Globant Reports 2021 Second Quarter Financial Results

Rhea-AI Summary

Globant (NYSE: GLOB) reported impressive results for Q2 2021, with revenues of $305.3 million, reflecting a 67.1% increase year-over-year. IFRS diluted EPS was $0.48, up from $0.26 a year prior. The company also reported strong margins: IFRS gross profit margin at 38.0% and adjusted gross profit margin at 39.3%. For the first half of 2021, revenues reached $575.4 million, up 53.7%. Globant's positive outlook anticipates Q3 revenues of at least $325 million and full-year revenues of $1,236 million, indicating a 51.8% growth for 2021.

Positive

• Second quarter revenues increased by 67.1% year-over-year to $305.3 million.
• Gross profit margin improved to 38.0%, up from 36.3% year-over-year.
• Non-IFRS adjusted diluted EPS rose to $0.88 from $0.45 year-over-year.
• Positive full-year revenue guidance projected at least $1,236 million, a 51.8% increase.

Negative

• None.

Strong Performance Amid Robust Demand Environment

• Second quarter revenues of $305.3 million, up 67.1% year-over-year
• IFRS Diluted EPS of $0.48 for the second quarter
• Non-IFRS Diluted EPS of $0.88 for the second quarter

LUXEMBOURG, Aug. 12, 2021 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2021.

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.

Second Quarter 2021 Financial Highlights

• Revenues rose to $305.3 million, representing 67.1% year-over-year growth compared to the second quarter of 2020.
• IFRS Gross Profit margin was 38.0% compared to 36.3% in the second quarter of 2020.
• Non-IFRS Adjusted Gross Profit Margin was 39.3% compared to 38.2% in the second quarter of 2020.
• IFRS Profit from Operations Margin was 10.1% compared to 8.1% in the second quarter of 2020.
• Non-IFRS Adjusted Profit from Operations Margin was 16.2% compared to 13.5% in the second quarter of 2020.
• IFRS Diluted EPS was $0.48 compared to $0.26 in the second quarter of 2020.
• Non-IFRS Adjusted Diluted EPS was $0.88 compared to $0.45 in the second quarter of 2020.

Six months ended June 30, 2021 Financial Highlights

• Revenues rose to $575.4 million, representing 53.7% year-over-year growth compared to the first six months of 2020.
• IFRS Gross Profit margin was 38.1% compared to 37.0% in the first six months of 2020.
• Non-IFRS Adjusted Gross Profit Margin was 39.4% compared to 38.9% in the first six months of 2020.
• IFRS Profit from Operations Margin was 10.6% compared to 8.9% in the first six months of 2020
• Non-IFRS Adjusted Profit from Operations Margin was 16.4% compared to 14.6% in the first six months of 2020.
• IFRS Diluted EPS was $1.01 compared to $0.60 in the first six months of 2020.
• Non-IFRS Adjusted Diluted EPS was $1.71 compared to $1.04 in the first six months of 2020.

Other Metrics as of and for the quarter ended June 30, 2021

• Cash and cash equivalents and Short-term investments totaled $465.0 million as of June 30, 2021, an increase of $166.8 million from $298.2 million as of December 31, 2020. During the second quarter of 2021, we raised approximately $286.2 million in net proceeds from our equity offering of 1.38 million shares. As of June 30, 2021, our credit facility was fully undrawn.
• Globant completed the second quarter of 2021 with 19,428 Globers, 18,350 of whom were technology, design and innovation professionals.
• The geographic revenue breakdown for the second quarter of 2021 was as follows: 63.8% from North America (top country: US), 21.6% from Latin America and others (top country: Argentina), 13.2% from Europe (top country: Spain) and 1.4% from Asia (top country: Japan).
• In terms of currencies, 76.4% of Globant's revenues for the second quarter of 2021 were denominated in US dollars.
• During the twelve months ended June 30, 2021, Globant served a total of 941 customers and continued to increase its wallet share, having 154 accounts with more than $1 million of annual revenues, compared to 113 for the same period one year ago.
• Globant's top customer, top five customers and top ten customers for the second quarter of 2021 represented 10.3%, 26.4% and 39.8% of revenues, respectively.

"Organizations continue to face the need to adapt to new demands. According to the IDC, the number of companies that embrace a digital transformation strategy is up 43% since 2019. This continues to present a unique opportunity to us, as we help our clients seek reinvention and create their way forward", said Martín Migoya. "As a reflection of our vision, we have seen an amazing expansion during the first half of the year, and it's the first time Globant's revenues have surpassed $1 billion over the last twelve months. We will continue working to scale our dream of reinventing this industry."

"In the second quarter we recorded a robust 67.1% year over year revenue growth, with strong margins, leading to both top and bottom line beats. In addition, we accelerated our hiring in Q2, with IT professionals up 58.6% year over year and 12.7% quarter over quarter. Our revenues, adj. EPS and IT headcount, all recorded the strongest year over year growth since we are a public company. We also materially raised our full-year guidance. As we exit the Covid-19 pandemic, we are witnessing a demand environment stronger than before the pandemic. Moreover, our robust pipeline makes us believe we can deliver strong and elevated levels of growth for the foreseeable future," explained Juan Urthiague, Globant's CFO.

