Globant Reports 2019 Second Quarter Financial Results
Second quarter revenues of $157.5 million, up 23.2% year-over-year
IFRS Diluted EPS of $0.36 for the second quarter
Non-IFRS Diluted EPS of $0.53 for the second quarter
LUXEMBOURG, Aug. 15, 2019 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2019.
Please see highlights below, including certain Non-IFRS measures. Note that reconciliations between Non-IFRS financial measures and IFRS operating results are disclosed at the end of this press release.
Second quarter 2019 highlights
-- Revenue rose to $157.5 million, representing 23.2% year-over-year growth
compared to the second quarter of 2018.
-- IFRS Gross Profit margin was 38.5% compared to 38.3% in the second
quarter of 2018.
-- Non-IFRS Adjusted Gross Profit Margin was 40.2% compared to 40.1% in the
second quarter of 2018.
-- IFRS Profit from Operations Margin was 12.3% compared to 12.5% in the
second quarter of 2018.
-- Non-IFRS Adjusted Profit from Operations Margin was 16.4% compared to
15.8% in the second quarter of 2018.
-- IFRS Diluted EPS was $0.36, compared to $0.39 in the second quarter of
2018.
-- Non-IFRS Adjusted Diluted EPS was $0.53, compared to $0.40 in the second
quarter of 2018.
Six months ended June 30, 2019 highlights
-- Revenue rose to $303.7 million, representing 22.6% year-over-year growth
compared to the first six months of 2018.
-- IFRS Gross Profit margin was 38.9% compared to 38.0% in the first six
months of 2018.
-- Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to 39.6% in the
first six months of 2018.
-- IFRS Profit from Operations Margin was 12.4% compared to 12.1% in the
first six months of 2018.
-- Non-IFRS Adjusted Profit from Operations Margin was 16.7% compared to
15.2% in the first six months of 2018.
-- IFRS Diluted EPS was $0.68, compared to $0.67 in the first six months of
2018.
-- Non-IFRS Adjusted Diluted EPS was $1.02, compared to $0.78 in the first
six months of 2018.
"I am very pleased to announce another quarter of robust growth and solid financial performance. Our second quarter revenues for 2019 amounted to a record of $157.5 million, representing a 23.2% year-over-year growth," said Martín Migoya, Globant's CEO and co-founder.
"We continue to see strong demand coming from organizations as they look to transform their businesses. Industry analysts continue to report record spending in digital and cognitive transformation in excess of $5 trillion over the years 2018 to 2021," explained Martín Migoya. "As digitalization and high consumer expectations change, organizations need to adapt to stay relevant. We will continue to help our customers uncover ways to create more business value, making digital and cognitive transformation sustainable," added Martín Migoya.
"Once again, we delivered a solid performance in terms of revenues and EPS for the quarter. The strong net additions of Globers coupled with a slight reduction in attrition place us in a good position to capture market growth opportunities," explained Juan Urthiague, Globant's CFO.
Globant completed the second quarter with 9,905 Globers, 9,215 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the first quarter was as follows: 75.2% from North America (top country: US), 16.1% from Latin America and others (top country: Argentina) and 8.7% from Europe (top country: Spain). In terms of currencies, 88.7% of Globant's revenues for the second quarter was denominated in US dollars.
During the last twelve months ended June 30, 2019, Globant served 585 customers, 97 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%, 27.2% and 41.0% of second quarter revenues, respectively.
Cash and bank balances and Investments as of June 30, 2019 amounted to $58.2 million and current assets amounted to $241.2 million, accounting for 43.2% of total assets for the same period. Finally, as of June 30, 2019, 36.6 million common shares were issued and outstanding.
2019 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 2019:
-- Third quarter 2019 Revenues are estimated to be between $170-$172
million, implying 27.1% year-over-year growth at the midpoint of the
range.
-- Third quarter 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in
the range of $0.57-$0.61 (assuming an average of 37.9 million diluted
shares outstanding during the third quarter).
-- Fiscal year 2019 Revenues are estimated to be in the range of $654-$660
million, implying 25.8% year-over-year revenue growth at the midpoint of
the range.
-- Fiscal year 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in the
range of $2.19-$2.25 (assuming an average of 37.7 million diluted shares
outstanding during 2019).
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the Q2 2019 results in a conference call today beginning at 4:30pm ET.
Conference call access information is:
US & Canada +1 (888) 346-2877
International +1 (412) 902-4257
Webcast http://investors.globant.com/
Additionally, a replay will be available via the same dial-in number and on our investor relations website after the call.
About Globant (NYSE:GLOB)
We are a digitally native company where innovation, design and engineering meet scale. We use the latest technologies in the digital and cognitive field to empower organizations in every aspect.
We have more than 9,900 employees and we are present in 17 countries working for companies like Google, Southwest Airlines, EA and BBVA, among others.
We were named a Worldwide Leader of Digital Strategy Consulting Services by IDC MarketScape report (2016 and 2017). We were also featured as a business case study at Harvard, MIT, and Stanford. We are a member of the Cybersecurity Tech Accord (2019).
