Globant Reports 2018 Second Quarter Financial Results

LUXEMBOURG, Aug. 23, 2018 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2018.

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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 2018 highlights

    --  Revenues increased to a record $127.9 million, representing 28.4%
        year-over-year growth.
    --  Non-IFRS Adjusted Gross Profit was $51.3 million (40.1% Non-IFRS
        Adjusted Gross Profit Margin), an increase of $13.4 million compared to
        $37.9 million for the second quarter of 2017 (38.1% Non-IFRS Adjusted
        Gross Profit Margin).
    --  Non-IFRS Adjusted Net Income was $14.5 million (11.4% Non-IFRS Adjusted
        Net Income Margin), compared to a profit of $9.5 million for the second
        quarter of 2017 (9.5% Non-IFRS Adjusted Net Income Margin).
    --  Non-IFRS Adjusted Diluted EPS was $0.40 per share (based on an average
        of 36.7 million diluted shares), compared to Non-IFRS Adjusted Diluted
        EPS of $0.26 for the second quarter of 2017 (based on an average of 36.0
        million diluted shares).

Six months ended June 30, 2018 highlights

    --  Revenue for the period increased to $247.6 million, representing 31.5%
        year-over-year growth.
    --  Non-IFRS Adjusted Gross Profit was $98.2 million (39.6% Non-IFRS
        Adjusted Gross Profit Margin), an increase of $25.6 million compared to
        $72.5 million (38.5% Non-IFRS Adjusted Gross Profit Margin) in the first
        six months of 2017.
    --  Non-IFRS Adjusted Net Income was $28.4 million (11.5% Non-IFRS Adjusted
        Net Income Margin), an increase of $10.0 million, compared to a profit
        of $18.4 million (9.8% Non-IFRS Adjusted Net Income Margin) in the first
        six months of 2017.
    --  Non-IFRS Adjusted Diluted EPS was $0.78 per share (based on an average
        of 36.5 million diluted shares during the first six months of the 2018),
        an increase of $0.27 compared to Non-IFRS Adjusted Diluted EPS of $0.51
        for the first six months of 2017 (based on an average of 36.0 million
        diluted shares during the first six months of 2017).

"We are very pleased with our second quarter performance. Our revenues for the quarter amounted to $127.9 million, representing an outstanding 28.4% year-over-year growth. We continue to experience strong momentum in the business, with our top 10 and our non-top 10 accounts, increasing by 30.5% and 26.8%, respectively, compared to the second quarter of 2017," explained Martín Migoya, Globant's CEO and co-founder.

"We are experiencing two disruptive technology revolutions happening at the same time: the digital and cognitive revolutions. Organizations need to move quickly to adapt their businesses as users demand new types of engagement and Globant is in a great position to capture these opportunities," explained Martin Migoya. "Creating solutions for the digital and cognitive transformation is a totally different game than traditional IT projects. We believe that it begins with cultural behavioral and organizational change and then delivering the right blend of engineering, design and innovation in the same way successful software companies in the Silicon Valley do," added Martín Migoya."

"During this quarter we delivered solid revenue growth, strong gross and operating income margins, and a healthy net income. These positive numbers, coupled with increased diversification in terms of customers and delivery centers, are extremely important to enable us to achieve our financial and operational targets," explained Alejandro Scannapieco, Globant's CFO.

Globant completed the second quarter with 7,279 Globers, 6,775 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the second quarter was as follows: 78.4% from North America (top country: US), 13.1% from Latin America and others (top country: Argentina) and 8.5% from Europe (top country: Spain). 86.4% of Globant's revenue for the second quarter was denominated in US dollars, and the remaining 13.6% was denominated in other currencies, including Euros, GB pounds and other Latin American currencies.

During the last twelve months ended June 30, 2018, Globant served 355 customers, 92 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 11.1%, 32.5% and 44.6% of second quarter revenues, respectively.

Cash and bank balances and Investments as of June 30, 2018 amounted to $57.3 million, while current assets amounted to $175.1 million, accounting for 45.6% of total assets for the same period. Finally, as of June 30, 2018, 35.8 million common shares were issued and outstanding.

