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Globant Reports 2023 Second Quarter Financial Results

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Globant reports strong half-year performance with revenues of $497.5 million, up 15.9% YoY. Positive outlook for Q3 and full year 2023 with estimated revenues of at least $545.0 million and $2,094.0 million respectively.
Positive
  • Strong half-year performance with revenue growth of 15.9% YoY
  • Positive outlook for Q3 and full year 2023
Negative
  • None.

Strong Half-Year Performance, Positive Outlook Ahead

  • Second quarter revenues of $497.5 million, up 15.9% year-over-year
  • IFRS Diluted EPS of $0.85 for the second quarter
  • Non-IFRS Adjusted Diluted EPS of $1.36 for the second quarter

LUXEMBOURG, Aug. 17, 2023 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2023.

Globant new logo

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 2023 Financial Highlights

  • Revenues rose to $497.5 million, representing 15.9% year-over-year growth.
  • IFRS Gross Profit Margin was 36.3% compared to 37.6% in the second quarter of 2022.
  • Non-IFRS Adjusted Gross Profit Margin was 38.3% compared to 39.1% in the second quarter of 2022.
  • IFRS Profit from Operations Margin was 9.4% compared to 11.4% in the second quarter of 2022.
  • Non-IFRS Adjusted Profit from Operations Margin was 15.0% compared to 16.1% in the second quarter of 2022.
  • IFRS Diluted EPS was $0.85 compared to $0.87 in the second quarter of 2022.
  • Non-IFRS Adjusted Diluted EPS was $1.36 compared to $1.22 in the second quarter of 2022.

Six months ended June 30, 2023 Financial Highlights

  • Revenues rose to $970.0 million, representing 16.8% year-over-year growth.
  • IFRS Gross Profit Margin was 36.0% compared to 37.8% in the first six months of 2022.
  • Non-IFRS Adjusted Gross Profit Margin was 38.2% compared to 39.3% in the first six months of 2022.
  • IFRS Profit from Operations Margin was 9.4% compared to 12.0% in the first six months of 2022.
  • Non-IFRS Adjusted Profit from Operations Margin was 15.0% compared to 16.5% in the first six months of 2022.
  • IFRS Diluted EPS was $1.70 compared to $1.72 in the first six months of 2022.
  • Non-IFRS Adjusted Diluted EPS was $2.64 compared to $2.41 in the first six months of 2022.

Other Metrics as of and for the quarter ended June 30, 2023

  • Cash and cash equivalents and Short-term investments were $270.8 million as of June 30, 2023, a decrease of $70.1 million from $340.9 million as of December 31, 2022, driven mainly by payments of taxes, investments in our platform business and inorganic expansion initiatives. As of June 30, 2023, our credit facility was fully undrawn.
  • Globant completed the second quarter of 2023 with 25,947 Globers, 24,163 of whom were technology, design and innovation professionals.
  • The geographic revenue breakdown for the second quarter of 2023 was as follows: 60.6% from North America (top country: US), 22.0% from Latin America (top country: Argentina), 14.1% from EMEA (top country: Spain) and 3.3% from Asia and Oceania (top country: India).
  • Globant's top customer, top five customers and top ten customers for the second quarter of 2023 represented 8.8%, 23.7% and 33.3% of revenues, respectively.
  • During the twelve months ended June 30, 2023, Globant served a total of 1,388 customers (with revenues over $10,000 in the last twelve months) and continued to increase its wallet share, with 283 accounts generating more than $1 million of annual revenues, compared to 233 for the same period one year ago.
  • In terms of currencies, 73.9% of Globant's revenues for the second quarter of 2023 were denominated in US dollars.

"We are happy to deliver another great quarter. At Globant, our vision is to provide the best AI and digital transformations in the world, and we will continue to do so with a strong focus on reinventing our technology professional services industry. We are seeing strong sequential growth into the second half of the year, providing us with encouraging signs as we start thinking about 2024",  said Martín Migoya, Globant's CEO and Co-founder. "In the AI space, we continue to expand our services in order to meet the increasing demand. In early June, IDC named us as a leader in AI in the IDC MarketScape, validation of our strong expertise. Beyond that, the evolution of platforms like GeneXus, Augoor, Sportian, MAIDA and Waasabi are key real-life solutions that can be scaled globally."

"It is with great pride that we report our industry-leading growth, boasting a solid 15.9% year-over-year revenue increase, amounting to an impressive $497.5 million. We have raised our guidance for the year, a testament to our unwavering commitment to delivering excellent results in the current environment. Moreover, our adjusted operating profit margin met guidance expectations, and our strategic execution of M&A initiatives has effectively expanded our presence in the European market. As anticipated,  our underlying leading-indicators remain strong, and we feel encouraged by the short term revenue growth momentum in our business. We are firmly on track for continued success, and we are genuinely excited about the boundless opportunities that lie ahead," explained Juan Urthiague, Globant's CFO.

