 2016 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and twelve month periods ended December 31, 2017 and 2016, 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)


                                                                    Three months ended       Year ended
                                                                    ------------------       ----------

                                                                         December             December            December             December
                                                                                    31, 2017            31, 2016            31, 2017             31, 2016
                                                                                    --------            --------            --------             --------


    Revenues                                                                         115,433               87,254              413,439               322,856

    Cost of revenues                                                                (72,114)            (53,201)           (262,584)            (191,395)
                                                                                     -------              -------             --------              --------

    Gross profit                                                                      43,319               34,053              150,855               131,461


    Selling, general and administrative expenses                                    (29,090)            (22,891)           (110,895)             (81,889)

    Impairment of tax credits                                                              -                   -             (1,586)                    -
                                                                                         ---                 ---              ------                   ---

    Profit from operations                                                            14,229               11,162               38,374                49,572


    Finance income                                                                     2,774                2,711                7,956                16,215

    Finance (expense) gain, net                                                      (3,657)             (3,913)            (11,064)             (19,227)
                                                                                      ------               ------              -------               -------

    Finance expense, net                                                               (883)             (1,202)             (3,108)              (3,012)
                                                                                        ----               ------               ------                ------


    Other income, net                                                                  1,579                2,576                3,989                 3,629
                                                                                       -----                -----                -----                 -----

    Profit before income tax                                                          14,925               12,536               39,255                50,189
                                                                                      ------               ------               ------                ------


    Income tax                                                                       (2,694)             (3,056)             (8,081)             (14,327)
                                                                                      ------               ------               ------               -------

    Net income for the period                                                         12,231                9,480               31,174                35,862
                                                                                      ------                -----               ------                ------


    Other comprehensive income, net of income tax effects

    Items that may be reclassified subsequently to profit and loss:

    - Exchange differences on translating foreign operations                           (469)                (12)               (265)                1,103

    - Net fair value loss on available-for-sale financial assets                           -                 (7)                (27)                 (52)
                                                                                         ---                 ---                  ---                   ---

    Total comprehensive income for the period                                         11,762                9,461               30,882                36,913
                                                                                      ------                -----               ------                ------


    Net income attributable to:

    Owners of the Company                                                             12,254               10,321               31,250                35,876

    Non-controlling interest                                                            (23)                   4                 (76)                 (14)
                                                                                         ---                  ---                  ---                   ---

    Net income for the period                                                         12,231               10,325               31,174                35,862
                                                                                      ------               ------               ------                ------


    Total comprehensive income for the period attributable to:

    Owners of the Company                                                             11,785               10,302               30,958                36,927

    Non-controlling interest                                                            (23)                   4                 (76)                 (14)
                                                                                         ---                  ---                  ---                   ---

    Total comprehensive income for the period                                         11,762               10,306               30,882                36,913
                                                                                      ------               ------               ------                ------



    Earnings per share

    Basic                                                                               0.35                 0.27                 0.89                  1.04

    Diluted                                                                             0.34                 0.27                 0.86                  1.01


    Weighted average of outstanding shares (in thousands)

    Basic                                                                             35,172               34,601               34,919                34,402

    Diluted                                                                           36,349               35,612               36,096                35,413

Globant S.A.
Condensed Interim Consolidated Statement of Financial Position
(In thousands of U.S. dollars, unaudited)


                                                       December          December
                                                                31, 2017          31, 2016
                                                                --------          --------

    ASSETS

    Current assets
    --------------

    Cash and cash equivalents                                     52,525             50,532

    Investments                                                    8,147              9,355

    Trade receivables                                             80,078             54,170

    Other receivables                                             14,469             18,869

    Other financial assets                                           873                900

    Total current assets                                         156,092            133,826
                                                                 -------            -------


    Non-current assets
    ------------------

    Other receivables                                             31,736             27,465

    Deferred tax assets                                           15,459              7,691

    Investment in associates                                       1,550                800

    Other financial assets                                           555                319

    Property and equipment                                        43,879             35,676

    Intangible assets                                             11,497             13,791

    Goodwill                                                     102,033             65,180

    Total non-current assets                                     206,709            150,922
                                                                 -------            -------

    TOTAL ASSETS                                                 362,801            284,748
                                                                 =======            =======


    LIABILITIES

    Current liabilities
    -------------------

    Trade payables                                                12,244              5,603

    Payroll and social security taxes payable                     41,068             30,328

    Borrowings                                                     6,011                217

    Other financial liabilities                                   10,664             12,602

    Tax liabilities                                                7,034              6,249

    Other liabilities                                                 20                  -

    Total current liabilities                                     77,041             54,999
                                                                  ------             ------


    Non-current liabilities
    -----------------------

    Other financial liabilities                                   20,322             19,224

    Other liabilities                                                  -                20

    Provisions for contingencies                                   1,179              1,945

    Total non-current liabilities                                 21,501             21,189
                                                                  ------             ------

    TOTAL LIABILITIES                                             98,542             76,188
                                                                  ------             ------


