Globant Reports 2023 Fourth Quarter and Full Year Financial Results

Rhea-AI Summary

Globant (GLOB) reported strong financial results for the fourth quarter and full year 2023, with revenues up 18.3% and 17.7% year-over-year respectively. The company's IFRS Diluted EPS for the fourth quarter was $0.96 and $3.64 for the full year. Non-IFRS Adjusted Diluted EPS stood at $1.62 for the fourth quarter and $5.74 for the full year. Globant highlighted growth in key metrics, geographic revenue breakdown, customer segments, and strategic acquisitions, positioning the company for continued success in 2024.

Positive

• Strong revenue growth of 18.3% year-over-year in Q4 2023.
• IFRS Diluted EPS of $0.96 for Q4 and $3.64 for full year 2023.
• Non-IFRS Adjusted Diluted EPS of $1.62 for Q4 and $5.74 for full year 2023.
• Cash and cash equivalents at $323.3 million as of December 31, 2023.
• Expansion into new markets and strategic acquisitions enhancing capabilities.
• Increased wallet share with 311 accounts generating over $1 million in annual revenues.
• CEO Martín Migoya expressed optimism for future growth and highlighted recent acquisitions of GUT and Iteris.

Negative

• None.

Insights

Financial Analyst

The reported financial results of Globant indicate a robust year-over-year growth in revenues, with a notable 18.3% increase in the fourth quarter and a 17.7% rise for the full year. However, a slight contraction in both IFRS and Non-IFRS Gross Profit Margins suggests a rise in the cost of goods sold or a change in the company's revenue mix. The decline in IFRS and Non-IFRS Profit from Operations Margins, from 11.2% to 9.5% and from 16.1% to 15.3% respectively in the fourth quarter, could be indicative of increased operational expenses or investments that have not yet yielded proportional returns. The EPS growth is modest but positive, which may be seen favorably by investors. The reduction in cash and short-term investments could be a point of interest, as it reflects significant investments in business expansion and acquisitions, which could either be a strategic move for long-term growth or a potential risk if these investments do not deliver expected returns.

Market Research Analyst

Globant's expansion into new markets and the increase in the number of high-revenue accounts (from 259 to 311 generating more than $1 million annually) are strong indicators of the company's market penetration and customer relationship strength. The geographical revenue breakdown shows a heavy reliance on North America, particularly the US, which could be seen as both a strength, given the size of the market and a potential risk, due to geopolitical or economic factors that could affect that region. The company's focus on AI and generative AI capabilities positions it well in a rapidly growing sector, potentially increasing its appeal to investors interested in tech-driven growth. However, the concentration of revenue among its top customers (30.8% of revenues from the top ten customers) could be a concern, as it may indicate a vulnerability to the loss of key clients.

Technology Industry Analyst

The emphasis on AI and generative AI by Globant underscores the company's commitment to staying at the forefront of technological innovation. The acquisitions of GUT and Iteris are likely to enhance Globant's creative and digital capabilities, which could lead to a more diversified service offering and potentially higher margins in the long run. As the tech industry is rapidly evolving, particularly with the rise of AI technologies, Globant's strategic focus could provide a competitive edge. However, it's important to monitor how effectively the company integrates these acquisitions and leverages new technologies to maintain its growth trajectory and market position.

Solid Finish to the Year and Positive Outlook Ahead

• Fourth quarter revenues of $580.7 million, up 18.3% year-over-year
• IFRS Diluted EPS of $0.96 for the fourth quarter
• Non-IFRS Adjusted Diluted EPS of $1.62 for the fourth quarter
• Full year 2023 revenues of $2,095.9 million, up 17.7% year-over-year
• IFRS Diluted EPS of $3.64 for the full year
• Non-IFRS Adjusted Diluted EPS of $5.74 for the full year

LUXEMBOURG, Feb. 15, 2024 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native company focused on reinventing businesses through innovative technology solutions, today announced results for the three months and year ended December 31, 2023.

