Globant Reports 2019 Third Quarter Financial Results
Robust Results, Backed By Strong Demand Environment
Third quarter revenues of $171.3 million, up 27.3% year-over-year
IFRS Diluted EPS of $0.40 for the third quarter
Non-IFRS Diluted EPS of $0.62 for the third quarter
LUXEMBOURG, Nov. 14, 2019 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and nine months ended September 30, 2019.
Please see highlights below, including certain Non-IFRS measures. Note that reconciliations between Non-IFRS financial measures and IFRS operating results are disclosed at the end of this press release.
Third quarter 2019 highlights
-- Revenue rose to $171.3 million, representing 27.3% year-over-year growth
compared to the third quarter of 2018.
-- IFRS Gross Profit margin was 38.7% compared to 39.5% in the third
quarter of 2018.
-- Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to 41.2% in the
third quarter of 2018.
-- IFRS Profit from Operations Margin was 13.4% compared to 14.1% in the
third quarter of 2018.
-- Non-IFRS Adjusted Profit from Operations Margin was 18.1% compared to
17.3% in the third quarter of 2018.
-- IFRS Diluted EPS was $0.40, compared to $0.42 in the third quarter of
2018.
-- Non-IFRS Adjusted Diluted EPS was $0.62, compared to $0.46 in the third
quarter of 2018.
Nine months ended September 30, 2019 highlights
-- Revenue rose to $475.0 million, representing 24.3% year-over-year growth
compared to the first nine months of 2018.
-- IFRS Gross Profit margin was 38.8% compared to 38.6% in the first nine
months of 2018.
-- Non-IFRS Adjusted Gross Profit Margin was 40.6% compared to 40.2% in the
first nine months of 2018.
-- IFRS Profit from Operations Margin was 12.8% compared to 12.8% in the
first nine months of 2018.
-- Non-IFRS Adjusted Profit from Operations Margin was 17.2% compared to
15.9% in the first nine months of 2018.
-- IFRS Diluted EPS was $1.08, compared to $1.09 in the first nine months
of 2018.
-- Non-IFRS Adjusted Diluted EPS was $1.65, compared to $1.24 in the first
nine months of 2018.
"Third quarter 2019 was another robust quarter for Globant in terms of revenues and profitability. Our revenues reached a new quarterly record of $171.3 million, representing a solid 27.3% year over year growth." said Martín Migoya, Globant's CEO and co-founder.
"Consumer expectations are going faster than technology, continuing to expand the market opportunity. According to a Globant study, 87% of organizations are currently pursuing a digital transformation initiative, but only one third say they are innovative and their digital maturity is cutting edge," added Martín Migoya. "As a pure play in digital and cognitive transformation, we are ready to help companies reinvent themselves to face these future challenges. By leveraging technologies like AI we can augment the organizations' capabilities to enhance their business models, internal experiences, and processes."
"I am very pleased with our third quarter financial performance. During this quarter we delivered solid revenue growth while improving our operating and net income margins. Additionally, net additions of Globers continue to be strong, combined with further decrease in attrition levels," explained Juan Urthiague, Globant's CFO.
Globant completed the third quarter with 11,283 Globers, 10,462 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the third quarter was as follows: 77.1% from North America (top country: US), 17.0% from Latin America and others (top country: Argentina) and 5.9% from Europe (top country: Spain). In terms of currencies, 86.3% of Globant's revenues for the third quarter was denominated in US dollars.
During the last twelve months ended September 30, 2019, Globant served 744 customers, 104 of which accounted for more than $1 million of Globant's revenues. Globant's top customer, top five customers and top ten customers represented 11.9%, 26.1% and 38.6% of third quarter revenues, respectively.
Cash and bank balances and Investments as of September 30, 2019 amounted to $59.5 million and current assets amounted to $246.4 million, accounting for 38.7% of total assets for the same period. Finally, as of September 30, 2019, 36.8 million common shares were issued and outstanding.