2018 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 2018:

    --  Third quarter 2018 Revenues are estimated to be between $131.5-$133.5
        million, implying 20.8% year-over-year growth at the midpoint of the
        range.
    --  Third quarter 2018 Non-IFRS Adjusted Diluted EPS is estimated to be in
        the range of $0.41-$0.45 (assuming an average of 37.0 million diluted
        shares outstanding during the third quarter).
    --  Fiscal year 2018 Revenues are estimated to be in the range of $514-$518
        million, implying 24.8% 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 $1.65-$1.69 (assuming an average of 36.9 million diluted shares
        outstanding during 2018).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the Q2 2018 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 where innovation, design and engineering meet scale. We use some of the latest technologies in the digital and cognitive field to empower organizations in every aspect.

We have more than 7,200 professionals in 13 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, expenses related to secondary share offering 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 June 30, 2018 and December 31, 2017 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and six months ended June 30, 2018 and 2017, 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)


                                                                                              Six months ended           Three months ended
                                                                                              ----------------           ------------------

                                                                                                June 30, 2018               June 30, 2017              June 30, 2018             June 30, 2017
                                                                                               -------------               -------------              -------------             -------------


    Revenues                                                                                                     247,604                      188,331                   127,892                     99,589

    Cost of revenues                                                                                           (153,404)                   (120,737)                 (78,861)                  (65,243)
                                                                                                                --------                     --------                   -------                    -------

    Gross profit                                                                                                  94,200                       67,594                    49,031                     34,346


    Selling, general and administrative expenses                                                                (63,880)                    (53,386)                 (32,681)                  (29,131)

    Net impairment (losses) gain on financial assets                                                               (434)                     (1,223)                    (423)                   (1,583)
                                                                                                                    ----                       ------                      ----                     ------

    Profit from operations                                                                                        29,886                       12,985                    15,927                      3,632


    Finance income                                                                                                16,018                        4,122                    13,665                      2,037

    Finance expense                                                                                             (18,961)                     (5,436)                 (15,717)                   (3,301)
                                                                                                                 -------                       ------                   -------                     ------

    Finance expense, net                                                                                         (2,943)                     (1,314)                  (2,052)                   (1,264)
                                                                                                                  ------                       ------                    ------                     ------


    Other income, net                                                                                              4,521                        2,408                     4,507                        680
                                                                                                                   -----                        -----                     -----                        ---

    Profit before income tax                                                                                      31,464                       14,079                    18,382                      3,048
                                                                                                                  ------                       ------                    ------                      -----


    Income tax                                                                                                   (6,898)                     (3,125)                  (3,957)                     (950)
                                                                                                                  ------                       ------                    ------                       ----

    Net income for the period                                                                                     24,566                       10,954                    14,425                      2,098
                                                                                                                  ------                       ------                    ------                      -----


    Other comprehensive income, net of income tax effects

    Items that may be reclassified subsequently to profit and loss:

    - Exchange differences on translating foreign operations                                                     (1,123)                        (78)                  (1,294)                     (238)

    - Net change in fair value on financial assets measured at FVOCI                                                 (9)                           5                       (3)                       (2)
                                                                                                                     ---                          ---                       ---                        ---

    Total comprehensive income for the period                                                                     23,434                       10,881                    13,128                      1,858
                                                                                                                  ------                       ------                    ------                      -----


    Net income attributable to:

    Owners of the Company                                                                                         24,583                       10,987                    14,413                      2,120

    Non-controlling interest                                                                                        (17)                        (33)                       12                       (22)
                                                                                                                     ---                          ---                       ---                        ---

    Net income for the period                                                                                     24,566                       10,954                    14,425                      2,098
                                                                                                                  ------                       ------                    ------                      -----


    Total comprehensive income for the period attributable to:

    Owners of the Company                                                                                         23,451                       10,914                    13,116                      1,880

    Non-controlling interest                                                                                        (17)                        (33)                       12                       (22)
                                                                                                                     ---                          ---                       ---                        ---

    Total comprehensive income for the period                                                                     23,434                       10,881                    13,128                      1,858
                                                                                                                  ------                       ------                    ------                      -----



    Earnings per share

    Basic                                                                                                           0.69                         0.32                      0.40                       0.06

    Diluted                                                                                                         0.67                         0.30                      0.39                       0.06


    Weighted average of outstanding shares (in thousands)

    Basic                                                                                                         35,584                       34,738                    35,735                     34,794

    Diluted                                                                                                       36,510                       35,979                    36,661                     36,034

Globant S.A.


