Globant Reports 2015 Third Quarter Results

Solid Revenue Growth, Robust EPS

05 Nov, 2015, 16:01 ET from Globant

SAN FRANCISCO, Nov. 5, 2015 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally-native technology services company focused on creating digital journeys , today announced results for the three and nine months ended September 30, 2015.

Third Quarter 2015 Highlights

  • Revenue for the third quarter amounted to $67.1 million, representing 29.2% year-over-year growth. Revenue for the first nine months of the year was $182.2 million, representing 26.1% year-over-year growth
  • Non-IFRS Adjusted Gross Profit for the third quarter was $26.2 million (39.0% Non-IFRS Adjusted Gross Profit Margin), an increase of 30bps compared to the second quarter of 2015 and a decrease of 200bps compared to the third quarter of 2014.
  • Non-IFRS Adjusted Net Income for the third quarter was $9.1 million (13.6% Non-IFRS Adjusted Net Income Margin), an increase of $0.8 million, or 9.4%, compared to a profit of $8.4 million for the third quarter of 2014.
  • Non-IFRS Adjusted Diluted EPS for the third quarter was $0.26 per share (based on 35.1 million average diluted shares for the quarter), an increase of $0.01 compared to Non-IFRS Adjusted Diluted Profit per Share of $0.25 for the third 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 thrilled to announce another solid quarter in terms of business performance and financial results, with robust growth in both existing and new accounts. Nowadays, users are demanding businesses to offer personalized experiences that generate value for them. As a result, companies are compelled to create what we call Digital Journeys, a sequence of smart, relevant and context aware interactions, integrated with the core business to provide a seamless journey across the different touch points with users. Globant has mastered the ability of building these digital journeys through our Studios, our Agile Pods Methodology and the brand new Services over Platforms offering." explained Martin Migoya, Globant's CEO and co-founder. "Under our Services over Platforms umbrella, we offer a wide variety of products that can help build Digital Journeys in an agile and innovative way. As opposed to the traditional Software as a Service ("SaaS") approach in which the products are static, we know that each company has specific characteristic, so on top of our products we offer services to adapt, expand and make them fit their particular goals. A clear example of a Services over Platforms product is our Digital Journey Mobile Platform, which combines social media, gaming strategies, mobile technologies and Big Data to augment the end users' experiences before, during & after a touch point with the consumer."

Martin Migoya added: "Market demand remains solid. Our revenue increased 29.2% during this quarter compared to the third quarter of 2014, with revenues from our top customer almost doubling compared to a year ago. For the first time in Globant's history, we have one customer accounting for more than $20 million in annual revenues, a good reflection of our ability to cultivate our key accounts"

"Q3 has been another strong quarter for us. Once more, we delivered robust top line growth and solid EPS, as we have done consistently since our IPO last year. Business momentum combined with a good level of net additions position us on the right path to achieve our full year targets." explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 4,724 Globers, 4,327 of whom were IT professionals.  The geographic revenue breakdown for the third quarter was as follows: 84.1% from North America (top country: U.S.), 11.5% from Latin America and others (top country: Chile) and 4.4% from Europe (top country: U.K.). 93.3% of Globant's revenue for the third quarter was denominated in U.S. dollars and the remaining 6.7% was in other currencies.

During the 12 months preceding September 30, 2015, Globant served 343 customers; 47 of which accounted for more than $1 million of Globant's revenues.  Globant's top customer, top 5 customers and top 10 customers represented 13.4%, 33.2% and 45.9% of the third quarter revenues, respectively.

Cash and investments as of September 30, 2015 amounted to $73.6 million from $62.2 million as of December 31, 2014 while borrowings decreased to $0.8  million compared to $1.3  million as of December 31, 2014. Current assets amounted to $139.0 million, accounting for 66.6% of total assets. As of September 30, 2015 there were $34.1 million common shares issued and outstanding.

Fourth Quarter and 2015 Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the fourth quarter and for the full year 2015:

  • Fourth quarter revenue is estimated to be between $68 - $70 million.
  • Fourth 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 2015 revenue is estimated to be between $250 - $252 million
  • Fiscal year 2015 Non-IFRS diluted EPS is estimated to be in the range of $0.93 - $0.97 (assuming 35.0 million average diluted shares outstanding for the full year).

Conference Call and Webcast

Martin 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 4,500 professionals in 9 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)

Nine months ended

Three months ended

September 30, 2015

September 30, 2014

September 30, 2015

September 30, 2014

Revenues 

182,233

144,488

67,117

51,959

Cost of revenues 

(115,481)

(87,333)

(42,474)

(31,596)

Gross profit

66,752

57,155

24,643

20,363

Selling, general and administrative expenses 

(52,123)

(41,436)

(18,705)

(15,103)

Impairment of tax credits, net

1,820

(821)

-

(40)

Profit from operations

16,449

14,898

5,938

5,220

Gain on transactions with bonds 

13,331

10,023

4,980

5,244

Finance income

10,308

8,077

3,808

2,992

Finance expense

(8,518)

(9,725)

(3,415)

(3,263)

Finance expense, net

1,790

(1,648)

393

(271)

Other income and expenses, net

(11)

(50)

(8)

(23)

Profit before income tax

31,559

23,223

11,303

10,170

Income tax

(8,251)

(6,108)

(3,073)

(2,380)

Net income for the period

23,308

17,115

8,230

7,790

Other comprehensive loss net of income tax

Items that may be reclassified subsequently to profit and loss:

