Globant Reports 2020 Fourth Quarter and Full Year Financial Results
Solid End to the Year and Robust Outlook
-- Fourth quarter revenues of $232.6 million, up 26.2% year-over-year
-- IFRS Diluted EPS of $0.46 for the fourth quarter
-- Non-IFRS Diluted EPS of $0.70 for the fourth quarter
LUXEMBOURG, Feb. 18, 2021 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three months and year ended December 31, 2020.
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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 2020 highlights
-- Revenues rose to $232.6 million, representing 26.2% year-over-year
growth compared to the fourth quarter of 2019.
-- IFRS Gross Profit margin was 38.2% compared to 37.9% in the fourth
quarter of 2019.
-- Non-IFRS Adjusted Gross Profit Margin was 39.6% compared to 39.9% in the
fourth quarter of 2019.
-- IFRS Profit from Operations Margin was 11.7% compared to 10.9% in the
fourth quarter of 2019.
-- Non-IFRS Adjusted Profit from Operations Margin was 16.3% compared to
16.5% in the fourth quarter of 2019.
-- IFRS Diluted EPS was $0.46 compared to $0.35 in the fourth quarter of
2019.
-- Non-IFRS Adjusted Diluted EPS was $0.70 compared to $0.64 in the fourth
quarter of 2019.
Full year ended December 31, 2020 highlights
-- Revenues rose to $814.1 million, representing 23.5% year-over-year
growth.
-- IFRS Gross Profit margin was 37.4% compared to 38.5% for the full year
2019.
-- Non-IFRS Adjusted Gross Profit Margin was 39.1% compared to 40.4% for
the full year 2019.
-- IFRS Profit from Operations Margin was 10.3% compared to 12.2% for the
full year 2019.
-- Non-IFRS Adjusted Profit from Operations Margin was 15.2% compared to
17.0% for the full year 2019.
-- IFRS Diluted EPS was $1.37 compared to $1.43 for the full year 2019.
-- Non-IFRS Adjusted Diluted EPS was $2.45 compared to $2.29 for the full
year 2019.
Other Metrics as of and for the quarter ended December 31, 2020
-- Cash and cash equivalents and current investments were $298.2 million as
of December 31, 2020, an increase of $215.7 million from $82.5 million
as of December 31, 2019. As of December 31, 2020, we had $25 million
drawn on our credit facility.
-- Globant completed the fourth quarter with 16,251 Globers, 15,290 of whom
were technology, design and innovation professionals.
-- The geographic revenue breakdown for the fourth quarter was as follows:
65.9% from North America (top country: US), 24.3% from Latin America and
others (top country: Argentina) and 9.8% from Europe (top country:
Spain).
-- In terms of currencies, 85.8% of Globant's revenues for the fourth
quarter were denominated in US dollars.
-- During the year ended December 31, 2020, Globant served a total of 798
customers and continued to increase its wallet share, having 129
accounts with more than $1 million of annual revenues, compared to 107
for the same period one year ago.
-- Globant's top customer, top five customers and top ten customers
represented 10.7%, 30.0% and 42.9% of fourth quarter revenues,
respectively.
"2020 was a very challenging year for the whole world, but at the same time it brought an amazing opportunity for us, as more organizations faced the need for profound transformation. We kept pushing the boundaries of our industry, bringing more value to our customers and helping them reinvent themselves. In this context, we delivered a robust 23.5% year over year revenue growth in 2020", said Martín Migoya, Globant's CEO and co-founder. "With our Studios and our AI-accelerators, we will continue to bring together strategy, sustainable business models, digital trends, AI and inclusive culture to unleash our customers' potential."
"Our future-centric vision means putting sustainability at the forefront to deliver digital and cognitive transformations. This vision puts a focus on rethinking business models with our clients", Migoya added. "On this line, we took a step further in December, as we announced the acquisition of consultancy-firm Bluecap, which will be key to help us reinforce our strategic capabilities worldwide".
"I am very satisfied with our overall results for the fourth quarter and full year 2020. We started the year on very strong footing, but faced some challenges from COVID-19 during the first half of the second quarter of 2020. However, since then, the demand environment and our overall business continued to improve throughout the rest of 2020, and we ended the year at a robust 23.5% year over year revenue growth, ahead of market expectations. In addition, our hiring remains strong, our attrition remains at historic lows, and our adjusted operating margins are trending back up. All this bodes well for a very positive 2021," explained Juan Urthiague, Globant's CFO.