2023 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 2023:

  • Third quarter 2023 Revenues are estimated to be at least $545.0 million, or 18.8% year-over-year growth.
  • Third quarter 2023 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15-16.5%.
  • Third quarter 2023 Non-IFRS Adjusted Diluted EPS is estimated to be at least $1.46 (assuming an average of 43.5 million diluted shares outstanding during the third quarter).
  • Fiscal year 2023 Revenues are estimated to be at least $2,094.0 million, implying at least 17.6% year-over-year revenue growth.
  • Fiscal year 2023 Non-IFRS Adjusted Profit from Operations Margin is estimated to be in the range of 15%-16.5%.
  • Fiscal year 2023 Non-IFRS Adjusted Diluted EPS is estimated to be at least $5.72 (assuming an average of 43.4 million diluted shares outstanding during 2023).

Conference Call and Webcast

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

Video conference call access information is:
https://more.globant.com/F2Q23EarningsCall
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 25,900 employees and we are present in more than 25 countries in 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") 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, 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 condensed interim consolidated statements of financial position as of June 30, 2023 and December 31, 2022 and its condensed interim consolidated statement of comprehensive income for the three and six months ended June 30, 2023 and 2022, 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, 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.
Condensed Interim Consolidated Statements of Comprehensive Income
(In thousands of U.S. dollars, except per share amounts, unaudited)


Six Months Ended


Three months ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022









Revenues

969,952


830,635


497,531


429,257

Cost of revenues

(620,814)


(516,937)


(316,690)


(267,970)

Gross profit

349,138


313,698


180,841


161,287









Selling, general and administrative expenses

(247,533)


(213,316)


(128,176)


(111,678)

Net impairment losses on financial assets

(11,358)


(744)


(6,641)


(707)

Other operating income and expenses, net

614



614


Profit from operations

90,861


99,638


46,638


48,902









Finance income

2,176


624


941


334

Finance expense

(9,402)


(7,352)


(5,230)


(3,323)

Other financial results, net

8,429


1,256


4,667


818

Financial results, net

1,203


(5,472)


378


(2,171)









Share of results of investment in associates

15



(41)


Other income and expenses, net

1,301


2,074


(186)


1,200

Profit before income tax

93,380


96,240


46,789


47,931









Income tax

(20,089)


(22,279)


(9,883)


(10,777)

Net income for the period

73,291


73,961


36,906


37,154









Other comprehensive income, net of income tax effects








Items that may be reclassified subsequently to profit and loss:








- Exchange differences on translating foreign operations

1,252


(23,114)


(1,489)


(20,679)

- Net change in fair value on financial assets measured at FVOCI

(2,331)


(2,092)


(2,356)


(2,091)

- Gains and losses on cash flow hedges

3,879


(4,211)


(327)


(4,344)

Total comprehensive income for the period

76,091


44,544


32,734


10,040









Net income attributable to:








Owners of the Company

73,412


73,715


36,993


37,092

Non-controlling interest

(121)


246


(87)


62

Net income for the period

73,291


73,961


36,906


37,154









Total comprehensive income for the period attributable to:








Owners of the Company

75,027


44,298


32,898


9,978

Non-controlling interest

1,064


246


(164)


62

Total comprehensive income for the period

76,091


44,544


32,734


10,040

Earnings per share








Basic

1.73


1.76


0.87


0.89

Diluted

1.70


1.72


0.85


0.87

Weighted average of outstanding shares (in thousands)








Basic

42,362


41,788


42,426


41,829

Diluted

43,309


42,737


43,373


42,778

 

Globant S.A.
Condensed Interim Consolidated Statements of Financial Position as of June 30, 2023 and December 31, 2022
(In thousands of U.S. dollars, unaudited)



June 30, 2023


December 31, 2022

ASSETS





Current assets





Cash and cash equivalents


240,863


292,457

Investments


29,906


48,408

Trade receivables


488,052


424,810

Other assets


14,848


15,197

Other receivables


60,619


70,212

Other financial assets


10,608


6,529

Total current assets


844,896


857,613






Non-current assets





Investments


1,836


1,513

Other assets


3,445


10,657

Other receivables


21,457


16,316

Deferred tax assets


52,132


46,807

Investment in associates


1,352


1,337

Other financial assets


31,217


34,978

Property and equipment


161,371


161,733

Intangible assets


200,449


182,572

Right-of-use assets


131,125


147,311

Goodwill


799,598


734,952

Total non-current assets


1,403,982


1,338,176

TOTAL ASSETS


2,248,878


2,195,789






LIABILITIES





Current liabilities





Trade payables


84,048


89,397

Payroll and social security taxes payable


171,619


203,819

Borrowings


294


2,838

Other financial liabilities


60,716


59,316

Lease liabilities


39,273


37,681

Tax liabilities


22,925


23,454

Income tax payable


14,717


11,276

Other liabilities


1,353


808

Total current liabilities


394,945


428,589






Non-current liabilities





Trade payables


4,178


5,445

Borrowings


54


861

Other financial liabilities


60,506


78,055

Lease liabilities


86,033


97,457

Deferred tax liabilities


5,070


11,291

Income tax payable


2,342


Payroll and social security taxes payable


2,848


4,316

Provisions for contingencies


12,708


13,615

Total non-current liabilities


173,739


211,040

TOTAL LIABILITIES


568,684


639,629






Capital and reserves





Issued capital


51,040


50,724

Additional paid-in capital


1,000,316


950,520

Other reserves


(30,627)


