Globant Reports 2019 Full Year and Fourth Quarter Financial Results: Strong Finish To The Year; Robust Outlook

Fourth quarter revenues of $184.3 million, up 31.5% year-over-year
IFRS Diluted EPS of $0.35 for the fourth quarter
Non-IFRS Diluted EPS of $0.64 for the fourth quarter

LUXEMBOURG, Feb. 20, 2020 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for three months and year ended December 31, 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.

Fourth quarter 2019 highlights

    --  Revenues rose to $184.3 million, representing 31.5% year-over-year
        growth compared to the fourth quarter of 2018.
    --  IFRS Gross Profit margin was 37.9% compared to 40.2% in the fourth
        quarter of 2018.
    --  Non-IFRS Adjusted Gross Profit Margin was 39.9% compared to 41.7% in the
        fourth quarter of 2018.
    --  IFRS Profit from Operations Margin was 10.9% compared to 12.8% in the
        fourth quarter of 2018.
    --  Non-IFRS Adjusted Profit from Operations Margin was 16.5% compared to
        16.7% in the fourth quarter of 2018.
    --  IFRS Diluted EPS was $0.35 compared to $0.31 in the fourth quarter of
        2018.
    --  Non-IFRS Adjusted Diluted EPS was $0.64 compared to $0.50 in the fourth
        quarter of 2018.

Full year ended December 31, 2019 highlights

    --  Revenues rose to $659.3 million, representing 26.2% year-over-year
        growth.
    --  IFRS Gross Profit margin was 38.5% compared to 39.0% for the full year
        2018.
    --  Non-IFRS Adjusted Gross Profit Margin was 40.4% compared to 40.6% for
        the full year 2018.
    --  IFRS Profit from Operations Margin was 12.2% compared to 12.8% for the
        full year 2018.
    --  Non-IFRS Adjusted Profit from Operations Margin was 17.0% compared to
        16.1% for the full year 2018.
    --  IFRS Diluted EPS was $1.43 compared to $1.41 for the full year 2018.
    --  Non-IFRS Adjusted Diluted EPS was $2.29 compared to $1.74 for the full
        year 2018.

"2019 was another very successful year for our company. Our full year revenues for 2019 amounted to $659.3 million, representing 26.2% year-over-year growth. It is our 5th year since we are a public company with growth above 26%. At the same time, revenues for the fourth quarter of 2019 amounted to $184.3 million, a new record for the company and an outstanding increase of 31.5% compared to the fourth quarter of 2018," said Martín Migoya, Globant's CEO and co-founder.

"With Gartner's estimate of 3.9 trillion dollars to be spent on IT alone in 2020, we continue to see an enormous opportunity for growth, since we are a unique player in the field delivering digital and cognitive transformations. We have a strong focus on innovation, on building an agile culture and applying AI to everything we do," Migoya added. "On top of that, with our Be Kind initiative, we are deepening our commitment to being a sustainable organization, conscious about generating positive impact for all our stakeholders as we grow. Within Be Kind, we have set specific goals to fight climate change and to work even harder on diversity, inclusion and cultural wellness. These goals will focus us as we continue to expand."

"I am very satisfied with our overall results for the fourth quarter and full year 2019. During this year we continued our growth journey while at the same time significantly improving our profitability. Finally, hirings continue to be strong, combined with further decrease in attrition levels, a positive signal towards the beginning of 2020" explained Juan Urthiague, Globant's CFO.

Globant completed the fourth quarter with 11,855 Globers, 11,021 of whom were technology, design and innovation professionals. The geographic revenue breakdown for the fourth quarter was as follows: 75.0% from North America (top country: US), 20.0% from Latin America and others (top country: Argentina) and 5.1% from Europe (top country: Spain). In terms of currencies, 86.7% of Globant's revenues for the fourth quarter was denominated in US dollars.

During the year ended December 31, 2019, Globant served a total of 822 customers and continued to increase its wallet share, having 107 accounts with more than $1 million of annual revenues, 26 accounts over $5 million and 14 accounts above $10 million. Globant's top customer, top five customers and top ten customers represented 11.7%, 27.0% and 38.5% of fourth quarter revenues, respectively.

Cash and bank balances and Investments as of December 31, 2019 amounted to $82.5 million, while borrowings amounted to $51.4 million. Finally, as of December 31, 2019, 37.0 million common shares were issued and outstanding.

2020 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 2020:

    --  First quarter 2020 Revenues are estimated to be at least $188 million,
        implying at least 28.6% year-over-year growth.
    --  First quarter 2020 Non-IFRS Adjusted Profit from Operations Margin is
        estimated to be in the range of 16%-17%.
    --  First quarter 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at
        least $0.62 (assuming an average of 38.2 million diluted shares
        outstanding during the first quarter).
    --  Fiscal year 2020 Revenues are estimated to be at least $810 million,
        implying at least 22.9% year-over-year revenue growth.
    --  Fiscal year 2020 Non-IFRS Adjusted Profit from Operations Margin is
        estimated to be in the range of 16.5%-17.5%.
    --  Fiscal year 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at
        least $2.74 (assuming an average of 38.5 million diluted shares
        outstanding during 2020).