2021 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 2021:
-- First quarter 2021 Revenues are estimated to be at least $258 million,
implying at least 34.7% year-over-year growth.
-- First quarter 2021 Non-IFRS Adjusted Profit from Operations Margin is
estimated to be in the range of 15%-17%.
-- First quarter 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at
least $0.79 (assuming an average of 41.2 million diluted shares
outstanding during the first quarter).
-- Fiscal year 2021 Revenues are estimated to be at least $1,047 million,
implying at least 28.6% year-over-year revenue growth.
-- Fiscal year 2021 Non-IFRS Adjusted Profit from Operations Margin is
estimated to be in the range of 15%-17%.
-- Fiscal year 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at
least $3.20 (assuming an average of 41.5 million diluted shares
outstanding during 2021).
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the full year and fourth quarter 2020 results in a conference call today beginning at 4:30pm ET.
Video conference call access information is:
https://more.globant.com/F4Q20EarningsCall
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 16,200 employees and 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"), 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 consolidated statements of financial position as of December 31, 2020 and 2019 and its consolidated statement of comprehensive income for the three months and year ended December 31, 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 non-financial 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.
Consolidated Statement of Comprehensive Income
(In thousands of U.S. dollars, except per share amounts, unaudited)
Year ended Three months ended
December December December December
31, 2020 31, 2019 31, 2020 31, 2019
Revenues 814,139 659,325 232,636 184,306
Cost of revenues (509,812) (405,164) (143,723) (114,501)
Gross profit 304,327 254,161 88,913 69,805
Selling, general and
administrative expenses (217,222) (172,478) (61,972) (50,195)
Net impairment losses on financial
assets (3,080) (228) 445 388
Other operating expense, net (83) (720) (83)
Profit from operations 83,942 80,735 27,303 19,998
Finance income 1,920 958 543 330
Finance expense (10,430) (6,653) (2,991) (2,545)
Other financial results, net 3,601 (5,894) 1,429 (495)
Financial results, net (4,909) (11,589) (1,019) (2,710)
Share of results of investment in
associates (622) (224) (247) (41)
Other income and expenses, net (1,887) 110 1,737 75
Profit before income tax 76,524 69,032 27,774 17,322
Income tax (22,307) (15,017) (9,085) (3,869)
Net income for the year /period 54,217 54,015 18,689 13,453
Other comprehensive income (loss)
net of income tax effects
Items that may be reclassified
subsequently to profit and loss:
-Exchange differences on
translating foreign operations (398) (400) 2,141 558
-Net change in fair value on
financial assets measured at
FVOCI (373) (1)
-Gains and losses on cash flow
hedges 281 352 1,129 586
Total comprehensive income for the
year /period 54,100 53,594 21,959 14,596
Net income attributable to:
Owners of the Company 54,217 54,015 18,689 13,453
Non-controlling interest
Net income for the year /period 54,217 54,015 18,689 13,453
Total comprehensive income for the
year attributable to:
Owners of the Company 54,100 53,594 21,959 14,596
Non-controlling interest
Total comprehensive income for the
year /period 54,100 53,594 21,959 14,596
Earnings per share
Basic 1.41 1.48 0.47 0.36
Diluted 1.37 1.43 0.46 0.35
Weighted average of outstanding
shares (in thousands)
Basic 38,515 36,586 39,713 36,897
Diluted 39,717 37,674 40,914 37,985
Globant S.A.