2019 Fourth Quarter and Full Year Outlook
Based on current market conditions, Globant is providing the following estimates for the fourth quarter and the full year of 2019:
-- Fourth quarter 2019 Revenues are estimated to be between $182-$184
million, implying 30.6% year-over-year growth at the midpoint of the
range.
-- Fourth quarter 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in
the range of $0.58-$0.62 (assuming an average of 38.0 million diluted
shares outstanding during the fourth quarter).
-- Fiscal year 2019 Revenues are estimated to be in the range of $657-$659
million, implying 26.0% year-over-year revenue growth at the midpoint of
the range.
-- Fiscal year 2019 Non-IFRS Adjusted Diluted EPS is estimated to be in the
range of $2.23-$2.27 (assuming an average of 37.7 million diluted shares
outstanding during 2019).
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the Q3 2019 results in a conference call today beginning at 4:30pm ET.
Conference call access information is:
US & Canada +1 (888) 346-2877
International +1 (412) 902-4257
Webcast http://investors.globant.com/
Additionally, a replay will be available via the same dial-in number and on our investor relations website after the call.
About Globant (NYSE:GLOB)
We are a digitally native company where innovation, design and engineering meet scale. We use the latest technologies in the digital and cognitive field to empower organizations in every aspect.
We have more than 11,200 employees and we are present in 17 countries working for companies like Google, Southwest Airlines, EA and BBVA, among others.
We were named a Worldwide Leader of Digital Strategy Consulting Services by IDC MarketScape report (2016 and 2017). We were also featured as a business case study at Harvard, MIT, and Stanford. We are a member of the Cybersecurity Tech Accord (2019).
For more information, visit www.globant.com
Non-IFRS Financial Measures
While the financial figures included in this press release have been computed in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting". The financial information in this press release has not been audited.
Globant provides non-IFRS financial measures in addition to reported IFRS results prepared in accordance with IAS 34 "Interim Financial Reporting". Management believes these measures help illustrate underlying trends in the company's business and uses the non-IFRS financial measures to establish budgets and operational goals, communicated internally and externally, for managing the company's business and evaluating its performance. The company anticipates that it will continue to report both IFRS and certain non-IFRS financial measures in its financial results, including non-IFRS measures that exclude share-based compensation expense, depreciation and amortization, impairment of assets and acquisition-related charges. Because the company's non-IFRS financial measures are not calculated according to IFRS, these measures are not comparable to IFRS and may not necessarily be comparable to similarly described non-IFRS measures reported by other companies within the company's industry. Consequently, Globant's non-IFRS financial measures should not be evaluated in isolation or supplant comparable IFRS measures, but, rather, should be considered together with its unaudited interim consolidated statement of financial position as of September 30, 2019 and December 31, 2018 and its unaudited interim consolidated statement of profit or loss and other comprehensive income for the three and nine months ended September 30, 2019 and 2018, prepared in accordance with IAS 34.
Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Diluted EPS to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, share-based compensation expense, impairment of assets and acquisition-related charges. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.
Forward Looking Statements
In addition to historical information, this release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: our ability to maintain current resource utilization rates and productivity levels; our ability to manage attrition and attract and retain highly-skilled IT professionals; our ability to accurately price our client contracts; our ability to achieve our anticipated growth; our ability to effectively manage our rapid growth; our ability to retain our senior management team and other key employees; our ability to continue to innovate and remain at the forefront of emerging technologies and related market trends; our ability to retain our business relationships and client contracts; our ability to manage the impact of global adverse economic conditions; our ability to manage uncertainty concerning the instability in the current economic, political and social environment in Latin America; and other factors discussed under the heading "Risk Factors" in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission.
Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.