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 2023 Financial Highlights

• Revenues rose to $580.7 million, representing 18.3% year-over-year growth.
• IFRS Gross Profit Margin was 35.9% compared to 37.4% in the fourth quarter of 2022.
• Non-IFRS Adjusted Gross Profit Margin was 38.0% compared to 39.0% in the fourth quarter of 2022.
• IFRS Profit from Operations Margin was 9.5% compared to 11.2% in the fourth quarter of 2022.
• Non-IFRS Adjusted Profit from Operations Margin was 15.3% compared to 16.1% in the fourth quarter of 2022.
• IFRS Diluted EPS was $0.96 compared to $0.91 in the fourth quarter of 2022.
• Non-IFRS Adjusted Diluted EPS was $1.62 compared to $1.40 in the fourth quarter of 2022.

Full Year ended December 31, 2023 Financial Highlights

• Revenues rose to $2,095.9 million, representing 17.7% year-over-year growth.
• IFRS Gross Profit Margin was 36.1% compared to 37.6% for the full year 2022.
• Non-IFRS Adjusted Gross Profit Margin was 38.1% compared to 39.2% for the full year 2022.
• IFRS Profit from Operations Margin was 9.5% compared to 11.6% for the full year  2022.
• Non-IFRS Adjusted Profit from Operations Margin was 15.2% compared to 16.3% for the full year 2022.
• IFRS Diluted EPS was $3.64 compared to $3.47 for the full year 2022.
• Non-IFRS Adjusted Diluted EPS was $5.74 compared to $5.08 for the full year 2022.

Other Metrics as of and for the quarter ended December 31, 2023

• Cash and cash equivalents and Short-term investments were $323.3 million as of December 31, 2023, a decrease of $17.6 million from $340.9 million as of December 31, 2022, driven mainly by investments in our platform business, expansion to new geographies, the addition of new studios and acquisitions. As of December 31, 2023, we had a total amount of $155 million drawn from our credit facility.
• Globant completed the fourth quarter of 2023 with 29,150 Globers, 27,116 of whom were technology, design and innovation professionals.
• The geographic revenue breakdown for the fourth quarter of 2023 was as follows: 57.4% from North America (top country: US), 22.9% from Latin America (top country: Argentina), 17.2% from EMEA (top country: Spain) and 2.5% from Asia and Oceania (top country: Japan).
• Globant's top customer, top five customers and top ten customers for the fourth quarter of 2023 represented 8.2%, 21.4% and 30.8% of revenues, respectively.
• During the twelve months ended December 31, 2023, Globant served a total of 1,610 customers (with revenues over $10,000 in the last twelve months) and continued to increase its wallet share, with 311 accounts generating more than $1 million of annual revenues, compared to 259 for the same period one year ago.
• In terms of currencies, 68.6% of Globant's revenues for the fourth quarter of 2023 were denominated in US dollars.

"Our journey of two decades has been marked by resilience, innovation and a commitment to delivering exceptional results. As we reflect on our achievements from the fourth quarter and full year of 2023, we are very proud of the progress we have made as a company. Throughout the year, we expanded into new markets, forged valuable relationships with top-notch new clients and diversified our service offering. Our dedication to being a trusted end-to-end partner has enabled us to craft multiple solutions and continuously expand the breadth of our services, platforms and capabilities. With a global footprint in five continents and a focus on AI and generative AI capabilities, we are well-positioned for future growth," said Martín Migoya, Globant's CEO and co-founder. "Our recent acquisitions of GUT and Iteris further strengthen our creative and digital capabilities. As we enter 2024, we remain optimistic about the growth potential of our total addressable market and our ability to deliver industry-leading results."

"Our strong results in 2023 reflect the strength inherent in our culture, the agility of our business model and the transformative impact of our work. We achieved a milestone of $2.1 billion in revenue, representing a remarkable 17.7% year-over-year growth, while capturing a significant market share and validating our value proposition. Our focus on profitability and operational efficiency resulted in solid financial health, as we maintained strong margins and generated meaningful profitability. With a robust financial position and significant free cash flow generation, we are strategically positioned to foster expansion and strengthen our strategic investments. We are grateful for the trust and support of our clients, shareholders and the entire Globant team as we continue our journey of growth and success," explained Juan Urthiague, Globant's CFO.