For more information, visit www.globant.com
Non-IFRS Financial Measures
While the financial figures included in this press release have been computed in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting". The financial information in this press release has not been audited.
Globant provides non-IFRS financial measures in addition to reported IFRS results prepared in accordance with IAS 34 "Interim Financial Reporting". Management believes these measures help illustrate underlying trends in the company's business and uses the non-IFRS financial measures to establish budgets and operational goals, communicated internally and externally, for managing the company's business and evaluating its performance. The company anticipates that it will continue to report both IFRS and certain non-IFRS financial measures in its financial results, including non-IFRS measures that exclude share-based compensation expense, depreciation and amortization, impairment of assets and acquisition-related charges. Because the company's non-IFRS financial measures are not calculated according to IFRS, these measures are not comparable to IFRS and may not necessarily be comparable to similarly described non-IFRS measures reported by other companies within the company's industry. Consequently, Globant's non-IFRS financial measures should not be evaluated in isolation or supplant comparable IFRS measures, but, rather, should be considered together with its unaudited interim consolidated statement of financial position as of June 30, 2019 and December 31, 2018 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and six months ended June 30, 2019 and 2018, prepared in accordance with IAS 34.
Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Diluted EPS to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, share-based compensation expense, impairment of assets and acquisition-related charges. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.
Forward Looking Statements
In addition to historical information, this release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: our ability to maintain current resource utilization rates and productivity levels; our ability to manage attrition and attract and retain highly-skilled IT professionals; our ability to accurately price our client contracts; our ability to achieve our anticipated growth; our ability to effectively manage our rapid growth; our ability to retain our senior management team and other key employees; our ability to continue to innovate and remain at the forefront of emerging technologies and related market trends; our ability to retain our business relationships and client contracts; our ability to manage the impact of global adverse economic conditions; our ability to manage uncertainty concerning the instability in the current economic, political and social environment in Latin America; and other factors discussed under the heading "Risk Factors" in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission.
Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.
Globant S.A.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In thousands of U.S. dollars, except per share amounts, unaudited)
Six months ended Three months ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
---
Revenues 303,685 247,604 157,534 127,892
Cost of revenues (185,616) (153,404) (96,889) (78,861)
Gross profit 118,069 94,200 60,645 49,031
Selling, general and
administrative expenses (79,192) (63,880) (40,560) (32,681)
Net impairment losses on
financial assets (1,075) (434) (639) (423)
Profit from operations 37,802 29,886 19,446 15,927
Finance income 2,692 16,018 1,801 13,665
Finance expense (8,046) (18,961) (4,344) (15,717)
Finance expense, net (5,354) (2,943) (2,543) (2,052)
Other income, net 8 4,521 27 4,507
Profit before income tax 32,456 31,464 16,930 18,382
Income tax (6,972) (6,898) (3,545) (3,957)
Net income for the period 25,484 24,566 13,385 14,425
Other comprehensive income, net of income tax
effects
Items that may be reclassified subsequently to
profit and loss:
-Exchange differences on
translating foreign
operations (159) (1,123) 457 (1,294)
-Net change in fair
value on financial
assets measured at FVOCI 27 (9) (8) (3)
-Gains and losses on
cash flow hedges 433 1,315 -
Total comprehensive
income for the period 25,785 23,434 15,149 13,128
Net income attributable to:
Owners of the Company 25,484 24,583 13,385 14,413
Non-controlling interest - (17) 12
---
Net income for the period 25,484 24,566 13,385 14,425
Total comprehensive income for the period
attributable to:
Owners of the Company 25,785 23,451 15,149 13,116
Non-controlling interest - (17) 12
---
Total comprehensive
income for the period 25,785 23,434 15,149 13,128
Earnings per share
Basic 0.70 0.69 0.37 0.40
Diluted 0.68 0.67 0.36 0.39
Weighted average of outstanding shares (in
thousands)
Basic 36,361 35,584 36,516 35,735
Diluted 37,467 36,510 37,622 36,661
Globant S.A.
