Globant Reports 2015 Fourth Quarter and Full Year Financial Results

Acceleration in Revenue Growth, Strong EPS

Feb 17, 2016, 16:05 ET from Globant

SAN FRANCISCO, Feb. 17, 2016 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys, today announced results for the three and twelve months ended December 31, 2015.

Full Year 2015 Highlights

  • Revenue for the full year increased to $253.8 million, the company's highest annual revenue to date, representing 27.2% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit for the full year was $98.7 million (38.9% Non-IFRS Adjusted Gross Profit Margin), an increase of $16.9 million compared to $81.7 million (and a decrease of 210 bps compared to 41.0% Non-IFRS Adjusted Gross Profit Margin) in 2014.
  • Non-IFRS Adjusted Net Income for the full year was $34.3 million (13.5% Non-IFRS Adjusted Net Income Margin), an increase of $8.5 million compared to $25.9 million (13.0% Non-IFRS Adjusted Net Income Margin) in 2014, representing 32.7% year-over-year growth.
  • Non-IFRS Adjusted Diluted EPS for the full year was $0.98 per share (based on 35.0 million average diluted shares for the year), an increase of $0.17 compared to $0.81 per share in 2014.

Fourth Quarter 2015 Highlights

  • Revenue for the fourth quarter amounted to $71.6 million, representing 29.8% year-over-year growth.
  • Non-IFRS Adjusted Gross Profit for the fourth quarter was $28.1 million (39.2% Non-IFRS Adjusted Gross Profit Margin), an increase of 20 bps compared to the third quarter of 2015 and a decrease of 50 bps compared to the fourth quarter of 2014. 
  • Non-IFRS Adjusted Net Income for the fourth quarter was $9.0 million (12.6% Non-IFRS Adjusted Net Income Margin), an increase of $0.9 million, or 10.8%, compared to a profit of $8.1 million for the fourth quarter of 2014.
  • Non-IFRS Adjusted Diluted EPS for the fourth quarter was $0.26 per share (based on 35.2 million average diluted shares for the quarter), an increase of $0.02 compared to Non-IFRS Adjusted Diluted Profit per Share of $0.24 for the fourth quarter of 2014.

Reconciliations between Non-IFRS / adjusted financial measures and IFRS operating results are included at the end of this press release.

"I am very excited by our 2015 performance. Our revenues increased to $253.8 million, a robust 27.2% increase compared to 2014, driven by strong growth in our top accounts and increasing demand for our digital journeys. At the same time we delivered strong Adjusted EPS for the full year, reaching $0.98 cents.

Market demand for our services remains strong. Our revenue increased 29.8% during this quarter compared to the fourth quarter of 2014. Our top customer revenues increased 88% compared to a year ago and exceeded $31 million during 2015," explained Martín Migoya, Globant's CEO and co-founder.

Migoya added: "Industry experts suggest that the move towards "Digital" will be a secular change for the IT Services. The use of Emerging Technologies to transform businesses has become a requirement for large organizations in today's competitive environment, which is what we reflect in our newly launched book, The Never Ending Digital Journey. Globant, with its vast experience creating digital journeys that matter for millions of consumers combined with its studio model, continues to be at the forefront of these trends. We believe our compelling value proposition in the digital space will continue to be a strategic advantage for our company going forward."

"Q4 2015 and full year revenues and EPS exceeded our expectations once again. Positive macro trends combined with solid execution translated into another successful year for our company. The strong net additions of Globers coupled with a slight reduction in attrition place us in a solid position to have a great 2016." explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 5,041 Globers, 4,613 of whom were IT professionals. The geographic revenue breakdown for the fourth quarter was as follows: 81.7% from North America (top country: U.S.), 12.2% from Latin America and others (top country: Chile) and 6.0% from Europe (top country: U.K.). 93.2% of Globant's revenue for the fourth quarter was denominated in U.S. dollars and G.B. pounds and the remaining 6.8% was in other currencies.

During the 12 months ended December 31, 2015, Globant served 344 customers, 51 of which accounted for more than $1 million of Globant's revenues.  Globant's top customer, top 5 customers and top 10 customers represented 12.7%, 34.4% and 46.4% of the fourth quarter revenues, respectively.

Cash and investments as of December 31, 2015 increased to $62.4 million from $62.2 million as of December 31, 2014, while borrowings decreased to $0.5 million compared to $1.3 million as of December 31, 2014. Current assets amounted to $127.8 million, accounting for 57.4% of total assets. As of December 31, 2015 there were 34.2 million common shares issued and outstanding.

2016 First Quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the first quarter and for the full year 2016:

  • First quarter revenue is estimated to be between $69 - $71 million
  • First quarter Non-IFRS diluted EPS is estimated to be in the range of $0.21 - $0.25 (assuming 35.3 million average diluted shares outstanding for the quarter).
  • Fiscal year 2016 revenue is estimated to be between $305- $314 million
  • Fiscal year 2016 Non-IFRS diluted EPS is estimated to be in the range of $1.12 - $1.20 (assuming 35.8 million average diluted shares outstanding for the full year).