    Condensed Interim Consolidated Statement of Financial Position

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


                                                June 30, 2018      December 31, 2017
                                                -------------      -----------------

    ASSETS

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

    Cash and bank
     balances                                               49,228                   52,525

    Investments                                              8,033                    8,147

    Trade
     receivables                                            96,829                   80,078

    Other
     receivables                                            20,088                   14,357

    Other financial
     assets                                                    885                      873

    Total current
     assets                                                175,063                  155,980
                                                           -------                  -------


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

    Other
     receivables                                            31,577                   31,736

    Deferred tax
     assets                                                 14,641                   13,186

    Investment in
     associates                                              4,800                    1,550

    Other financial
     assets                                                    455                      555

    Property and
     equipment                                              45,524                   43,879

    Intangible
     assets                                                 12,918                   11,365

    Goodwill                                                98,609                   98,926

    Total non-
     current assets                                        208,524                  201,197
                                                           -------                  -------

    TOTAL ASSETS                                           383,587                  357,177
                                                           =======                  =======


    LIABILITIES

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

    Trade payables                                          14,306                   11,640

    Payroll and
     social security
     taxes payable                                          40,997                   40,472

    Borrowings                                               6,026                    6,011

    Other financial
     liabilities                                             7,536                   10,664

    Tax liabilities                                          5,424                    5,253

    Other
     liabilities                                             1,179                       20

    Total current
     liabilities                                            75,468                   74,060
                                                            ------                   ------


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

    Other financial
     liabilities                                             7,025                   18,574

    Provisions for
     contingencies                                           1,404                    1,179

    Total non-
     current
     liabilities                                             8,429                   19,753
                                                             -----                   ------

    TOTAL
     LIABILITIES                                            83,897                   93,813
                                                            ------                   ------


    Capital and
     reserves

    Issued capital                                          42,920                   42,271

    Additional paid-
     in capital                                             98,971                   86,728

    Other reserves                                         (2,385)                 (1,253)

    Retained
     earnings                                              160,241                  135,658
                                                           -------                  -------

    Total equity
     attributable to
     owners of the
     Company                                               299,747                  263,404

    Non-controlling
     interests                                                (57)                    (40)

    Total equity                                           299,690                  263,364

    TOTAL EQUITY AND
     LIABILITIES                                           383,587                  357,177
                                                           =======                  =======

Globant S.A.


    Supplemental Non-IFRS Financial Information

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


                                                                                                                                                                                      Six months ended                                     Three months ended
                                                                                                                                                                                      ----------------                                     ------------------

                                                                                                                                                                                        June 30, 2018                                         June 30, 2017                                         June 30, 2018                               June 30, 2017
                                                                                                                                                                                       -------------                                         -------------                                         -------------                               -------------


    Reconciliation of adjusted gross profit

    Gross Profit                                                                                                                                                                                          94,200                                                 67,594                                                 49,031                                     34,346

    Depreciation and amortization expense                                                                                                                                                                  2,003                                                  2,199                                                  1,010                                      1,097

    Share-based compensation expense                                                                                                                                                                       1,953                                                  2,730                                                  1,292                                      2,452
                                                                                                                                                                                                           -----                                                  -----                                                  -----                                      -----

    Adjusted gross profit                                                                                                                                                                                 98,156                                                 72,523                                                 51,333                                     37,895
                                                                                                                                                                                                          ------                                                 ------                                                 ------                                     ------

    Adjusted gross profit margin                                                                                                                                                                           39.6%                                                 38.5%                                                 40.1%                                     38.1%
                                                                                                                                                                                                            ----                                                   ----                                                   ----                                       ----


    Reconciliation of selling, general and administrative expenses

    Selling, general and administrative expenses                                                                                                                                                        (63,880)                                              (53,386)                                              (32,681)                                  (29,131)

    Depreciation and amortization expense                                                                                                                                                                  7,479                                                  5,481                                                  3,967                                      2,885

    Share-based compensation expense                                                                                                                                                                       4,203                                                  4,028                                                  1,995                                      3,429

    Acquisition-related charges (a)                                                                                                                                                                        1,265                                                    287                                                    707                                          -
                                                                                                                                                                                                           -----                                                    ---                                                    ---                                        ---