Consolidated Statement of Financial Position
(In thousands of U.S. dollars, unaudited)
June 30, 2019 December 31, 2018
---
ASSETS
Current assets
---
Cash and
bank
balances 42,132 77,606
Investments 16,110 8,635
Trade
receivables 149,532 110,898
Other
assets 11,138 -
Other
receivables 21,042 15,341
Other
financial
assets 1,268 550
Total
current
assets 241,222 213,030
Non-current assets
---
Investments 514 527
Other
assets 7,792 -
Other
receivables 37,480 34,197
Deferred
tax
assets 19,135 16,916
Investment
in
associates 4,000 4,000
Other
financial
assets 2,343 345
Property
and
equipment 51,141 51,460
Intangible
assets 12,846 11,778
Right-
of-use
asset 40,186 -
Goodwill 141,693 104,846
Total
non-
current
assets 317,130 224,069
TOTAL
ASSETS 558,352 437,099
LIABILITIES
Current liabilities
---
Trade
payables 26,169 17,578
Payroll
and
social
security
taxes
payable 53,081 58,535
Borrowings 586 -
Other
financial
liabilities 5,338 9,347
Lease
liabilities 14,800 -
Tax
liabilities 6,862 7,399
Other
liabilities 5 44
Total
current
liabilities 106,841 92,903
Non-current liabilities
---
Trade
payables 5,824 -
Borrowings 25,239 -
Other
financial
liabilities 1,061 3,418
Lease
liabilities 28,270 -
Tax
liabilities 153 -
Provisions
for
contingencies 2,486 2,862
Total
non-
current
liabilities 63,033 6,280
TOTAL
LIABILITIES 169,874 99,183
Capital and reserves
Issued
capital 43,945 43,158
Additional
paid-in
capital 135,521 109,559
Other
reserves (1,835) (2,136)
Retained
earnings 210,847 187,335
Total
equity
attributable
to
owners
of the
Company 388,478 337,916
TOTAL
EQUITY
AND
LIABILITIES 558,352 437,099
Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
Six months ended Three months ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
---
Reconciliation of adjusted gross profit
Gross Profit 118,069 94,200 60,645 49,031
Depreciation and
amortization expense 2,920 2,003 1,693 1,010
Share-based
compensation expense 2,453 1,953 1,010 1,292
Adjusted gross profit 123,442 98,156 63,348 51,333
Adjusted gross profit
margin 40.6% 39.6% 40.2% 40.1%
Reconciliation of selling, general and
administrative expenses
Selling, general and
administrative
expenses (79,192) (63,880) (40,560) (32,681)
Depreciation and
amortization expense 8,527 7,479 4,108 3,967
Share-based
compensation expense 6,834 4,203 3,857 1,995
Acquisition-related
charges (a) 3,165 1,265 1,333 707
Adjusted selling,
general and
administrative
expenses (60,666) (50,933) (31,262) (26,012)
Adjusted selling,
general and
administrative
expenses as % of
revenues (20.0)% (20.6)% (19.8)% (20.3)%
Reconciliation of Adjusted Profit from Operations
Profit from Operations 37,802 29,886 19,446 15,927
Share-based
compensation expense 9,287 6,156 4,867 3,287
Acquisition-related
charges (a) 3,534 1,649 1,588 899
Impairment of assets
(b) - 48 48
Adjusted Profit from
Operations 50,623 37,739 25,901 20,161
Adjusted Profit from
Operations margin 16.7% 15.2% 16.4% 15.8%
Reconciliation of Net income for the period
Net income for the
period 25,484 24,566 13,385 14,425
Share-based
compensation expense 9,287 6,156 4,867 3,287
Acquisition-related
charges (a) 3,631 (2,585) 1,614 (3,467)
Impairment of assets
(b) - 48 48
Expenses related to
secondary share
offering (c) - 234 234
Adjusted Net income 38,402 28,419 19,866 14,527
Adjusted Net income
margin 12.6% 11.5% 12.6% 11.4%
Calculation of Adjusted Diluted EPS
Adjusted Net income 38,402 28,419 19,866 14,527
Diluted shares 37,467 36,510 37,622 36,661
Adjusted Diluted EPS 1.02 0.78 0.53 0.40
(a) Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our consolidated statements of operations, external deal costs, acquisition-related retention bonuses, integration costs, changes in the fair value of contingent consideration liabilities, charges for impairment of acquired intangible assets and other acquisition-related costs. We cannot provide acquisition-related charges on a forward-looking basis without unreasonable effort as such charges may fluctuate based on the timing, size, and complexity of future acquisitions as well as other uncertainty inherent in mergers and acquisitions.
(b) Impairment of assets include, when applicable, charges for impairment of intangible assets, charges for impairment of investments in associates and charges for impairment of tax credits, net of recoveries.
(c) Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held WPP Luxembourg Gamma Three S.àr.l. ("WPP").
Globant S.A.
Schedule of Supplemental Information (unaudited)
Metrics Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
=== ===
Total Employees 7,279 7,807 8,384 9,259 9,905
IT Professionals 6,775 7,285 7,821 8,609 9,215
North America
Revenues % 78.4 77.5 77.4 73.7 75.2
Latin America and
Others Revenues % 13.1 12.5 13.5 17.0 16.1
Europe Revenues % 8.5 10.0 9.1 9.3 8.7
USD Revenues % 86.4 85.1 85.6 83.3 88.7
Other Currencies
Revenues % 13.6 14.9 14.4 16.7 11.3
Top Customer % 11.1 11.9 10.9 10.5 10.4
Top 5 Customers % 32.5 33.4 30.9 28.9 27.2
Top 10 Customers % 44.6 45.8 42.7 40.8 41.0
Customers Served
(Last Twelve
Months) 355 344 373 472 585
Customers with >$1M
in Revenues (Last
Twelve Months) 92 90 90 91 97
Investor Relations Contact:
Paula Conde, Globant
investors@globant.com
+1 (877) 215-5230
Media Contact:
Wanda Weigert, Globant
pr@globant.com
+1 (877) 215-5230
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SOURCE Globant