2021 Third quarter and Full Year Outlook

Based on current market conditions, Globant is providing the following estimates for the third quarter and the full year of 2021:

• Third quarter 2021 Revenues are estimated to be at least $325 million, or 56.8% year over year growth.
• Third quarter 2021 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15.5%-17%.
• Third quarter 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at least $0.92 (assuming an average of 42.7 million diluted shares outstanding during the third quarter).
• Fiscal year 2021 Revenues are estimated to be at least $1,236 million, or 51.8% year over year growth.
• Fiscal year 2021 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15.5%-17%.
• Fiscal year 2021 Non-IFRS Adjusted Diluted EPS is estimated to be at least $3.58 (assuming an average of 42.0 million diluted shares outstanding during 2021).

Conference Call and Webcast

Martín Migoya and Juan Urthiague will discuss the second quarter 2021 results in a video conference call today beginning at 4:30pm ET.

Video conference call access information is: https://more.globant.com/F2Q21EarningsCall

Webcast http://investors.globant.com/

About Globant (NYSE:GLOB)

We are a digitally native company that helps organizations reinvent themselves to create a way forward and unleash their potential. We are the place where innovation, design and engineering meet scale.

We have more than 19,400 employees and we are present in 18 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, COVID-19 related expenses and the related effect on income taxes of the pre-tax adjustments. 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 condensed interim consolidated statements of financial position as of June 30, 2021 and December 31, 2020 and its condensed interim consolidated statement of comprehensive income for the three and six months ended June 30, 2021 and 2020, prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting.

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 COVID-19 related expenses and the tax effect of non-IFRS adjustments. 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)
		Six months ended						Three months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues		575,427			374,280			305,257			182,708
Cost of revenues		(356,249)			(235,836)			(189,276)			(116,467)
Gross profit		219,178			138,444			115,981			66,241
Selling, general and administrative expenses		(154,097)			(101,454)			(82,206)			(49,582)
Net impairment losses on financial assets		(4,003)			(3,544)			(2,904)			(1,927)
Other operating income		11			—			—			—
Profit from operations		61,089			33,446			30,871			14,732
Finance income		330			707			7			451
Finance expense		(5,943)			(5,106)			(3,331)			(2,651)
Other financial results, net		(655)			3,624			(1,526)			907
Financial results, net		(6,268)			(775)			(4,850)			(1,293)
Share of results of investment in associates		(233)			(82)			(233)			(82)
Other income and expenses, net		(443)			43			(481)			27
Profit before income tax		54,145			32,632			25,307			13,384
Income tax		(12,531)			(9,443)			(5,360)			(3,365)
Net income for the period		41,614			23,189			19,947			10,019
- Exchange differences on translating foreign operations		(2,438)			(1,537)			(714)			567
- Net change in fair value on financial assets measured at FVOCI		—			(23)			—			91
- Gains and losses on cash flow hedges		96			(834)			(74)			1,235
Total comprehensive income for the period		39,272			20,795			19,159			11,912
Net income attributable to:
Owners of the Company		41,614			23,189			19,947			10,019
Net income for the period		41,614			23,189			19,947			10,019
Total comprehensive income for the period attributable to:
Owners of the Company		39,272			20,795			19,159			11,912
Total comprehensive income for the period		39,272			20,795			19,159			11,912
Earnings per share
Basic		1.03			0.62			0.49			0.27
Diluted		1.01			0.60			0.48			0.26
Weighted average of outstanding shares (in thousands)
Basic		40,212			37,347			40,522			37,686
Diluted		41,354			38,420			41,664			38,759

 

Globant S.A.
Condensed Interim Consolidated Statements of Financial Position as of June 30, 2021 and December 31, 2020
(In thousands of U.S. dollars, unaudited)
		June 30, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents		431,373			278,939
Investments		33,673			19,284
Trade receivables		281,422			196,020
Other assets		7,097			8,146
Other receivables		58,485			31,633
Other financial assets		2,265			1,577
Total current assets		814,315			535,599
Non-current assets
Trade Receivables		—			5,644
Investments		823			615
Other assets		5,429			6,954
Other Receivables		12,874			9,629
Deferred tax assets		42,906			41,507
Investment in associates		—			3,154
Other financial assets		26,233			15,147
Property and equipment		108,388			101,027
Intangible assets		89,082			86,721
Right-of-use assets		97,899			90,010
Goodwill		450,946			392,760
Total non-current assets		834,580			753,168
TOTAL ASSETS		1,648,895			1,288,767
LIABILITIES
Current liabilities
Trade payables		42,135			35,266
Payroll and social security taxes payable		121,114			111,881
Borrowings		250			907
Other financial liabilities		47,103			19,822
Lease liabilities		8,950			15,358
Tax liabilities		14,383			11,804
Income tax payable		10,199			10,511
Other liabilities		472			81
Total current liabilities		244,606			205,630
Non-current liabilities
Trade payables		4,528			5,240
Borrowings		902			25,061
Other financial liabilities		51,151			74,376
Lease liabilities		84,333			72,240
Deferred tax liabilities		8,337			13,698
Provisions for contingencies		21,529			12,583
Total non-current liabilities		170,780			203,198
TOTAL LIABILITIES		415,386			408,828
Capital and reserves
Issued capital		49,856			47,861
Additional paid-in capital		853,460			541,157
Other reserves		(5,016)			(2,674)
Retained earnings		335,209			293,595
Total equity attributable to owners of the Company		1,233,509			879,939
TOTAL EQUITY AND LIABILITIES		1,648,895			1,288,767