Conference Call and Webcast

Martín Migoya and Juan Urthiague will discuss the full year and fourth quarter 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/

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 11,800 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 for the fourth quarter and applicable to financial statements for the full year, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting" nor a financial statement as defined by International Accounting Standards 1 "Presentation of Financial Statements". 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 IFRS. 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 consolidated statement of financial position as of December 31, 2019 and December 31, 2018 and its unaudited consolidated statement of profit or loss and other comprehensive income for the three years ended December 31, 2019, prepared in accordance with IFRS issued by IASB.

Globant is not providing a quantitative reconciliation of forward-looking Non-IFRS Adjusted Profit from Operations Margin or 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)


                                               Year ended    Three months ended



                                           December 31, 2019 December 31, 2018   December 31, 2019   December 31, 2018






     Revenues                                       659,325             522,310             184,306              140,138



     Cost of revenues                             (405,164)          (318,554)          (114,501)            (83,797)



                 Gross profit                        254,161             203,756              69,805               56,341




      Selling, general and
       administrative expenses                     (172,478)          (133,187)           (50,195)            (35,540)


      Net impairment losses on
       financial assets                                (228)            (3,469)                388              (2,575)


      Other operating expense,
       net                                             (720)              (306)                                  (306)



                 Profit from operations               80,735              66,794              19,998               17,920




      Gains on transactions
       with bonds                                      1,569                                  1,569





     Finance income                                  13,643              11,418               4,246                1,643



     Finance expense                               (26,801)           (16,968)            (8,525)             (3,153)



                 Finance expense, net               (13,158)            (5,550)            (4,279)             (1,510)





      Share of results of
       investment in associates                        (224)                                  (41)




      Other income, net                                  110               6,220                  75              (1,374)



                 Profit before income tax             69,032              67,464              17,322               15,036






     Income tax                                    (15,017)           (15,868)            (3,869)             (3,527)



                 Net income for the period            54,015              51,596              13,453               11,509





      Other comprehensive
       income, net of income
       tax effects


      Items that may be
       reclassified
       subsequently to profit
       and loss:


      -Exchange differences on
       translating foreign
       operations                                      (400)              (871)                558                  451


      -Net change in fair
       value on financial
       assets measured at FVOCI                        (373)               (12)                (1)                 (5)


      -Gains and losses on
       cash flow hedges                                  352                                    586



                 Total comprehensive
                  income for the period               53,594              50,713              14,596               11,955





                 Net income attributable
                  to:


      Owners of the Company                           54,015              51,677              13,453               11,509


      Non-controlling interest                                             (81)



                 Net income for the period            54,015              51,596              13,453               11,509





                 Total comprehensive
                  income for the period
                  attributable to:


      Owners of the Company                           53,594              50,794              14,596               11,955


      Non-controlling interest                                             (81)



                 Total comprehensive
                  income for the period               53,594              50,713              14,596               11,955







                 Earnings per share



     Basic                                             1.48                1.45                0.36                 0.32



     Diluted                                           1.43                1.41                0.35                 0.31




                 Weighted average of
                  outstanding shares (in
                  thousands)



     Basic                                           36,586              35,746              36,897               35,961



     Diluted                                         37,674              36,685              37,985               36,899

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


                                                            December December

                                                            31, 2019 31, 2018




       
                ASSETS


                                    Current assets

    ---


       Cash and bank balances                                62,721    77,606



       Investments                                           19,780     8,635



       Trade receivables                                    156,676   110,898



       Other assets                                          13,439



       Other receivables                                     19,308    15,341



       Other financial assets                                 4,527       550



       Total current assets                                 276,451   213,030





                                    Non-current assets

    ---


       Investments                                              418       527



       Other assets                                           7,796



       Other receivables                                      8,810    34,197



       Deferred tax assets                                   26,868    16,916


        Investment in associates                               3,776     4,000



       Other financial assets                                 1,683       345



       Property and equipment                                87,533    51,460



       Intangible assets                                     27,110    11,778



       Right-of-use asset                                    58,781



       Goodwill                                             188,538   104,846


        Total non-current assets                             411,313   224,069



                     TOTAL ASSETS                            687,764   437,099





                     LIABILITIES


                                    Current liabilities

    ---


       Trade payables                                        31,487    17,578


        Payroll and social security taxes
         payable                                              72,252    58,535