Conference Call and Webcast

Martín Migoya and Alejandro Scannapieco will discuss the three-month results in a conference call today beginning at 4:30pm ET.

Conference call access information is: US +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 information and in our investor relations website after the call.

About Globant

Globant (NYSE: GLOB) is a digitally native technology services company. We dream and build digital journeys that matter to millions of users. We are the place where engineering, design, and innovation meet scale. Today, Globant has more than 5,000 professionals in 11 countries working for companies like Google, eBay Classifieds Group, JWT, EA and Coca-Cola, among others, has been recognized as one of the Top 10 Most Innovative Companies in South America by FastCompany, was included in the 2010 Cool Vendor in Business Process Services Report by Gartner, and has been featured in case studies at Harvard, MIT and Stanford.  For more information visit www.globant.com.

Non-IFRS Financial Information

Globant provides non-IFRS financial measures to complement reported IFRS results. Management believes these measures help illustrate underlying trends in the company's business and uses the 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 results that exclude share-based compensation expense, amortization of purchased intangible assets, and provisions resulting from changes in valuation allowances. Because the company's reported 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 financial statements, which are prepared according to IFRS.

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, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "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: the persistence and intensification of competition in the IT industry; the future growth of spending in IT services outsourcing generally, application outsourcing and custom application development and offshore development services; the level of growth of demand for our services from our clients; the level of increase in revenues from our new clients; the resource utilization rates and productivity levels, the level of attrition of our IT professionals; the pricing structures we use for our client contracts; general economic and business conditions in the locations in which we operate; the levels of our concentration of revenues by vertical, geography, by client and by type of contract in the future; the continuity of the tax incentives available for software companies with operations in Argentina; Argentina's regulations on proceeds from the export of services; our expectation that we will be able to integrate and manage the companies we acquire and that our acquisitions will yield the benefits we envision; the demands we expect our rapid growth to place on our management and infrastructure; the sufficiency of our current cash, cash flow from operations, and lines of credit to meet our anticipated cash needs; the high proportion of our cost of services comprised of personnel salaries; and other factors discussed under the heading "Risk Factors" in the final prospectus for our initial public offering and other documents filed with the Securities and Exchange Commission.

These forward-looking statements involve various risks and uncertainties. Although the registrant believes that its expectations expressed in these forward-looking statements are reasonable, its expectations may turn out to be incorrect. The registrant's actual results could be materially different from its expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed might not occur, and the registrant's future results and its performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these 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)

Twelve months ended

Three months ended

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Revenues 

253,796

199,605

71,563

55,117

Cost of revenues 

(160,292)

(121,693)

(44,811)

(34,360)

Gross profit

93,504

77,912

26,752

20,757

Selling, general and administrative expenses 

(71,594)

(57,288)

(19,471)

(15,852)

Impairment of tax credits, net

1,820

1,505

-

2,326

Profit from operations

23,730

22,129

7,281

7,231

Gain on transactions with bonds 

19,102

12,629

5,771

2,606

Finance income

27,555

10,269

17,247

2,192

Finance expense

(20,952)

(11,213)

(12,434)

(1,488)

Finance expense, net

6,603

(944)

4,813

704

Other income and expenses, net

605

380

616

430

Profit before income tax

50,040

34,194

18,481

10,971

Income tax

(18,420)

(8,931)

(10,169)

(2,823)

Net income for the period

31,620

25,263

8,312

8,148

Other comprehensive loss net of income tax

Items that may be reclassified subsequently to profit and loss:

- Exchange differences on translating foreign operations

(1,353)

(433)

(57)

(261)

- Net fair value gain on available-for-sale financial assets

52

-

52

-

Total comprehensive income for the period

30,319

24,830

8,307

7,887

Net income attributable to:

Owners of the Company

31,653

25,201

8,345

8,143

Non-controlling interest

(33)

62

(33)

5

Net income for the period

31,620

25,263

8,312

8,148

Total comprehensive income for the period attributable to:

Owners of the Company

30,352

24,768

8,340

7,882

Non-controlling interest

(33)

62

(33)

5

Total comprehensive income for the period

30,319

24,830

8,307

7,887

Earnings per share 

Basic

0.93

0.81

0.24

0.24

Diluted

0.90

0.79

0.24

0.24

Weighted average of outstanding shares (in thousands)

