Globant Reports 2015 Second Quarter Results

Record Quarterly Revenues and Robust EPS

Aug 13, 2015, 16:01 ET from Globant

SAN FRANCISCO, Aug. 13, 2015 /PRNewswire/ -- Globant (NYSE: GLOB), a new-breed technology services provider focused on delivering innovative software solutions by leveraging emerging technologies and trends, today announced results for the three and six months ended June 30, 2015.

Second Quarter 2015 Highlights

  • Revenue for the second quarter amounted to $60.6 million, representing 22.7% year-over-year growth. Revenue for the first six months of the year was $115.1 million, representing 24.4% year-over-year growth
  • Non-IFRS Adjusted Gross Profit for the second quarter was $23.4 million (38.7% Non-IFRS Adjusted Gross Profit Margin), an increase of 0.2pp compared to the first quarter of 2015 and a decrease of 3.6pp compared to the second quarter of 2014. 
  • Non-IFRS Adjusted Net Income for the second quarter was $8.6 million (14.3% Non-IFRS Adjusted Net Income Margin), an increase of $2.7 million, or 45.5%, compared to a profit of $5.9 million for the second quarter of 2014.
  • Non-IFRS Adjusted Diluted EPS for the second quarter was $0.25 per share (based on 34.9 million average diluted shares for the quarter), an increase of $0.05 compared to Non-IFRS Adjusted Diluted Profit per Share of $0.20 for the second 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 pleased to announce that our second quarter results were stronger than we anticipated. Our position as a pure play on emerging technologies makes us the preferred option when our customers seek a partner that can consolidate engineering, innovation and design in a single place. Strong overall demand for our services and great traction from our key strategic accounts are contributing to our strong revenue growth." explained Martin Migoya, Globant's CEO and co-founder. "Business remains solid, with our top customer and top 10 customers growing at 49.4% and 30.8% year over year respectively. We now have 5 customers with projected annual revenues in excess of $10 million based on Q2 running rates. Finally, including the headcount from the acquisition of Clarice Technologies in May, we added 427 IT professionals, the largest headcount increase in a single quarter in our history."

Mr. Migoya added: "We operate in a rapidly changing environment and our ability to adapt continues to be a key differentiator for our success. Our unique Studio organization continues to evolve following the new trends we are seeing in the market. We are launching our Cognitive Computing studio, focused on developing intelligent products and services leveraging the power and complexity of Big Data. By using artificial intelligence, natural language processing, and machine learning, Globant's solutions enable companies to extend and magnify their expertise, and improve how they relate to their audiences with customer and context-aware smart applications. We have also launched our Seamless Experience practice to help companies create an integrated multiplatform experience that can lead to the digital transformation of their business."

"As in previous quarters, and as we have done consistently since the launch of our IPO, we delivered strong revenue growth and robust EPS. Solid pipeline and record net additions will be very important to achieving our targets for the rest of the year." explained Alejandro Scannapieco, Globant's CFO.

Globant completed the quarter with 4,512 Globers, 4,121 of whom were IT professionals.  The geographic revenue breakdown for the second quarter was as follows: 85.2% from North America (top country: U.S.), 9.7% from Latin America and others (top country: Chile) and 5.1% from Europe (top country: U.K.). 94.6% of Globant's revenue for the second quarter was denominated in U.S. dollars and the remaining  5.4% was in other currencies.

During the 12 months preceding June 30, 2015, Globant served 344 customers. 43 of these customers each accounted for more than $1 million of Globant's revenues.  Globant's top customer, top 5 customers and top 10 customers represented 12.3%, 32.8% and 47.7% of the second quarter revenues, respectively.

Cash and investments as of June 30, 2015 amounted to $63.7 million from $62.2 million as of December 31, 2014 while borrowings decreased to $0.9 million compared to $1.3 million as of December 31, 2014. Current assets amounted to $128.1 million, accounting for 65.2% of total assets. As of June 30, 2015 there were 34,006,880 common shares issued and outstanding.

Third Quarter and 2015 Full Year Outlook

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

  • Third quarter revenue is estimated to be between $63.5-$65.5 million
  • Third quarter Non-IFRS diluted EPS is estimated to be in the range of $0.20 - $0.24 (assuming 35.2 million average diluted shares outstanding for the quarter).
  • Fiscal year 2015 revenue is estimated to be between $247 - $251 million
  • Fiscal year 2015 Non-IFRS diluted EPS is estimated to be in the range of $0.90 - $0.96 (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 new-breed technology services provider focused on delivering innovative software solutions by leveraging emerging technologies and trends.  Globant combines the engineering and technical rigor of IT services providers with the creative approach and culture of digital agencies. Customers select Globant as the place where engineering, design and innovation meet scale.  In only 12 years, Globant has grown into a company with more than 4,000 professionals working for customers 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)

Six months ended

Three months ended

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

Revenues 

115,116

92,529

60,604

49,404

Cost of revenues 

(73,007)

(55,737)

(38,393)

(29,378)

Gross profit

42,109

36,792

22,211

20,026

Selling, general and administrative expenses 

(33,418)

(26,333)

(17,961)

(13,392)

Impairment of tax credits, net

1,820

(781)

-

(365)

Profit from operations

10,511

9,678

4,250

6,269

Gain on transactions with bonds 

8,351

4,779

4,367

2,173

Finance income

6,500

5,085

3,943

569

Finance expense

(5,103)

(6,462)

(2,367)

(1,004)

Finance expense, net

1,397

(1,377)

1,576

(435)