 

Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
	Six months ended						Three months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Reconciliation of adjusted gross profit
Gross Profit	219,178			138,444			115,981			66,241
Depreciation and amortization expense	5,883			4,639			3,082			2,349
Share-based compensation expense	1,830			2,328			815			1,207
Adjusted gross profit	226,891			145,411			119,878			69,797
Adjusted gross profit margin	39.4	%		38.9	%		39.3	%		38.2	%
Reconciliation of selling, general and administrative expenses
Selling, general and administrative expenses	(154,097)			(101,454)			(82,206)			(49,582)
Depreciation and amortization expense	21,745			9,897			11,907			5,003
Share-based compensation expense	15,791			10,485			8,109			5,327
Acquisition-related charges (a)	6,596			4,248			3,962			1,490
Adjusted selling, general and administrative expenses	(109,965)			(76,824)			(58,228)			(37,762)
Adjusted selling, general and administrative expenses as % of revenues	(19.1)	%		(20.5)	%		(19.1)	%		(20.7)	%
Reconciliation of Adjusted Profit from Operations
Profit from Operations	61,089			33,446			30,871			14,732
Share-based compensation expense	17,621			12,813			8,924			6,534
Acquisition-related charges (a)	13,473			5,040			7,399			1,878
COVID-19-related charges (b)	2,228			3,185			2,228			1,469
Impairment of assets	(11)			—			—			—
Adjusted Profit from Operations	94,400			54,484			49,422			24,613
Adjusted Profit from Operations margin	16.4	%		14.6	%		16.2	%		13.5	%
Reconciliation of Net income for the period
Net income for the period	41,614			23,189			19,947			10,019
Share-based compensation expense	17,621			12,813			8,924			6,534
Acquisition-related charges (a)	16,202			5,143			9,549			1,926
COVID-19-related charges (b)	2,228			3,185			2,228			1,469
Impairment of assets	(11)			—			—			—
Tax effect of non-IFRS adjustments (c)	(6,928)			(4,415)			(4,169)			(2,482)
Adjusted Net income	70,726			39,915			36,479			17,466
Adjusted Net income margin	12.3	%		10.7	%		12.0	%		9.6	%
Calculation of Adjusted Diluted EPS
Adjusted Net income	70,726			39,915			36,479			17,466
Diluted shares	41,354			38,420			41,664			38,759
Adjusted Diluted EPS	1.71			1.04			0.88			0.45

 

(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.

(c) Non-IFRS Adjusted net income and adjusted Diluted EPS for Q2 of 2020 reflects the tax impact of non-IFRS adjustments. Non-IFRS Adjusted net income and adjusted Diluted EPS for Q2 2020, previously presented were recast to conform to the current presentation.

 

Globant S.A.
Schedule of Supplemental Information (unaudited)
Metrics	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021
Total Employees	12,333		14,340		16,251		17,267		19,428
IT Professionals	11,573		13,436		15,290		16,284		18,350
North America Revenues %	72.8		70.0		65.9		63.1		63.8
Latin America and Others Revenues %	20.8		22.4		24.3		23.6		21.6
Europe Revenues %	6.4		7.6		9.8		12.0		13.2
Asia Revenues %							1.3		1.4
USD Revenues %	87.0		84.5		85.8		77.7		76.4
Other Currencies Revenues %	13.0		15.5		14.2		22.3		23.6
Top Customer %	10.7		10.8		10.7		10.5		10.3
Top 5 Customers %	31.9		32.2		30.0		28.4		26.4
Top 10 Customers %	44.9		45.0		42.9		41.0		39.8
Customers Served (Last Twelve Months)	805		893		798		860		941
Customers with >$1M in Revenues (Last Twelve Months)	113		118		129		139		154

 

Investor Relations Contact:
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

FAQ

What were the Q2 2021 earnings results for Globant (GLOB)?

Globant reported Q2 2021 revenues of $305.3 million, a 67.1% increase year-over-year, and IFRS diluted EPS of $0.48.

What is Globant's revenue outlook for Q3 2021?

Globant estimates Q3 2021 revenues to be at least $325 million, representing 56.8% year-over-year growth.

How did Globant's margins perform in Q2 2021?

Globant's IFRS gross profit margin was 38.0%, and the non-IFRS adjusted profit from operations margin was 16.2% for Q2 2021.

What is the projected EPS for Globant for the full year 2021?

Globant's full-year 2021 non-IFRS adjusted diluted EPS is estimated to be at least $3.58.