Globant S.A.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In thousands of U.S. dollars, except per share amounts, unaudited)
Nine months ended Three months ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Revenues 475,019 382,172 171,334 134,568
Cost of revenues (290,663) (234,757) (105,047) (81,353)
Gross profit 184,356 147,415 66,287 53,215
Selling, general and administrative expenses (122,283) (97,647) (43,091) (33,767)
Net impairment losses on financial assets (616) (894) 459 (460)
Other operating expense, net (720) (720)
Profit from operations 60,737 48,874 22,935 18,988
Finance income 9,397 20,217 6,705 4,199
Finance expense (18,276) (24,257) (10,230) (5,296)
Finance expense, net (8,879) (4,040) (3,525) (1,097)
Share of results of investment in associates (183) (183)
Other income, net 35 7,594 27 3,073
Profit before income tax 51,710 52,428 19,254 20,964
Income tax (11,148) (12,341) (4,176) (5,443)
Net income for the period 40,562 40,087 15,078 15,521
Other comprehensive income, net of income tax effects
Items that may be reclassified subsequently to profit and loss:
- Exchange differences on translating foreign operations (958) (1,322) (799) (199)
- Net change in fair value on financial assets measured at FVOCI (372) (7) (399) 2
- Gains and losses on cash flow hedges (234) (667)
Total comprehensive income for the period 38,998 38,758 13,213 15,324
Net income attributable to:
Owners of the Company 40,562 40,168 15,078 15,585
Non-controlling interest (81) (64)
Net income for the period 40,562 40,087 15,078 15,521
Total comprehensive income for the period attributable to:
Owners of the Company 38,998 38,839 13,213 15,388
Non-controlling interest (81) (64)
Total comprehensive income for the period 38,998 38,758 13,213 15,324
Earnings per share
Basic 1.11 1.12 0.41 0.43
Diluted 1.08 1.09 0.40 0.42
Weighted average of outstanding shares (in thousands)
Basic 36,481 35,674 36,718 35,851
Diluted 37,595 36,624 37,831 36,802
Globant S.A.
Consolidated Statement of Financial Position
(In thousands of U.S. dollars, unaudited)
September 30, 2019 December 31, 2018
ASSETS
Current
assets
---
Cash and
bank
balances 57,105 77,606
Investments 2,349 8,635
Trade
receivables 157,896 110,898
Other
assets 10,171
Other
receivables 14,822 15,341
Other
financial
assets 4,052 550
Total
current
assets 246,395 213,030
Non-
current
assets
---
Investments 602 527
Other
assets 7,479
Other
receivables 37,044 34,197
Deferred
tax
assets 21,823 16,916
Investment
in
associates 3,817 4,000
Other
financial
assets 595 345
Property
and
equipment 56,194 51,460
Intangible
assets 12,677 11,778
Right-of-
use asset 51,885
Goodwill 197,698 104,846
Total non-
current
assets 389,814 224,069
TOTAL
ASSETS 636,209 437,099
LIABILITIES
Current
liabilities
---
Trade
payables 23,685 17,578
Payroll
and
social
security
taxes
payable 63,823 58,535
Borrowings 30,759
Other
financial
liabilities 5,045 9,347
Lease
liabilities 17,924
Tax
liabilities 7,714 7,399
Other
liabilities 296 44
Total
current
liabilities 149,246 92,903
Non-
current
liabilities
---
Trade
payables 6,156
Borrowings 25,711
Other
financial
liabilities 2,522 3,418
Lease
liabilities 35,747
Tax
liabilities 257
Other
liabilities 456
Provisions
for
contingencies 2,470 2,862
Total non-
current
liabilities 73,319 6,280
TOTAL
LIABILITIES 222,565 99,183
Capital
and
reserves
Issued
capital 44,175 43,158
Additional
paid-in
capital 147,244 109,559
Other
reserves (3,700) (2,136)
Retained
earnings 225,925 187,335
Total
equity 413,644 337,916
TOTAL
EQUITY
AND
LIABILITIES 636,209 437,099
Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
Nine months ended Three months ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Reconciliation of