Basic

33,960

30,926

34,177

33,374

Diluted

35,013

31,867

35,230

34,315

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

Dec 31, 2015

Dec 31, 2014

ASSETS

Current assets

Cash and cash equivalents 

36,720

34,195

Investments

25,660

27,984

Trade receivables

45,952

40,056

Other receivables 

18,570

14,253

Other financial assets

900

Total current assets

127,802

116,488

Non-current assets

Other receivables 

20,122

916

Deferred tax assets

7,878

4,881

Long-term investments

300

750

Other financial assets

1,221

-

Property and equipment

25,720

19,213

Intangible assets

7,209

6,105

Goodwill

32,532

12,772

Total non-current assets

94,982

44,637

TOTAL ASSETS

222,784

161,125

LIABILITIES

Current liabilities

Trade payables 

4,436

5,673

Payroll and social security taxes payable

25,551

20,967

Borrowings

280

513

Other financial liabilities

6,240

1,045

Tax liabilities

10,120

3,446

Other liabilities 

9

173

Total current liabilities

46,636

31,817

Non-current liabilities

Borrowings

268

772

Other financial liabilities

15,045

263

Provisions for contingencies

650

794

Total non-current liabilities

15,963

1,829

TOTAL LIABILITIES

62,599

33,646

Capital and reserves

Issued and paid-in capital

41,050

40,324

Additional paid-in capital

51,854

50,276

Other reserves

(2,012)

(711)

Retained earnings

69,243

37,590

Total equity attributable to owners of the Company

160,135

127,479

Non-controlling interests

50

-

Total equity

160,185

127,479

TOTAL EQUITY AND LIABILITIES

222,784

161,125

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

Twelve months ended

Three months ended

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Reconciliation of adjusted gross profit

Gross Profit

93,504

77,912

26,752

20,757

Adjustments

D&A

4,441

3,813

1,094

1,162

Share Based Compensation

735

35

218

-

Adjusted gross profit

98,680

81,760

28,064

21,919

Adjusted gross profit margin

38.9%

41.0%

39.2%

39.8%

Reconciliation of selling, general and administrative expenses

Selling, general and administrative expenses

-71,594

-57,288

-19,471

-15,852

Adjustments

M&A Expenses

337

-

-

D&A

4,860

4,221

1,091

1,173

Share Based Compensation

1,647

582

501

-

Adjusted selling, general and administrative expenses

-64,750

-52,485

-17,879

-14,679

Adjusted selling, general and administrative expenses as % of revenues

-25.5%

-26.3%

-25.0%

-26.6%

Reconciliation of Adjusted Profit from Operations

Operating Profit

23,730

22,129

7,281

7,231

Adjustments

M&A Expenses

337

Impairment of tax credits

-1,820

-1,505

-

-2,326

Share Based Compensation

2,382

617

719

-

Adjusted Profit from Operations

24,629

21,241

8,000

4,905

Adjusted Operating Profit margin

9.7%

10.6%

11.2%

8.9%

Reconciliation of Net income (loss) for the period

Net income for the period

31,620

25,263

8,312

8,148

Adjustments

M&A Expenses

337

Share Based Compensation

2,382

617

719

-

Adjusted Net income 

34,339

25,880

9,031

8,148

Adjusted Net income margin

13.5%

13.0%

12.6%

14.8%

Calculation of Adjusted Diluted EPS

Adjusted Net income 

34,339

25,880

9,031

8,148

Diluted shares

35,013

31,867

35,230

34,315

Adjusted Diluted EPS

0.98

0.81

0.26

0.24

 

Globant S.A. Schedule of Supplemental Information

Metric

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Total Employees

3,332

3,371

3,567

3,775

4,040

4,512

4,724

5,041

IT Professionals

3,000

3,050

3,217

3,424

3,694

4,121

4,327

4,613

North America Revenue %

79.9

81.1

82.3

83.1

84.1

85.2

84.1

81.7

Latin America and Others Revenue % 

13.0

13.0

11.9

12.0

10.1

9.7

11.5

12.2

Europe Revenue %

7.1

6.0

5.8

4.9

5.8

5.1

4.4

6.0

USD Revenue %

88.9

91.8

93.5

94.6

95.0

94.6

93.3

90.8

GBP Revenue %

1.3

0.8

0.6

0.7

1.0

0.8

1.4

2.4

Other Currencies Revenue %

9.8

7.4

5.9

4.8

4.0

4.6

5.3

6.8

Top Customer %

7.1

10.1

8.8

8.8

10.2

12.3

13.4

12.7

Top 5 Customers %

25.4

29.0

29.2

28.9

30.8

32.8

33.2

34.4

Top 10 Customers %

39.8

44.8

46.2

44.8

47.8

47.7

45.9

46.4

LTM Customers Served

266

278

299

296

292

344

343

344

LTM Customers with >$1M in Revenue

42

42

45

46

43

43

47

51

 

Investor Relations Contact: Juan Urthiague, Globant investors@globant.com (877) 215-5230

Media Contact: Wanda Weigert, Globant pr@globant.com (877) 215-5230

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SOURCE Globant



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