Globant Reports 2020 Third Quarter Financial Results
LUXEMBOURG, Nov. 12, 2020 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and nine months ended September 30, 2020.
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 2020 Financial Highlights
-- Revenues rose to $207.2 million, representing 20.9% year-over-year
growth compared to the third quarter of 2019.
-- IFRS Gross Profit margin was 37.1% compared to 38.7% in the third
quarter of 2019.
-- Non-IFRS Adjusted Gross Profit Margin was 39.0% compared to 40.6% in the
third quarter of 2019.
-- IFRS Profit from Operations Margin was 11.2% compared to 13.4% in the
third quarter of 2019.
-- Non-IFRS Adjusted Profit from Operations Margin was 15.3% compared to
18.1% in the third quarter of 2019.
-- IFRS Diluted EPS was $0.30 compared to $0.40 in the third quarter of
2019.
-- Non-IFRS Adjusted Diluted EPS was $0.60 compared to $0.62 in the third
quarter of 2019.
Nine months ended September 30, 2020 highlights
-- Revenue rose to $581.5 million, representing 22.4% year-over-year growth
compared to the first nine months of 2019.
-- IFRS Gross Profit margin was 37.0% compared to 38.8% in the first nine
months of 2019.
-- Non-IFRS Adjusted Gross Profit Margin was 38.9% compared to 40.6% in the
first nine months of 2019.
-- IFRS Profit from Operations Margin was 9.7% compared to 12.8% in the
first nine months of 2019.
-- Non-IFRS Adjusted Profit from Operations Margin was 14.8% compared to
17.2% in the first nine months of 2019.
-- IFRS Diluted EPS was $0.90, compared to $1.08 in the first nine months
of 2019.
-- Non-IFRS Adjusted Diluted EPS was $1.75, compared to $1.65 in the first
nine months of 2019.
Cash and Other Metrics for the Quarter ended September 30, 2020
-- Cash and cash equivalents and Short-term investments totaled $385.6
million as of September 30, 2020, an increase of $303.1 million, from
$82.5 million as of December 31, 2019. As of September 30, 2020, we had
$75 million drawn from our credit facility.
-- Globant completed the third quarter of 2020 with 14,340 Globers, 13,436
of whom were technology, design and innovation professionals.
-- The geographic revenue breakdown for the third quarter of 2020 was as
follows: 70.0% from North America (top country: US), 22.4% from Latin
America and others (top country: Argentina) and 7.6% from Europe (top
country: Spain).
-- In terms of currencies, 84.5% of Globant's revenues for the third
quarter of 2020 were denominated in US dollars.
-- During the twelve months ended September 30, 2020, Globant served a
total of 893 customers and continued to increase its wallet share,
having 118 accounts with more than $1 million of annual revenues,
compared to 104 for the same period one year ago.
-- Globant's top customer, top five customers and top ten customers for the
third quarter of 2020 represented 10.8%, 32.2% and 45.0% of revenues,
respectively.
"The global COVID-19 crisis pushed organizations to embrace profound digital transformations. We are in front of a unique opportunity and our strong value proposition enables us to differentiate from other players", said Martín Migoya, Globant CEO and co-founder. "During this quarter we had two major milestones that reflected our future-centric vision. First, we held our Converge event, which raised a lot of interest throughout our community as we formally launched Augmented Coding. Also, Globant was recognized as a 2020 Worldwide Leader in CX Improvement by IDC MarketScape. We are extremely proud of this recognition as it shows the outstanding work our team is doing throughout the globe."
"We are extremely pleased with Globant's sequential organic revenue recovery and very strong net employee additions for the third quarter. We are also very satisfied with gA's acquisition and the synergies that we are achieving. We delivered revenues and adjusted diluted earnings per share above our expectations and adjusted profit from operations margins at the upper end of our guidance range. As COVID-19 crisis has led to lower utilization rates, adjusted profit from operations margin is down year over year but is up sequentially 180 basis points. This trend shows a sequential recovery in business and utilization rates," explained Juan Urthiague, Globant's CFO.
2020 Fourth quarter Outlook
Based on current market conditions, Globant is providing the following estimates for the fourth quarter of 2020:
-- Fourth quarter 2020 Revenues are estimated to be at least $220 million,
or 19.4% year over year growth.
-- Fourth quarter 2020 Non-IFRS Adjusted Profit from Operations Margin is
estimated to be largely in line with third quarter 2020.
-- Fourth quarter 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at
least $0.66 (assuming an average of 41.3 million diluted shares
outstanding during the fourth quarter).