adjusted gross profit
Gross Profit 184,356 147,415 66,287 53,215
Depreciation and
amortization expense 4,981 3,055 2,061 1,052
Share-based
compensation expense 3,667 3,153 1,214 1,200
Adjusted gross profit 193,004 153,623 69,562 55,467
Adjusted gross profit
margin 40.6% 40.2% 40.6% 41.2%
Reconciliation of
selling, general and
administrative
expenses
Selling, general and
administrative
expenses (122,283) (97,647) (43,091) (33,767)
Depreciation and
amortization expense 12,512 11,883 3,985 4,404
Share-based
compensation expense 10,371 6,338 3,537 2,135
Acquisition-related
charges (a) 5,450 1,973 2,285 708
Adjusted selling,
general and
administrative
expenses (93,950) (77,454) (33,284) (26,521)
Adjusted selling,
general and
administrative
expenses as % of
revenues (19.8)% (20.3)% (19.4)% (19.7)%
Reconciliation of
Adjusted Profit from
Operations
Profit from Operations 60,737 48,874 22,935 18,988
Share-based
compensation expense 14,038 9,491 4,751 3,335
Acquisition-related
charges (a) 6,064 2,540 2,530 891
Impairment of assets
(b) 720 48 720
Adjusted Profit from
Operations 81,559 60,953 30,936 23,214
Adjusted Profit from
Operations margin 17.2% 15.9% 18.1% 17.3%
Reconciliation of Net
income for the period
Net income for the
period 40,562 40,087 15,078 15,521
Share-based
compensation expense 14,038 9,491 4,751 3,335
Acquisition-related
charges (a) 6,548 (4,636) 2,917 (2,051)
Impairment of assets
(b) 720 48 720
Expenses related to
secondary share
offering (c) 251 17
Adjusted Net income 61,868 45,241 23,466 16,822
Adjusted Net income
margin 13.0% 11.8% 13.7% 12.5%
Calculation of
Adjusted Diluted EPS
Adjusted Net income 61,868 45,241 23,466 16,822
Diluted shares 37,595 36,624 37,831 36,802
Adjusted Diluted EPS 1.65 1.24 0.62 0.46
(a) Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our consolidated statements of operations, external deal costs, acquisition-related retention bonuses, integration costs, changes in the fair value of contingent consideration liabilities, charges for impairment of acquired intangible assets and other acquisition-related costs. We cannot provide acquisition-related charges on a forward-looking basis without unreasonable effort as such charges may fluctuate based on the timing, size, and complexity of future acquisitions as well as other uncertainty inherent in mergers and acquisitions.
(b) Impairment of assets include, when applicable, charges for impairment of intangible assets, charges for impairment of investments in associates and charges for impairment of tax credits, net of recoveries.
(c) Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held WPP Luxembourg Gamma Three S.àr.l. ("WPP").
Globant S.A.
Schedule of Supplemental Information (unaudited)
Metrics Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
===
Total
Employees 7,807 8,384 9,259 9,905 11,283
IT
Professionals 7,285 7,821 8,609 9,215 10,462
North
America
Revenues % 77.5 77.4 73.7 75.2 77.1
Latin
America
and Others
Revenues % 12.5 13.5 17.0 16.1 17.0
Europe
Revenues % 10.0 9.1 9.3 8.7 5.9
USD
Revenues % 85.1 85.6 83.3 88.7 86.3
Other
Currencies
Revenues % 14.9 14.4 16.7 11.3 13.7
Top
Customer % 11.9 10.9 10.5 10.4 11.9
Top 5
Customers
% 33.4 30.9 28.9 27.2 26.1
Top 10
Customers
% 45.8 42.7 40.8 41.0 38.6
Customers
Served
(Last
Twelve
Months) 344 373 472 585 744
Customers
with >$1M
in
Revenues
(Last
Twelve
Months) 90 90 91 97 104
Investor Relations Contact:
Paula Conde & Amit Singh, Globant
investors@globant.com
+1 (877) 215-5230
Media Contact:
Wanda Weigert, Globant
pr@globant.com
+1 (877) 215-5230
View original content to download multimedia:http://www.prnewswire.com/news-releases/globant-reports-2019-third-quarter-financial-results-300958656.html
SOURCE Globant