2024 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 2024:

• First quarter 2024 Revenues are estimated to be at least $570.0 million, or 20.7% year-over-year growth.
• First quarter 2024 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15-16%.
• First quarter 2024 Non-IFRS Adjusted Diluted EPS is estimated to be at least $1.53 (assuming an average of 44.1 million diluted shares outstanding during the first quarter).
• Fiscal year 2024 Revenues are estimated to be at least $2,435.0 million, implying at least 16.2% year-over-year revenue growth.
• Fiscal year 2024 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15%-16%.
• Fiscal year 2024 Non-IFRS Adjusted Diluted EPS is estimated to be at least $6.50 (assuming an average of 44.3 million diluted shares outstanding during 2024).

Conference Call and Webcast
Martin Migoya, Globant's CEO and co-founder, Juan Urthiague, Globant's CFO, Patricia Pomies, Globant's COO, and Diego Tártara, Globant's  CTO, will discuss the fourth quarter 2023 results in a video conference call today beginning at 4:30pm ET.

Video conference call access information is:
https://more.globant.com/F4Q23EarningsCall
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 29,000 employees and we are present in more than 30 countries across 5 continents working for companies like Google, 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, acquisition-related charges, 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 consolidated statements of financial position as of December 31, 2023 and December 31, 2022 and its consolidated statements of comprehensive income for the three months and years ended December 31, 2023 and 2022, prepared in accordance with IFRS as issued by the 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, acquisition-related charges, 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: 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 Statements of Comprehensive Income (In thousands of U.S. dollars, except per share amounts, unaudited)
	Twelve Months Ended				Three Months Ended
	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Revenues	2,095,939		1,780,243		580,705		490,724
Cost of revenues	(1,340,178)		(1,110,848)		(372,384)		(307,204)
Gross profit	755,761		669,395		208,321		183,520
Selling, general and administrative expenses	(537,075)		(456,324)		(147,011)		(123,800)
Net impairment losses on financial assets	(18,808)		(6,364)		(4,829)		(4,541)
Other operating income and expenses, net	(916)		—		(1,530)		—
Profit from operations	198,962		206,707		54,951		55,179
Finance income	4,777		2,832		1,277		1,366
Finance expense	(23,753)		(16,552)		(8,690)		(5,142)
Other financial results, net	11,342		173		(131)		1,310
Financial results, net	(7,634)		(13,547)		(7,544)		(2,466)
Share of results of investment in associates	89		119		(96)		94
Other income and expenses, net	6,602		(395)		2,527		(2,414)
Profit before income tax	198,019		192,884		49,838		50,393
Income tax	(39,511)		(43,405)		(8,444)		(10,975)
Net income for the period	158,508		149,479		41,394		39,418
Other comprehensive income, net of income tax effects
Items that may be reclassified subsequently to profit and loss:
- Exchange differences on translating foreign operations	(16,721)		(21,770)		12,040		20,044
- Net change in fair value on financial assets measured at FVOCI	119		(107)		2,435		1,978
- Gains and losses on cash flow hedges	9,327		(3,171)		9,210		3,047
Total comprehensive income for the period	151,233		124,431		65,079		64,487
Net income attributable to:
Owners of the Company	158,538		148,891		42,133		39,185
Non-controlling interest	(30)		588		(739)		233
Net income for the period	158,508		149,479		41,394		39,418
Total comprehensive income for the period attributable to:
Owners of the Company	148,732		123,044		63,454		63,455
Non-controlling interest	2,501		1,387		1,625		1,032
Total comprehensive income for the period	151,233		124,431		65,079		64,487
Earnings per share
Basic	3.72		3.55		0.98		0.93
Diluted	3.64		3.47		0.96		0.91
Weighted average of outstanding shares (in thousands)
Basic	42,601		41,929		42,976		42,153
Diluted	43,594		42,855		43,970		43,079