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the third quarter 2020 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 14,300 employees and we are present in 16 countries working for companies like Google, Rockwell Automation, Electronic Arts and Santander, among others.
We were named a Worldwide Leader in CX Improvement by IDC MarketScape report. We were also featured as a business case study at Harvard, MIT, and Stanford. We are a member of the Cybersecurity Tech Accord.
For more information, please 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" 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 non financial assets, acquisition-related charges and COVID-19 related expenses. 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 condensed interim consolidated statement of financial position as of September 30, 2020, its audited consolidated statement of financial position as of December 31, 2019 and its unaudited condensed interim consolidated statement of comprehensive income for the three and nine months ended September 30, 2020 and 2019, prepared in accordance with IFRS as 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, acquisition-related charges and COVID-19 related expenses. 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: the impact and duration of the COVID-19 pandemic; 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 and any other risk factors we include in subsequent reports on Form 6-K.
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.
Condensed Interim Consolidated Statement of Comprehensive Income
(In thousands of U.S. dollars, except per share amounts, unaudited)
Nine months ended Three months ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Revenues 581,503 475,019 207,223 171,334
Cost of revenues (366,089) (290,663) (130,253) (105,047)
Gross profit 215,414 184,356 76,970 66,287
Selling, general and administrative expenses (155,250) (122,283) (53,796) (43,091)
Net impairment (losses) gain on account receivables (3,525) (616) 19 459
Other Operating (expenses) income, net (720) (720)
Profit from operations 56,639 60,737 23,193 22,935
Finance income 1,377 628 670 363
Finance expense (7,439) (4,108) (2,333) (1,773)
Other financial results, net 2,172 (5,399) (1,452) (2,115)
Share of results of investment in associates (375) (183) (293) (183)
Other income and expenses, net (3,624) 35 (3,667) 27
Profit before income tax 48,750 51,710 16,118 19,254
Income tax (13,222) (11,148) (3,779) (4,176)
Net income for the period 35,528 40,562 12,339 15,078
Other comprehensive income, net of income tax effects
Items that may be reclassified subsequently to profit and loss:
- Exchange differences on translating foreign operations (2,539) (958) (1,002) (799)
- Net change in fair value on financial assets measured at fair value (372) 23 (399)
through other comprehensive income ("FVOCI")
- Gains and losses on cash flow hedges (848) (234) (14) (667)
Total comprehensive income for the period 32,141 38,998 11,346 13,213
Net income attributable to:
Owners of the Company 35,528 40,562 12,339 15,078
Net income for the period 35,528 40,562 12,339 15,078
Total comprehensive income for the period attributable to:
Owners of the Company 32,141 38,998 11,346 13,213
Total comprehensive income for the period 32,141 38,998 11,346 13,213
Earnings per share
Basic 0.93 1.11 0.31 0.41
Diluted 0.90 1.08 0.30 0.40
Weighted average of outstanding shares (in thousands)
Basic 38,113 36,481 39,629 36,718
Diluted 39,314 37,595 40,830 37,831
Globant S.A.
Condensed Interim Consolidated Statements of Financial Position as of September 30, 2020 and December 31, 2019
(In September 30, December 31,
thousands 2020 2019
of U.S.
dollars,
unaudited)
ASSETS
Current
assets
---
Cash and
cash
equivalents 323,309 62,721
Investments 62,292 19,780
Trade
receivables 196,535 156,676
Other assets 9,517 13,439
Other
receivables 20,528 19,308
Other
financial
assets 2,456 4,527
Total
current
assets 614,637 276,451
Non-current
assets
---
Investments 418
Other assets 6,820 7,796
Receivables 21,168 8,810
Deferred tax
assets 42,439 26,868
Investment
in
associates 3,400 3,776
Other
financial
assets 5,647 1,683
Property and
equipment 87,239 87,533
Intangible
assets 35,036 27,110
Right-of-
use assets 67,385 58,781
Goodwill 258,860 188,538
Total non-
current
assets 527,994 411,313
TOTAL ASSETS 1,142,631 687,764
LIABILITIES
Current
liabilities
---
Trade
payables 24,669 31,487
Payroll and
social
security
taxes
payable 88,525 72,252
