Globant Reports 2018 Full Year and Fourth Quarter Financial Results
LUXEMBOURG, Feb. 14, 2019 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and twelve months ended December 31, 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.
Fourth quarter 2018 highlights
-- Revenues increased to a record $140.1 million, representing 21.4%
year-over-year growth.
-- Non-IFRS Adjusted Gross Profit was $58.4 million (41.7% Non-IFRS
Adjusted Gross Profit Margin), an increase of $13.4 million compared to
$45.0 million (39.0% Non-IFRS Adjusted Gross Profit Margin) for the
fourth quarter of 2017.
-- Non-IFRS Adjusted Net Income was $18.5 million (13.2% Non-IFRS Adjusted
Net Income Margin), an increase of $4.4 million compared to $14.1
million (12.2% Non-IFRS Adjusted Net Income Margin) for the fourth
quarter of 2017.
-- Non-IFRS Adjusted Diluted EPS was $0.50 per share (based on an average
of 36.9 million diluted shares), an increase of $0.11 compared to $0.39
per share (based on an average of 36.3 million diluted shares) for the
fourth quarter of 2017.
Full year ended December 31, 2018 highlights
-- Revenues increased to $522.3 million, representing 26.3% year-over-year
growth.
-- Non-IFRS Adjusted Gross Profit was $212.0 million (40.6% Non-IFRS
Adjusted Gross Profit Margin), an increase of $51.7 million compared to
$160.3 million (38.8% Non-IFRS Adjusted Gross Profit Margin) for the
full year 2017.
-- Non-IFRS Adjusted Net Income was $63.7 million (12.2% Non-IFRS Adjusted
Net Income Margin), an increase of $17.6 million, compared to $46.1
million (11.1% Non-IFRS Adjusted Net Income Margin) for the full year
2017.
-- Non-IFRS Adjusted Diluted EPS was $1.74 per share (based on an average
of 36.7 million diluted shares), an increase of $0.46 compared to $1.28
(based on an average of 36.1 million diluted shares) for the full year
2017.
"2018 was another very successful year for our company. Our full year revenues for 2018 amounted to $522.3 million, representing a 26.3% year-over-year growth. At the same time, revenues for the fourth quarter of 2018 amounted to $140.1 million, a new record for the company and an increase of 21.4% compared to the same period in 2017," said Martín Migoya, Globant's CEO and co-founder.
"Our constant expansion is mainly driven by our unique focus as a pure play in the digital and cognitive arena, which makes us the best partner to help organizations transform their businesses. We do this with a comprehensive approach that goes from evolving their culture, creating digital products and bringing digital and cognitive to the back office, to creating a full digital native culture for them. Our ultimate goal is to help evolve the entire technology organization to the next level", explained Martín Migoya. "Looking into 2019, we continue to have strong demand from companies looking to achieve digital and cognitive transformations as new users and requirements arise. We believe that our market approach with our Studios, our Agile Pods and our 50-Squared model positions us as a leader in this arena," added Martín Migoya.
"I am very satisfied with our overall results for the fourth quarter and full year 2018. During this year we continued to deliver strong revenue growth and significantly improved our profitability and cash generation", explained Juan Urthiague, Globant's CFO.
Globant completed the fourth quarter with 8,384 Globers, 7,821 of whom were technology, design and innovation professionals. The geographic revenues breakdown for the fourth quarter was as follows: 77.4% from North America (top country: US), 13.5% from Latin America and others (top country: Argentina) and 9.1% from Europe (top country: Spain). 85.6% of Globant's revenues for the fourth quarter was denominated in US dollars, and the remaining 14.4% was denominated in other currencies, including Euros, GB pounds and other Latin American currencies.
During the last twelve months ended December 31, 2018, Globant served 373 customers, 90 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 10.9%, 30.9% and 42.7% of fourth quarter revenues, respectively.
Cash and bank balances and Investments as of December 31, 2018 increased to $87.0 million from $60.7 million as of December 31, 2017. Current assets amounted to $214.0 million, accounting for 48.5% of total assets for the same period. Finally, as of December 31, 2018, 36.0 million common shares were issued and outstanding.