 

Globant S.A.  Consolidated Statements of Financial Position as of December 31, 2023 and December 31, 2022 (In thousands of U.S. dollars, unaudited)
		December 31, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents		307,223		292,457
Investments		16,070		48,408
Trade receivables		499,283		424,810
Other assets		31,753		15,197
Other receivables		54,786		70,212
Other financial assets		15,418		6,529
Total current assets		924,533		857,613
Non-current assets
Investments		1,833		1,513
Other assets		4,088		10,657
Other receivables		26,475		21,141
Deferred tax assets		60,777		41,982
Investment in associates		1,426		1,337
Other financial assets		34,864		34,978
Property and equipment		162,736		161,733
Intangible assets		235,540		182,572
Right-of-use assets		119,400		147,311
Goodwill		1,163,683		734,952
Total non-current assets		1,810,822		1,338,176
TOTAL ASSETS		2,735,355		2,195,789
LIABILITIES
Current liabilities
Trade payables		124,545		89,397
Payroll and social security taxes payable		221,843		203,819
Borrowings		156,916		2,838
Other financial liabilities		81,504		59,316
Lease liabilities		47,852		37,681
Tax liabilities		33,229		23,454
Income tax payable		11,287		11,276
Other liabilities		896		808
Total current liabilities		678,072		428,589
Non-current liabilities
Trade payables		2,981		5,445
Borrowings		2,191		861
Other financial liabilities		163,318		78,055
Lease liabilities		70,884		97,457
Deferred tax liabilities		9,706		11,291
Payroll and social security taxes payable		5,139		4,316
Provisions for contingencies		16,448		13,615
Total non-current liabilities		270,667		211,040
TOTAL LIABILITIES		948,739		639,629
Capital and reserves
Issued capital		51,705		50,724
Additional paid-in capital		1,022,918		950,520
Other reserves		(42,048)		(32,242)
Retained earnings		697,089		538,551
Total equity attributable to owners of the Company		1,729,664		1,507,553
Non-controlling interests		56,952		48,607
Total equity		1,786,616		1,556,160
TOTAL EQUITY AND LIABILITIES		2,735,355		2,195,789

 

Globant S.A. Selected Cash Flow Data (In thousands of U.S. dollars, unaudited)
		Three Months Ended
		December 31, 2023		December 31, 2022
Net Income for the period		41,394		39,418
Non-cash adjustments, taxes and others		56,119		50,219
Changes in working capital		63,389		9,553
Cash flows from operating activities		160,902		99,190
Capital expenditures		(36,323)		(14,903)
Cash flows from investing activities		(141,829)		(71,272)
Cash flows from financing activities		90,336		(31,059)
Net decrease in cash & cash equivalents		109,409		(3,141)

 

Globant S.A. Supplemental Non-IFRS Financial Information (In thousands of U.S. dollars, unaudited)
	Twelve Months Ended				Three Months Ended
	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Reconciliation of adjusted gross profit
Gross Profit	755,761		669,395		208,321		183,520
Depreciation and amortization expense	28,597		23,312		7,985		6,555
Share-based compensation expense - Equity settled	15,155		4,917		4,179		1,497
Adjusted gross profit	799,513		697,624		220,485		191,572
Adjusted gross profit margin	38.1 %		39.2 %		38.0 %		39.0 %
Reconciliation of selling, general and administrative expenses
Selling, general and administrative expenses	(537,075)		(456,324)		(147,011)		(123,800)
Depreciation and amortization expense	85,584		62,822		24,083		17,959
Share-based compensation expense - Equity settled	57,016		50,296		15,574		13,035
Acquisition-related charges (a)	21,092		13,612		6,604		4,611
Adjusted selling, general and administrative expenses	(373,383)		(329,594)		(100,750)		(88,195)
Adjusted selling, general and administrative expenses as % of revenues	(17.8) %		(18.5) %		(17.3) %		(18.0) %
Reconciliation of Adjusted Profit from Operations
Profit from Operations	198,962		206,707		54,951		55,179
Share-based compensation expense - Equity settled	72,171		55,213		19,753		14,532
Acquisition-related charges (a)	46,993		27,456		14,416		9,268
Adjusted Profit from Operations	318,126		289,376		89,120		78,979
Adjusted Profit from Operations margin	15.2 %		16.3 %		15.3 %		16.1 %
Reconciliation of Net income for the period
Net income for the period	158,538		148,891		42,133		39,185
Share-based compensation expense - Equity settled	72,099		55,213		19,722		14,532
Acquisition-related charges (a)	48,205		28,765		17,566		10,856
Tax effect of non-IFRS adjustments	(28,724)		(15,146)		(8,344)		(4,437)
Adjusted Net income	250,118		217,723		71,077		60,136
Adjusted Net income margin	11.9 %		12.2 %		12.2 %		12.3 %
Calculation of Adjusted Diluted EPS
Adjusted Net income	250,118		217,723		71,077		60,136
Diluted shares	43,594		42,855		43,970		43,079
Adjusted Diluted EPS	5.74		5.08		1.62		1.40