- Exchange differences on translating foreign operations

(1,296)

(172)

(867)

(376)

Total comprehensive income for the period

22,012

16,943

7,363

7,414

Net income attributable to:

Owners of the Company

23,308

17,058

8,230

7,785

Non-controlling interest

-

57

-

5

Net income for the period

23,308

17,115

8,230

7,790

Total comprehensive income for the period attributable to:

Owners of the Company

22,012

16,886

7,363

7,409

Non-controlling interest

-

57

-

5

Total comprehensive income for the period

22,012

16,943

7,363

7,414

Earnings per share 

Basic

0.69

0.57

0.24

0.24

Diluted

0.67

0.55

0.23

0.23

Weighted average of outstanding shares (in thousands)

Basic

33,887

30,099

34,080

32,294

Diluted

34,950

31,177

35,143

33,372

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

Sept 30, 2015

Dec 31, 2014

ASSETS

Current assets

Cash and cash equivalents 

29,715

34,195

Restricted cash

107

Investments

43,761

27,984

Trade receivables

44,418

40,056

Other receivables 

21,009

14,253

Total current assets

139,010

116,488

Non-current assets

Other receivables 

2,375

916

Deferred tax assets

5,902

4,881

Other financial assets

1,800

-

Investment in associates

750

750

Property and equipment

22,503

19,213

Intangible assets

6,518

6,105

Goodwill

29,796

12,772

Total non-current assets

69,644

44,637

TOTAL ASSETS

208,654

161,125

LIABILITIES

Current liabilities

Trade payables 

5,080

5,673

Payroll and social security taxes payable

26,157

20,967

Borrowings

368

513

Other financial liabilities

4,885

1,045

Tax liabilities

5,930

3,446

Other liabilities 

96

173

Total current liabilities

42,516

31,817

Non-current liabilities

Borrowings

409

772

Other financial liabilities

8,516

263

Provisions for contingencies

979

794

Total non-current liabilities

9,904

1,829

TOTAL LIABILITIES

52,420

33,646

Capital and reserves

Issued and paid-in capital

40,967

40,324

Additional paid-in capital

56,376

50,276

Foreign currency translation reserve

(2,007)

(711)

Retained earnings

60,898

37,590

Total equity

156,234

127,479

TOTAL EQUITY AND LIABILITIES

208,654

161,125

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

Nine months ended

Three months ended

September 30, 2015

September 30, 2014

September 30, 2015

September 30, 2014

Reconciliation of adjusted gross profit

Gross Profit

66,752

57,155

24,643

20,363

Adjustments

D&A

3,347

2,651

1,073

949

Share Based Compensation

517

35

445

1

Adjusted gross profit

70,616

59,841

26,161

21,313

Adjusted gross profit margin

38.8%

41.4%

39.0%

41.0%

Reconciliation of selling, general and administrative expenses

Selling, general and administrative expenses

-52,123

-41,436

-18,705

-15,103

Adjustments

M&A Expenses

337

D&A

3,769

3,048

1,297

1,114

Share Based Compensation

1,146

582

471

569

Adjusted selling, general and administrative expenses

-46,871

-37,806

-16,937

-13,420

Adjusted selling, general and administrative expenses as % of revenues

-25.7%

-26.2%

-25.2%

-25.8%

Reconciliation of Adjusted Profit from Operations

Operating Profit

16,449

14,898

5,938

5,220

Adjustments

M&A Expenses

337

Impairment of tax credits

-1,820

821

-

40

Share Based Compensation

1,663

617

916

570

Adjusted Profit from Operations

16,629

16,336

6,854

5,830

Adjusted Operating Profit margin

9.1%

11.3%

10.2%

11.2%

Reconciliation of Net income (loss) for the period

Net income for the period

23,308

17,115

8,230

7,790

Adjustments

M&A Expenses

337

Share Based Compensation

1,663

617

916

570

Adjusted Net income 

25,308

17,732

9,146

8,360

Adjusted Net income margin

13.9%

12.3%

13.6%

16.1%

Calculation of Adjusted Diluted EPS

Adjusted Net income 

25,308

17,732

9,146

8,360

Diluted shares

34,950

31,177

35,143

33,372

Adjusted Diluted EPS

0.72

0.57

0.26

0.25

Globant S.A. Schedule of Supplemental Information

Metric

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Total Employees

3,332

3,371

3,567

3,775

4,040

4,512

4,724

IT Professionals

3,000

3,050

3,217

3,424

3,694

4,121

4,327

North America Revenue %

79.9

81.1

82.3

83.1

84.1

85.2

84.1

Latin America and Others Revenue % 

13.0

13.0

11.9

12.0

10.1

9.7

11.5

Europe Revenue %

7.1

6.0

5.8

4.9

5.8

5.1

4.4

USD Revenue %

88.9

91.8

93.5

94.6

95.0

94.6

93.3

GBP Revenue %

1.3

0.8

0.6

0.7

1.0

0.8

1.4

Other Currencies Revenue %

9.8

7.4

5.9

4.8

4.0

4.6

5.3

Top Customer %

7.1

10.1

8.8

8.8

10.2

12.3

13.4

Top 5 Customers %

25.4

29.0

29.2

28.9

30.8

32.8

33.2

Top 10 Customers %

39.8

44.8

46.2

44.8

47.8

47.7

45.9

LTM Customers Served

266

278

299

296

292

344

343

LTM Customers with >$1M in Revenue

42

42

45

46

43

43

47

 

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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