2019 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 2019:
-- First quarter 2019 Revenues are estimated to be between $144-$146
million, implying 21.1% year-over-year growth at the midpoint of the
range.
-- First quarter 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in
the range of $0.45-$0.49 (assuming an average of 37.1 million diluted
shares outstanding during the first quarter).
-- Fiscal year 2019 Revenues are estimated to be in the range of $635-$645
million, implying 22.5% year-over-year revenues growth at the midpoint
of the range.
-- Fiscal year 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in the
range of $2.10-$2.20 (assuming an average of 37.4 million diluted shares
outstanding during 2019).
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the Q4 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 8,300 professionals and we are present in 14 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 Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The interim financial information included in this announcement has been also prepared in accordance with IFRS applicable to interim periods, however 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 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 assets, expenses related to our June 2018 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 December 31, 2018 and December 31, 2017 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and twelve months ended December 31, 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 assets, expenses related to our June 2018 secondary share offering 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 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 Argentina; 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 decision 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.
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.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In thousands of U.S. dollars, except per share amounts, unaudited)
Year ended Three months ended
December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017
---
Revenues 522,310 413,439 140,138 115,433
Cost of revenues (318,554) (263,171) (83,797) (72,701)
Gross profit 203,756 150,268 56,341 42,732
Selling, general and
administrative expenses (133,186) (110,813) (35,539) (28,905)
Net impairment losses on
financial assets (3,469) (1,581) (2,575) (98)
Other operating
(expenses) income, net (306) (4,708) (306) (4,708)
Profit from operations 66,795 33,166 17,921 9,021
Finance income 11,418 7,956 1,643 2,774
Finance expense (16,969) (11,036) (3,154) (3,629)
Finance expense, net (5,551) (3,080) (1,511) (855)
Other income, net 6,220 8,458 (1,374) 6,048
Profit before income tax 67,464 38,544 15,036 14,214
Income tax (15,868) (8,081) (3,527) (2,694)
Net income for the period 51,596 30,463 11,509 11,520
Other comprehensive income, net of income tax effects
Items that may be reclassified subsequently to profit
and loss:
-Exchange differences on
translating foreign
operations (871) (265) 451 (469)
-Net change in fair
value on financial
assets measured at FVOCI (12) (27) (5) -
Total comprehensive
income for the period 50,713 30,171 11,955 11,051
Net income attributable to:
Owners of the Company 51,677 30,539 11,509 11,543
Non-controlling interest (81) (76) (23)
Net income for the period 51,596 30,463 11,509 11,520
Total comprehensive income for the period
attributable to:
Owners of the Company 50,794 30,247 11,955 11,074
Non-controlling interest (81) (76) (23)
Total comprehensive
income for the period 50,713 30,171 11,955 11,051
Earnings per share
Basic 1.44 0.87 0.32 0.33
Diluted 1.41 0.84 0.31 0.32
Weighted average of outstanding shares (in thousands)
Basic 35,746 34,919 35,961 35,172
Diluted 36,685 36,094 36,899 36,349
Globant S.A.