Other income and expenses, net

(3)

(27)

-

6

Profit before income tax

20,256

13,053

10,193

8,013

Income tax

(5,178)

(3,728)

(2,620)

(2,112)

Net income for the period

15,078

9,325

7,573

5,901

Other comprehensive loss net of income tax

Items that may be reclassified subsequently to profit and loss:

- Exchange differences on translating foreign operations

(429)

204

-

50

Total comprehensive income for the period

14,649

9,529

7,573

5,951

Net income attributable to:

Owners of the Company

15,078

9,273

7,573

5,901

Non-controlling interest

-

52

-

-

Net income for the period

15,078

9,325

7,573

5,901

Total comprehensive income for the period attributable to:

Owners of the Company

14,649

9,477

7,748

5,951

Non-controlling interest

-

52

-

-

Total comprehensive income for the period

14,649

9,529

7,748

5,951

Earnings per share 

Basic

0.45

0.32

0.22

0.20

Diluted

0.43

0.31

0.22

0.20

Weighted average of outstanding shares (in thousands)

Basic

33,788

28,995

33,952

28,995

Diluted

34,735

29,945

34,899

29,945

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

June 30, 2015

Dec 31, 2014

ASSETS

Current assets

Cash and cash equivalents 

23,007

34,195

Investments

40,740

27,984

Trade receivables

42,770

40,056

Other receivables 

21,573

14,253

Total current assets

128,090

116,488

Non-current assets

Other receivables 

1,184

916

Deferred tax assets

5,809

4,881

Other financial assets

1,800

-

Investment in associates

750

750

Property and equipment

22,338

19,213

Intangible assets

6,213

6,105

Goodwill

30,175

12,772

Total non-current assets

68,269

44,637

TOTAL ASSETS

196,359

161,125

LIABILITIES

Current liabilities

Trade payables 

5,525

5,673

Payroll and social security taxes payable

24,136

20,967

Borrowings

411

513

Other financial liabilities

503

1,045

Tax liabilities

4,139

3,446

Other liabilities 

496

173

Total current liabilities

35,210

31,817

Non-current liabilities

Borrowings

525

772

Other financial liabilities

12,736

263

Provisions for contingencies

979

794

Total non-current liabilities

14,240

1,829

TOTAL LIABILITIES

49,450

33,646

Capital and reserves

Issued and paid-in capital

40,808

40,324

Additional paid-in capital

54,573

50,276

Foreign currency translation reserve

(1,140)

(711)

Retained earnings

52,668

37,590

Total equity

146,909

127,479

TOTAL EQUITY AND LIABILITIES

196,359

161,125

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

Six months ended

Three months ended

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

Reconciliation of adjusted gross profit

Gross Profit

42,109

36,792

22,211

20,026

Adjustments

D&A

2,274

1,702

1,167

847

Share Based Compensation

72

34

67

30

Adjusted gross profit

44,455

38,528

23,445

20,903

Adjusted gross profit margin

38.6%

41.6%

38.7%

42.3%

Reconciliation of selling, general and administrative expenses

Selling, general and administrative expenses

-33,418

-26,333

-17,961

-13,392

Adjustments

M&A Expenses

337

337

D&A

2,472

1,934

1,277

`

996

Share Based Compensation

675

13

666

9

Adjusted selling, general and administrative expenses

-29,934

-24,386

-15,681

-12,387

Adjusted selling, general and administrative expenses as % of revenues

-26.0%

-26.4%

-25.9%

-25.1%

Reconciliation of Adjusted Profit from Operations

Operating Profit

10,511

9,678

4,250

6,269

Adjustments

M&A Expenses

337

337

Impairment of tax credits

-1,820

781

-

365

Share Based Compensation

747

47

733

39

Adjusted Profit from Operations

9,775

10,506

5,320

6,673

Adjusted Operating Profit margin

8.5%

11.4%

8.8%

13.5%

Reconciliation of Net income (loss) for the period

Net income for the period

15,078

9,325

7,573

5,901

Adjustments

M&A Expenses

337

337

Share Based Compensation

747

47

733

39

Adjusted Net income 

16,162

9,372

8,643

5,940

Adjusted Net income margin

14.0%

10.1%

14.3%

12.0%

Calculation of Adjusted Diluted EPS

Adjusted Net income 

16,162

9,372

8,643

5,940

Diluted shares

34,735

29,945

34,899

29,945

Adjusted Diluted EPS

0.47

0.31

0.25

0.20

Globant S.A. Schedule of Supplemental Information

Metric

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Total Employees

3,332

3,371

3,567

3,775

4,040

4,512

IT Professionals

3,000

3,050

3,217

3,424

3,694

4,121

North America Revenue %

79.9

81.1

82.3

83.1

84.1

85.2

Latin America and Others Revenue % 

13.0

13.0

11.9

12.0

10.1

9.7

Europe Revenue %

7.1

6.0

5.8

4.9

5.8

5.1

USD Revenue %

88.9

91.8

93.5

94.6

95.0

94.6

GBP Revenue %

1.3

0.8

0.6

0.7

1.0

0.8

Other Currencies Revenue %

9.8

7.4

5.9

4.8

4.0

4.6

Top Customer %

7.1

10.1

8.8

8.8

10.2

12.3

Top 5 Customers %

25.4

29.0

29.2

28.9

30.8

32.8

Top 10 Customers %

39.8

44.8

46.2

44.8

47.8

47.7

LTM Customers Served

266

278

299

296

292

344

LTM Customers with >$1M in Revenue

42

42

45

46

43

43

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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