Borrowings 3,534 1,198
Other
financial
liabilities 21,233 8,937
Lease
liabilities 19,965 19,439
Tax
liabilities 9,447 7,898
Income tax
payable 11,335 4,612
Other
liabilities 55 368
Total
current
liabilities 178,763 146,191
Non-current
liabilities
---
Trade
payables 6,745 5,500
Borrowings 75,091 50,188
Other
financial
liabilities 14,696 1,617
Lease
liabilities 45,882 41,924
Deferred tax
liabilities 1,437 1,028
Provisions
for
contingencies 11,217 2,602
Total non-
current
liabilities 155,068 102,859
TOTAL
LIABILITIES 333,831 249,050
Capital and
reserves
Issued
capital 47,605 44,356
Additional
paid-in
capital 492,233 157,537
Other
reserves (5,944) (2,557)
Retained
earnings 274,906 239,378
Total equity
attributable
to owners
of the
Company 808,800 438,714
TOTAL EQUITY
AND
LIABILITIES 1,142,631 687,764
Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
Nine months ended Three months ended
September 30,
September 30,
September 30, September
2020 2019 2020 30, 2019
Reconciliation of
adjusted gross profit
Gross Profit 215,414 184,356 76,970 66,287
Depreciation and
amortization expense 7,329 4,981 2,690 2,061
Share-based
compensation expense 3,419 3,667 1,091 1,214
Adjusted gross profit 226,162 193,004 80,751 69,562
Adjusted gross profit
margin 38.9% 40.6% 39.0% 40.6%
Reconciliation of
selling, general and
administrative
expenses
Selling, general and
administrative
expenses (155,250) (122,283) (53,796) (43,091)
Depreciation and
amortization expense 15,459 12,512 5,562 3,985
Share-based
compensation expense 16,003 10,371 5,518 3,537
Acquisition-related
charges (a) 6,127 5,450 1,879 2,285
COVID-19-related
charges (b) (613) (613)
Adjusted selling,
general and
administrative
expenses (118,274) (93,950) (41,450) (33,284)
Adjusted selling,
general and
administrative
expenses as % of
revenues (20.3)% (19.8)% (20.0)% (19.4)%
Reconciliation of
Adjusted Profit from
Operations
Profit from Operations 56,639 60,737 23,193 22,935
Share-based
compensation expense 19,422 14,038 6,609 4,751
Impairment of tax
credits (8) (8)
Impairment of assets 720 720
Acquisition-related
charges (a) 7,303 6,064 2,263 2,530
COVID-19-related
charges (b) 2,751 (434)
Adjusted Profit from
Operations 86,107 81,559 31,623 30,936
Adjusted Profit from
Operations margin 14.8% 17.2% 15.3% 18.1%
Reconciliation of Net
income for the period
Net income for the
period 35,528 40,562 12,339 15,078
Share-based
compensation expense 19,422 14,038 6,609 4,751
Impairment of tax
credits (8) (8)
Impairment of assets 720 720
Acquisition-related
charges (a) 11,063 6,548 5,920 2,917
COVID-19-related
charges (b) 2,751 (434)
Adjusted Net income 68,756 61,868 24,426 23,466
Adjusted Net income
margin 11.8% 13.0% 11.8% 13.7%
Calculation of
Adjusted Diluted EPS
Adjusted Net income 68,756 61,868 24,426 23,466
Diluted shares 39,314 37,595 40,830 37,831
Adjusted Diluted EPS 1.75 1.65 0.60 0.62
(a) Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our condensed interim consolidated statements of 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) COVID-19 related charges include, when applicable, bad debt provision related to the effect of COVID-19 on our customers' businesses, donations and other expenses directly attributable to the pandemic that are both incremental to charges incurred prior to the outbreak and not expected to recur once the crisis has subsided and operations return to normal and clearly separable from normal operations. Moreover, these charges also include rent concessions that we were granted due to the pandemic environment.
Globant S.A.
Schedule of Supplemental Information (unaudited)
Metrics Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
---
Total Employees 11,283 11,855 12,538 12,333 14,340
IT Professionals 10,462 11,021 11,755 11,573 13,436
North America Revenues % 77.1 75.0 74.5 72.8 70.0
Latin America and Others Revenues % 17.0 20.0 19.5 20.8 22.4
Europe Revenues % 5.9 5.0 6.0 6.4 7.6
USD Revenues % 86.3 86.7 86.8 87.0 84.5
Other Currencies Revenues % 13.7 13.3 13.2 13.0 15.5
Top Customer % 11.9 11.7 11.7 10.7 10.8
Top 5 Customers % 26.1 27.0 29.1 31.9 32.2
Top 10 Customers % 38.6 38.5 41.0 44.9 45.0
Customers Served (Last Twelve Months) 744 822 876 805 893
Customers with >$1M in Revenues (Last Twelve Months) 104 107 112 113 118
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
Source: Globant
View original content to download multimedia:http://www.prnewswire.com/news-releases/globant-reports-2020-third-quarter-financial-results-301172003.html
SOURCE Globant