       Borrowings                                             1,198


        Other financial liabilities                            8,937     9,347



       Lease liabilities                                     19,439



       Tax liabilities                                       12,510     7,399



       Other liabilities                                        368        44


        Total current liabilities                            146,191    92,903





                                    Non-current liabilities

    ---


       Trade payables                                         5,500



       Borrowings                                            50,188


        Other financial liabilities                            1,617     3,418



       Lease liabilities                                     41,924



       Other liabilities                                      1,028


        Provisions for contingencies                           2,602     2,862


        Total non-current liabilities                        102,859     6,280



                     TOTAL LIABILITIES                       249,050    99,183





                     Capital and reserves



       Issued capital                                        44,356    43,158


        Additional paid-in capital                           157,537   109,559



       Other reserves                                       (2,557)  (2,136)



       Retained earnings                                    239,378   187,335




       Total equity                                         438,714   337,916


                     TOTAL EQUITY AND LIABILITIES            687,764   437,099

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


                                                                                              Year ended    Three months ended



                                                                                          December 31, 2019 December 31, 2018   December 31, 2019   December 31, 2018






     
                Reconciliation of adjusted gross profit



     Gross Profit                                                                                  254,161             203,756              69,805               56,341



     Depreciation and amortization expense                                                           7,350               4,022               2,369                  967



     Share-based compensation expense                                                                4,976               4,248               1,309                1,095




     
                Adjusted gross profit                                                            266,487             212,026              73,483               58,403




     
                Adjusted gross profit margin                                                       40.4%              40.6%              39.9%               41.7%






     
                Reconciliation of selling, general and administrative expenses



     Selling, general and administrative expenses                                                (172,478)          (133,187)           (50,195)            (35,540)



     Depreciation and amortization expense                                                          16,905              16,521               4,393                4,638



     Share-based compensation expense                                                               14,912               8,665               4,541                2,327



     Acquisition-related charges (a)                                                                 9,571               3,516               4,121                1,543




     
                Adjusted selling, general and administrative expenses                          (131,090)          (104,485)           (37,140)            (27,032)




     
                Adjusted selling, general and administrative expenses as % of revenues           (19.9)%            (20.0)%            (20.2)%             (19.3)%






     
                Reconciliation of Adjusted Profit from Operations



     Profit from Operations                                                                         80,735              66,794              19,998               17,920



     Share-based compensation expense                                                               19,888              12,913               5,850                3,422



     Acquisition-related charges (a)                                                                10,695               4,273               4,631                1,733



     Impairment of assets (b)                                                                          673                 354                (47)                 306



     
                Adjusted Profit from Operations                                                  111,991              84,334              30,432               23,381




     
                Adjusted Profit from Operations margin                                             17.0%              16.1%              16.5%               16.7%






     
                Reconciliation of Net income for the period



     Net income for the period                                                                      54,015              51,596              13,453               11,509



     Share-based compensation expense                                                               19,888              12,913               5,850                3,422



     Acquisition-related charges (a)                                                                11,518             (2,177)              4,970                2,459



     Impairment of assets (b)                                                                          673               1,154                (47)               1,106



     Expenses related to secondary share offering (c)                                                                     251



     
                Adjusted Net income                                                               86,094              63,737              24,226               18,496




     
                Adjusted Net income margin                                                         13.1%              12.2%              13.1%               13.2%






     
                Calculation of Adjusted Diluted EPS



     Adjusted Net income                                                                            86,094              63,737              24,226               18,496



     Diluted shares                                                                                 37,674              36,685              37,985               36,899




     
                Adjusted Diluted EPS                                                                2.29                1.74                0.64                 0.50

(a) Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our consolidated statements of profit or loss and other comprehensive income, 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 Q4 2018 Q1 2019  Q2 2019   Q3 2019    Q4 2019

                    ===



               Total
                Employees               8,384    9,259     9,905     11,283      11,855


               IT
                Professionals           7,821    8,609     9,215     10,462      11,021




    North
     America
     Revenues %                        77.4     73.7      75.2       77.1        75.0


    Latin
     America
     and Others
     Revenues %                        13.5     17.0      16.1       17.0        20.0


    Europe
     Revenues %                         9.1      9.3       8.7        5.9         5.1




    USD
     Revenues %                        85.6     83.3      88.7       86.3        86.7


    Other
     Currencies
     Revenues %                        14.4     16.7      11.3       13.7        13.3




    Top
     Customer %                        10.9     10.5      10.4       11.9        11.7


    Top 5
     Customers
     %                                  30.9     28.9      27.2       26.1        27.0


    Top 10
     Customers
     %                                  42.7     40.8      41.0       38.6        38.5




               Customers
                Served
                (Last
                Twelve
                Months)                   373      472       585        744         822


               Customers
                with >$1M
                in
                Revenues
                (Last
                Twelve
                Months)                    90       91        97        104         107

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

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