(32,242)

Retained earnings


611,963


538,551

Total equity attributable to owners of the Company


1,632,692


1,507,553

Non-controlling interests


47,502


48,607

Total equity


1,680,194


1,556,160

TOTAL EQUITY AND LIABILITIES


2,248,878


2,195,789

Globant S.A.
Selected Cash Flow Data
(In thousands of U.S. dollars, unaudited)



Three months ended



June 30, 2023


June 30, 2022

Net Income for the period


36,906


37,154

Non-cash adjustments, taxes and others


61,928


37,899

Changes in working capital


(62,092)


(30,074)

Cash flows from operating activities


36,742


44,979

Capital expenditures


(27,822)


(27,783)

Cash flows from investing activities


(35,510)


(51,465)

Cash flows from financing activities


(13,608)


(9,753)

Net decrease in cash & cash equivalents


(12,376)


(16,239)

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


Six Months Ended


Three months ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022









Reconciliation of adjusted gross profit








Gross Profit

349,138


313,698


180,841


161,287

Depreciation and amortization expense

13,033


10,800


6,601


5,582

Share-based compensation expense - Equity settled

8,778


1,914


3,188


1,114

Adjusted gross profit

370,949


326,412


190,630


167,983

Adjusted gross profit margin

38.2 %


39.3 %


38.3 %


39.1 %









Reconciliation of selling, general and administrative expenses








Selling, general and administrative expenses

(247,533)


(213,316)


(128,176)


(111,678)

Depreciation and amortization expense

40,489


28,933


20,710


14,778

Share-based compensation expense - Equity settled

24,995


23,477


13,865


13,116

Acquisition-related charges (a)

9,118


5,710


4,570


3,233

Adjusted selling, general and administrative expenses

(172,931)


(155,196)


(89,031)


(80,551)

Adjusted selling, general and administrative expenses as % of revenues

(17.8) %


(18.7) %


(17.9) %


(18.8) %









Reconciliation of Adjusted Profit from Operations








Profit from Operations

90,861


99,638


46,638


48,902

Share-based compensation expense - Equity settled

33,773


25,391


17,053


14,230

Acquisition-related charges (a)

21,142


11,715


10,727


6,075

Adjusted Profit from Operations

145,776


136,744


74,418


69,207

Adjusted Profit from Operations margin

15.0 %


16.5 %


15.0 %


16.1 %









Reconciliation of Net income for the period








Net income for the period

73,412


73,715


36,993


37,092

Share-based compensation expense - Equity settled

33,749


25,391


17,029


14,230

Acquisition-related charges (a)

20,761


10,598


10,889


4,289

Tax effect of non-IFRS adjustments

(13,660)


(6,767)


(6,053)


(3,474)

Adjusted Net income

114,262


102,937


58,858


52,137

Adjusted Net income margin

11.8 %


12.4 %


11.8 %


12.1 %









Calculation of Adjusted Diluted EPS








Adjusted Net income

114,262


102,937


58,858


52,137

Diluted shares

43,309


42,737


43,373


42,778

Adjusted Diluted EPS

2.64


2.41


1.36


1.22









(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, 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

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023







Total Employees

25,924

26,541

27,122

26,288

25,947

IT Professionals

24,410

24,922

25,331

24,496

24,163







North America Revenues %

64.5

64.9

61.7

61.4

60.6

Latin America Revenues %

23.8

21.9

22.7

21.8

22.0

EMEA Revenues %

9.7

10.0

11.9

13.4

14.1

Asia and Oceania Revenues %

2.0

3.2

3.7

3.4

3.3







USD Revenues %

79.0

81.2

77.5

74.8

73.9

Other Currencies Revenues %

21.0

18.8

22.5

25.2

26.1







Top Customer %

10.5

10.7

10.8

9.4

8.8

Top 5 Customers %

25.7

24.7

25.1

24.5

23.7

Top 10 Customers %

36.7

34.5

34.3

34.8

33.3







Customers Served (Last Twelve Months)*

1,043

1,114

1,249

1,342

1,388

Customers with >$1M in Revenues (Last Twelve Months)

233

255

259

276

283







(*) 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

Cision View original content:https://www.prnewswire.com/news-releases/globant-reports-2023-second-quarter-financial-results-301903850.html

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