    Capital and reserves

    Issued and paid-in capital                                    42,271             41,576

    Additional paid-in capital                                    86,912             62,790

    Other reserves                                               (1,253)             (961)

    Retained earnings                                            136,369            105,119
                                                                 -------            -------

    Total equity attributable to owners of the Company           264,299            208,524

    Non-controlling interests                                       (40)                36

    Total equity                                                 264,259            208,560

    TOTAL EQUITY AND LIABILITIES                                 362,801            284,748
                                                                 =======            =======

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


                                                                           Three months ended       Year ended
                                                                           ------------------       ----------

                                                                                December             December            December             December
                                                                                           31, 2017            31, 2016            31, 2017            31, 2016
                                                                                           --------            --------            --------            --------


    Reconciliation of adjusted gross profit

    Gross Profit                                                                             43,319               34,053              150,855              131,461

    Depreciation and amortization expense                                                       484                1,092                3,752                4,281

    Share-based compensation expense                                                          1,165                  206                5,666                  917
                                                                                              -----                  ---                -----                  ---

    Adjusted gross profit                                                                    44,968               35,351              160,273              136,659
                                                                                             ------               ------              -------              -------

    Adjusted gross profit margin                                                              39.0%               40.5%               38.8%               42.3%
                                                                                               ----                 ----                 ----                 ----


    Reconciliation of selling, general and administrative expenses

    Selling, general and administrative expenses                                           (29,090)            (22,891)           (110,895)            (81,889)

    Depreciation and amortization expense                                                     3,891                2,101               12,376                6,637

    Share-based compensation expense                                                          2,032                  661                8,798                2,703

    Acquisition-related charges (a)                                                              46                  284                  631                  556
                                                                                                ---                  ---                  ---                  ---

    Adjusted selling, general and administrative expenses                                  (23,121)            (19,845)            (89,090)            (71,993)
                                                                                            -------              -------              -------              -------

    Adjusted selling, general and administrative expenses as % of revenues                  (20.0)%             (22.7)%             (21.5)%             (22.3)%
                                                                                             ------               ------               ------               ------


    Reconciliation of Adjusted Profit from Operations

    Operating Profit                                                                         14,229               11,162               38,374               49,572

    Share-based compensation expense                                                          3,197                  867               14,464                3,620

    Impairment of tax credits                                                                     -                   -               1,586                    -

    Acquisition-related charges (a)                                                             435                  585                2,315                1,478

    Adjusted Profit from Operations                                                          17,861               12,614               56,739               54,670
                                                                                             ------               ------               ------               ------

    Adjusted Profit from Operations margin                                                    15.5%               14.5%               13.7%               16.9%
                                                                                               ----                 ----                 ----                 ----


    Reconciliation of Net income for the period

    Net income for the period                                                                12,231                9,480               31,174               35,862

    Share-based compensation expense                                                          3,197                  867               14,464                3,620

    Impairment of tax credits                                                                     -                   -               1,586                    -

    US settlement agreement, net                                                                  -                 845                    -                 845

    Acquisition-related charges (a)                                                         (1,298)             (1,703)             (1,158)             (1,556)

    Adjusted Net income                                                                      14,130                9,489               46,066               38,771
                                                                                             ------                -----               ------               ------

    Adjusted Net income margin                                                                12.2%               10.9%               11.1%               12.0%
                                                                                               ----                 ----                 ----                 ----


    Calculation of Adjusted Diluted EPS

    Adjusted Net income                                                                      14,130                9,489               46,066               38,771

    Diluted shares                                                                           36,349               35,612               36,096               35,413
                                                                                             ------               ------               ------               ------

    Adjusted Diluted EPS                                                                       0.39                 0.27                 1.28                 1.09
                                                                                               ----                 ----                 ----                 ----

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.

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



                                                        Metrics Q4 2016      Q1 2017       Q2 2017        Q3 2017        Q4 2017
                                                        ======= =======      =======       =======        =======        =======


    Total Employees                                                    5,631         5,855          6,223          6,397          6,753

    IT Professionals                                                   5,219         5,421          5,772          5,925          6,279


    North America Revenue %                                           78.9          78.9           78.5           79.1           78.6

    Latin America and Others Revenue %                                 9.6           9.9            9.2           13.3           14.6

    Europe Revenue %                                                  11.5          11.2           12.3            7.6            6.8


    USD Revenue %                                                     88.0          88.6           87.6           85.4           82.5

    Other Currencies Revenue %                                        12.0          11.4           12.4           14.6           17.5


    Top Customer %                                                     9.4           9.7           10.1           10.3           10.4

    Top 5 Customers %                                                 33.3          31.1           31.6           26.8           28.5

    Top 10 Customers %                                                45.8          43.7           43.9           40.7           43.2


    Customers Served (Last Twelve Months)                                340           336            331            346            356

    Customers with >$1M in Revenue (Last Twelve Months)                   60            67             76             78             82

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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