Consolidated Statements of Financial Position as of December 31, 2020 and
December 31, 2019
(In thousands of U.S. dollars, unaudited)
December 31, 2020 December 31, 2019
---
ASSETS
Current assets
---
Cash and cash
equivalents 278,939 62,721
Investments 19,284 19,780
Trade receivables 196,020 156,676
Other assets 8,146 13,439
Other receivables 31,633 19,308
Other financial
assets 1,577 4,527
Total current
assets 535,599 276,451
Non-current assets
---
Trade receivables 5,644 -
Investments 615 418
Other assets 6,954 7,796
Other receivables 9,629 8,810
Deferred tax assets 41,507 26,868
Investment in
associates 3,154 3,776
Other financial
assets 15,147 1,683
Property and
equipment 101,027 87,533
Intangible assets 86,721 27,110
Right-of-use
asset 90,010 58,781
Goodwill 392,760 188,538
Total non-current
assets 753,168 411,313
TOTAL ASSETS 1,288,767 687,764
LIABILITIES
Current liabilities
---
Trade payables 35,266 31,487
Payroll and social
security taxes
payable 111,881 72,252
Borrowings 907 1,198
Other financial
liabilities 19,822 8,937
Lease liabilities 15,358 19,439
Tax liabilities 11,804 7,898
Income tax payable 10,511 4,612
Other liabilities 81 368
Total current
liabilities 205,630 146,191
Non-current liabilities
---
Trade payables 5,240 5,500
Borrowings 25,061 50,188
Other financial
liabilities 74,376 1,617
Lease liabilities 72,240 41,924
Deferred tax
liabilities 13,698 1,028
Provisions for
contingencies 12,583 2,602
Total non-current
liabilities 203,198 102,859
TOTAL LIABILITIES 408,828 249,050
Capital and reserves
Issued capital 47,861 44,356
Additional paid-in
capital 541,157 157,537
Other reserves (2,674) (2,557)
Retained earnings 293,595 239,378
Total equity
attributable to
owners of the
Company 879,939 438,714
TOTAL EQUITY AND
LIABILITIES 1,288,767 687,764
Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
Year ended Three months ended
---
December December December December
31, 2020 31, 2019 31, 2020 31, 2019
---
Reconciliation of adjusted gross
profit
Gross Profit 304,327 254,161 88,913 69,805
Depreciation and
amortization expense 9,759 7,350 2,430 2,369
Share-based
compensation expense 4,109 4,976 690 1,309
---
Adjusted gross profit 318,195 266,487 92,033 73,483
---
Adjusted gross profit
margin 39.1 % 40.4 % 39.6 % 39.9 %
---
Reconciliation of selling, general
and administrative expenses
Selling, general and
administrative
expenses (217,222) (172,478) (61,972) (50,195)
Depreciation and
amortization expense 22,691 16,905 7,232 4,393
Share-based
compensation expense 20,519 14,912 4,516 4,541
Acquisition-related
charges (a) 10,096 9,571 3,969 4,121
COVID-19-related
charges (b) (613)
---
Adjusted selling,
general and
administrative
expenses (164,529) (131,090) (46,255) (37,140)
---
Adjusted selling,
general and
administrative
expenses as % of
revenues (20.2) % (19.9) % (19.9) % (20.2) %
Reconciliation of Adjusted Profit
from Operations
Profit from Operations 83,942 80,735 27,303 19,998
Share-based
compensation expense 24,628 19,888 5,206 5,850
Impairment of tax
credits (8)
Acquisition-related
charges (a) 12,754 10,695 5,451 4,631
COVID-19-related
charges (b) 2,582 (169)
Impairment of assets 83 673 83 (47)
---
Adjusted Profit from
Operations 123,981 111,991 37,874 30,432
---
Adjusted Profit from
Operations margin 15.2 % 17.0 % 16.3 % 16.5 %
Reconciliation of Net income for
the period
Net income for the
period 54,217 54,015 18,689 13,453
Share-based
compensation expense 24,628 19,888 5,206 5,850
Impairment of tax
credits (8)
Acquisition-related
charges (a) 15,796 11,518 4,733 4,970
COVID-19-related
charges (b) 2,582 (169)
Impairment of assets 83 673 83 (47)
---
Adjusted Net income 97,298 86,094 28,542 24,226
---
Adjusted Net income
margin 12.0 % 13.1 % 12.3 % 13.1 %
Calculation of Adjusted Diluted
EPS
Adjusted Net income 97,298 86,094 28,542 24,226
Diluted shares 39,717 37,674 40,914 37,831
---
Adjusted Diluted EPS 2.45 2.29 0.70 0.64
---
(a) Acquisition-related charges include, when applicable, amortization of purchased intangible assets included in depreciation and amortization expense line on our 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 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
=== ===
Total Employees 11,855 12,538 12,333 14,340 16,251
IT Professionals 11,021 11,755 11,573 13,436 15,290
North America
Revenues % 75.0 74.5 72.8 70.0 65.9
Latin America and
Others Revenues % 20.0 19.5 20.8 22.4 24.3
Europe Revenues % 5.0 6.0 6.4 7.6 9.8
USD Revenues % 86.7 86.8 87.0 84.5 85.8
Other Currencies
Revenues % 13.3 13.2 13.0 15.5 14.2
Top Customer % 11.7 11.7 10.7 10.8 10.7
Top 5 Customers % 27.0 29.1 31.9 32.2 30.0
Top 10 Customers % 38.5 41.0 44.9 45.0 42.9
Customers Served
(Last Twelve
Months) 822 876 805 893 798
Customers with >$1M
in Revenues (Last
Twelve Months) 107 112 113 118 129
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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SOURCE Globant