(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, interest charges on acquisition-related indebtedness, 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.

 

Globant S.A. Schedule of Supplemental Information (unaudited)
Metrics	Q4 2022	Q1 2023	Q2 2023	Q3 2023	Q4 2023
Total Employees	27,122	26,288	25,947	27,505	29,150
IT Professionals	25,331	24,496	24,163	25,575	27,116
North America Revenues %	61.7	61.4	60.6	58.9	57.4
Latin America Revenues %	22.7	21.8	22.0	21.6	22.9
EMEA Revenues %	11.9	13.4	14.1	16.5	17.2
Asia and Oceania Revenues %	3.7	3.4	3.3	3.0	2.5
USD Revenues %	77.5	74.8	73.9	72.5	68.6
Other Currencies Revenues %	22.5	25.2	26.1	27.5	31.4
Top Customer %	10.8	9.4	8.8	8.7	8.2
Top 5 Customers %	25.1	24.5	23.7	22.5	21.4
Top 10 Customers %	34.3	34.8	33.3	32.2	30.8
Customers Served (Last Twelve Months)*	1,249	1,342	1,388	1,544	1,610
Customers with >$1M in Revenues (Last Twelve Months)	259	276	283	305	311
(*) Represents customers with more than $10,000 in revenues in the last twelve months.

Investor Relations Contact:
Arturo Langa, 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 Globant's revenues for the fourth quarter of 2023?

Globant reported revenues of $580.7 million for the fourth quarter of 2023, reflecting an 18.3% year-over-year growth.

What was Globant's IFRS Diluted EPS for the full year 2023?

Globant's IFRS Diluted EPS for the full year 2023 was $3.64.

How many technology, design, and innovation professionals did Globant have in Q4 2023?

Globant had 27,116 technology, design, and innovation professionals in the fourth quarter of 2023.

Which geographic region contributed the most to Globant's revenues in Q4 2023?

In the fourth quarter of 2023, 57.4% of Globant's revenues came from North America, with the US being the top country.

How many accounts generated more than $1 million of annual revenues for Globant in the last twelve months?

Globant had 311 accounts generating more than $1 million of annual revenues in the last twelve months.

What did Globant's CEO, Martín Migoya, emphasize for the company's future growth?

Martín Migoya highlighted the company's global footprint, AI capabilities, recent acquisitions of GUT and Iteris, and optimism for future growth.

What was the percentage of Globant's revenues denominated in US dollars in Q4 2023?

In the fourth quarter of 2023, 68.6% of Globant's revenues were denominated in US dollars.

How did Globant's IFRS Gross Profit Margin compare between Q4 2023 and Q4 2022?

Globant's IFRS Gross Profit Margin was 35.9% in Q4 2023, compared to 37.4% in Q4 2022.

What was the total amount drawn from Globant's credit facility as of December 31, 2023?

Globant had a total amount of $155 million drawn from its credit facility as of December 31, 2023.