Consolidated Statement of Financial Position
(In thousands of U.S. dollars, unaudited)
December December
ASSETS 31, 2018 31, 2017
---
Current assets
---
Cash and bank balances 78,384 52,525
Investments 8,635 8,147
Trade receivables 110,898 80,078
Other receivables 15,567 14,357
Other financial assets 550 873
Total current assets 214,034 155,980
Non-current assets
---
Investments 527 -
Other receivables 34,197 31,736
Deferred tax assets 16,916 13,186
Investment in
associates 4,000 1,550
Other financial assets 345 555
Property and equipment 51,460 43,879
Intangible assets 11,778 11,365
Goodwill 107,890 98,926
Total non-current
assets 227,113 201,197
TOTAL ASSETS 441,147 357,177
LIABILITIES
Current liabilities
---
Trade payables 17,578 11,640
Payroll and social
security taxes payable 59,313 40,472
Borrowings - 6,011
Other financial
liabilities 8,858 10,664
Tax liabilities 7,625 5,253
Other liabilities 43 20
Total current
liabilities 93,417 74,060
Non-current liabilities
---
Other financial
liabilities 6,952 18,574
Provisions for
contingencies 2,862 1,179
Total non-current
liabilities 9,814 19,753
TOTAL LIABILITIES 103,231 93,813
Capital and reserves
Issued capital 43,158 42,271
Additional paid-in
capital 109,559 86,728
Other reserves (2,136) (1,253)
Retained earnings 187,335 135,658
Total equity
attributable to owners
of the Company 337,916 263,404
Non-controlling
interests - (40)
Total equity 337,916 263,364
TOTAL EQUITY AND
LIABILITIES 441,147 357,177
Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
Year ended Three months ended
December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017
---
Reconciliation of adjusted gross profit
Gross Profit 203,756 150,268 56,341 42,732
Depreciation and
amortization expense 4,022 4,339 967 1,071
Share-based
compensation expense 4,248 5,666 1,095 1,165
Adjusted gross profit 212,026 160,273 58,403 44,968
Adjusted gross profit
margin 40.6% 38.8% 41.7% 39.0%
Reconciliation of selling, general and
administrative expenses
Selling, general and
administrative
expenses (133,186) (110,813) (35,539) (28,905)
Depreciation and
amortization expense 16,521 11,789 4,638 3,304
Share-based
compensation expense 8,665 8,798 2,327 2,032
Acquisition-related
charges (a) 3,516 1,131 1,543 546
Adjusted selling,
general and
administrative
expenses (104,484) (89,095) (27,031) (23,023)
Adjusted selling,
general and
administrative
expenses as % of
revenues (20.0)% (21.5)% (19.3)% (19.9)%
Reconciliation of Adjusted Profit from Operations
Operating Profit 66,795 33,166 17,921 9,021
Share-based
compensation expense 12,913 14,464 3,422 3,197
Acquisition-related
charges (a) 4,273 7,523 1,733 5,643
Impairment of assets
(b) 354 1,586 306 -
Adjusted Profit from
Operations 84,335 56,739 23,382 17,861
Adjusted Profit from
Operations margin 16.1% 13.7% 16.7% 15.5%
Reconciliation of Net income for the period
Net income for the
period 51,596 30,463 11,509 11,520
Share-based
compensation expense 12,913 14,464 3,422 3,197
Acquisition-related
charges (a) (2,177) (447) 2,459 (587)
Impairment of assets
(b) 1,154 1,586 1,106 -
Expenses related to
secondary share
offering (c) 251 -
Adjusted Net income 63,737 46,066 18,496 14,130
Adjusted Net income
margin 12.2% 11.1% 13.2% 12.2%
Calculation of Adjusted Diluted EPS
Adjusted Net income 63,737 46,066 18,496 14,130
Diluted shares 36,685 36,094 36,899 36,349
Adjusted Diluted EPS 1.74 1.28 0.50 0.39
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) Impairment of assets includes, 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 our June 2018 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 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
=== ===
Total Employees 6,753 6,940 7,279 7,807 8,384
IT Professionals 6,279 6,462 6,775 7,285 7,821
North America
Revenues % 78.6 78.6 78.4 77.5 77.4
Latin America and
Others Revenues % 14.6 13.8 13.1 12.5 13.5
Europe Revenues % 6.8 7.6 8.5 10.0 9.1
USD Revenues % 82.5 85.5 86.4 85.1 85.6
Other Currencies
Revenues % 17.5 14.5 13.6 14.9 14.4
Top Customer % 10.4 11.1 11.1 11.9 10.9
Top 5 Customers % 28.5 31.3 32.5 33.4 30.9
Top 10 Customers % 43.2 44.5 44.6 45.8 42.7
Customers Served
(Last Twelve
Months) 356 348 355 344 373
Customers with >$1M
in Revenues (Last
Twelve Months) 82 89 92 90 90
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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