    Adjusted selling, general and administrative expenses                                                                                                                                               (50,933)                                              (43,590)                                              (26,012)                                  (22,817)
                                                                                                                                                                                                         -------                                                -------                                                -------                                    -------

    Adjusted selling, general and administrative expenses as % of revenues                                                                                                                               (20.6)%                                               (23.1)%                                               (20.3)%                                   (22.9)%
                                                                                                                                                                                                          ------                                                 ------                                                 ------                                     ------


    Reconciliation of Adjusted Profit from Operations

    Operating Profit                                                                                                                                                                                      29,886                                                 12,985                                                 15,927                                      3,632

    Share-based compensation expense                                                                                                                                                                       6,156                                                  6,758                                                  3,287                                      5,881

    Impairment of tax credits                                                                                                                                                                                 48                                                  1,586                                                     48                                      1,586

    Acquisition-related charges (a)                                                                                                                                                                        1,649                                                  1,135                                                    899                                        470

    Adjusted Profit from Operations                                                                                                                                                                       37,739                                                 22,464                                                 20,161                                     11,569
                                                                                                                                                                                                          ------                                                 ------                                                 ------                                     ------

    Adjusted Profit from Operations margin                                                                                                                                                                 15.2%                                                 11.9%                                                 15.8%                                     11.6%
                                                                                                                                                                                                            ----                                                   ----                                                   ----                                       ----


    Reconciliation of Net income for the period

    Net income for the period                                                                                                                                                                             24,566                                                 10,954                                                 14,425                                      2,098

    Share-based compensation expense                                                                                                                                                                       6,156                                                  6,758                                                  3,287                                      5,881

    Impairment of tax credits                                                                                                                                                                                 48                                                  1,586                                                     48                                      1,586

    Acquisition-related charges (a)                                                                                                                                                                      (2,585)                                                 (919)                                               (3,467)                                      (82)

    Expenses related to secondary share offering (b)                                                                                                                                                         234                                                      -                                                   234                                          -

    Adjusted Net income                                                                                                                                                                                   28,419                                                 18,379                                                 14,527                                      9,483
                                                                                                                                                                                                          ------                                                 ------                                                 ------                                      -----

    Adjusted Net income margin                                                                                                                                                                             11.5%                                                  9.8%                                                 11.4%                                      9.5%
                                                                                                                                                                                                            ----                                                    ---                                                   ----                                        ---


    Calculation of Adjusted Diluted EPS

    Adjusted Net income                                                                                                                                                                                   28,419                                                 18,379                                                 14,527                                      9,483

    Diluted shares                                                                                                                                                                                        36,510                                                 35,979                                                 36,661                                     36,034
                                                                                                                                                                                                          ------                                                 ------                                                 ------                                     ------

    Adjusted Diluted EPS                                                                                                                                                                                    0.78                                                   0.51                                                   0.40                                       0.26
                                                                                                                                                                                                            ----                                                   ----                                                   ----                                       ----


    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.



    (b)  Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held by WPP Luxembourg Gamma Three S.àr.l.
    -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Globant S.A.


    Schedule of Supplemental Information
     (unaudited)


                  Metrics                Q2 2017      Q3 2017       Q4 2017        Q1 2018        Q2 2018
                  =======                =======      =======       =======        =======        =======


    Total Employees                             6,223         6,397          6,753          6,940          7,279

    IT Professionals                            5,772         5,925          6,279          6,462          6,775


    North America
     Revenue %                                 78.5          79.1           78.6           78.6           78.4

    Latin America and
     Others Revenue %                           9.2          13.3           14.6           13.8           13.1

    Europe Revenue %                           12.3           7.6            6.8            7.6            8.5


    USD Revenue %                              87.6          85.4           82.5           85.5           86.4

    Other Currencies
     Revenue %                                 12.4          14.6           17.5           14.5           13.6


    Top Customer %                             10.1          10.3           10.4           11.1           11.1

    Top 5 Customers %                          31.6          26.8           28.5           31.3           32.5

    Top 10 Customers %                         43.9          40.7           43.2           44.5           44.6


    Customers Served
     (Last Twelve
     Months)                                      331           346            356            348            355

    Customers with >$1M
     in Revenue (Last
     Twelve Months)                                76            78             82             89             92

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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