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Globant Reports 2020 Third Quarter Financial Results

November 12, 2020 GMT
Globant new logo (PRNewsfoto/Globant)
Globant new logo (PRNewsfoto/Globant)

LUXEMBOURG, Nov. 12, 2020 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and nine months ended September 30, 2020.

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.

Third Quarter 2020 Financial Highlights

  • Revenues rose to $207.2 million, representing 20.9% year-over-year growth compared to the third quarter of 2019.
  • IFRS Gross Profit margin was 37.1% compared to 38.7% in the third quarter of 2019.
  • Non-IFRS Adjusted Gross Profit Margin was 39.0% compared to 40.6% in the third quarter of 2019.
  • IFRS Profit from Operations Margin was 11.2% compared to 13.4% in the third quarter of 2019.
  • Non-IFRS Adjusted Profit from Operations Margin was 15.3% compared to 18.1% in the third quarter of 2019.
  • IFRS Diluted EPS was $0.30 compared to $0.40 in the third quarter of 2019.
  • Non-IFRS Adjusted Diluted EPS was $0.60 compared to $0.62 in the third quarter of 2019.

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Nine months ended September 30, 2020 highlights

  • Revenue rose to $581.5 million, representing 22.4% year-over-year growth compared to the first nine months of 2019.
  • IFRS Gross Profit margin was 37.0% compared to 38.8% in the first nine months of 2019.
  • Non-IFRS Adjusted Gross Profit Margin was 38.9% compared to 40.6% in the first nine months of 2019.
  • IFRS Profit from Operations Margin was 9.7% compared to 12.8% in the first nine months of 2019.
  • Non-IFRS Adjusted Profit from Operations Margin was 14.8% compared to 17.2% in the first nine months of 2019.
  • IFRS Diluted EPS was $0.90, compared to $1.08 in the first nine months of 2019.
  • Non-IFRS Adjusted Diluted EPS was $1.75, compared to $1.65 in the first nine months of 2019.

Cash and Other Metrics for the Quarter ended September 30, 2020

  • Cash and cash equivalents and Short-term investments totaled $385.6 million as of September 30, 2020, an increase of $303.1 million, from $82.5 million as of December 31, 2019. As of September 30, 2020, we had $75 million drawn from our credit facility.
  • Globant completed the third quarter of 2020 with 14,340 Globers, 13,436 of whom were technology, design and innovation professionals.
  • The geographic revenue breakdown for the third quarter of 2020 was as follows: 70.0% from North America (top country: US), 22.4% from Latin America and others (top country: Argentina) and 7.6% from Europe (top country: Spain).
  • In terms of currencies, 84.5% of Globant’s revenues for the third quarter of 2020 were denominated in US dollars.
  • During the twelve months ended September 30, 2020, Globant served a total of 893 customers and continued to increase its wallet share, having 118 accounts with more than $1 million of annual revenues, compared to 104 for the same period one year ago.
  • Globant’s top customer, top five customers and top ten customers for the third quarter of 2020 represented 10.8%, 32.2% and 45.0% of revenues, respectively.

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“The global COVID-19 crisis pushed organizations to embrace profound digital transformations. We are in front of a unique opportunity and our strong value proposition enables us to differentiate from other players”, said Martín Migoya, Globant CEO and co-founder. “During this quarter we had two major milestones that reflected our future-centric vision. First, we held our Converge event, which raised a lot of interest throughout our community as we formally launched Augmented Coding. Also, Globant was recognized as a 2020 Worldwide Leader in CX Improvement by IDC MarketScape. We are extremely proud of this recognition as it shows the outstanding work our team is doing throughout the globe.”

“We are extremely pleased with Globant’s sequential organic revenue recovery and very strong net employee additions for the third quarter. We are also very satisfied with gA’s acquisition and the synergies that we are achieving. We delivered revenues and adjusted diluted earnings per share above our expectations and adjusted profit from operations margins at the upper end of our guidance range. As COVID-19 crisis has led to lower utilization rates, adjusted profit from operations margin is down year over year but is up sequentially 180 basis points. This trend shows a sequential recovery in business and utilization rates,” explained Juan Urthiague, Globant’s CFO.

2020 Fourth quarter Outlook

Based on current market conditions, Globant is providing the following estimates for the fourth quarter of 2020:

  • Fourth quarter 2020 Revenues are estimated to be at least $220 million, or 19.4% year over year growth.
  • Fourth quarter 2020 Non-IFRS Adjusted Profit from Operations Margin is estimated to be largely in line with third quarter 2020.
  • Fourth quarter 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at least $0.66 (assuming an average of 41.3 million diluted shares outstanding during the fourth quarter).

Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the third quarter 2020 results in a conference call today beginning at 4:30pm ET.

Conference call access information is:
US & Canada +1 (888) 346-2877
International +1 (412) 902-4257
Webcast http://investors.globant.com/

About Globant (NYSE:GLOB)
We are a digitally native company where innovation, design and engineering meet scale. We use the latest technologies in the digital and cognitive field to empower organizations in every aspect.

We have more than 14,300 employees and we are present in 16 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 and COVID-19 related expenses. 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 unaudited condensed interim consolidated statement of financial position as of September 30, 2020, its audited consolidated statement of financial position as of December 31, 2019 and its unaudited condensed interim consolidated statement of comprehensive income for the three and nine months ended September 30, 2020 and 2019, prepared in accordance with IFRS as issued by 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, impairment of assets, acquisition-related charges and COVID-19 related expenses. 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)


Nine months ended


Three months ended


September 30, 2020

September 30, 2019


September 30, 2020

September 30, 2019







Revenues

581,503

475,019


207,223

171,334

Cost of revenues

(366,089)

(290,663)


(130,253)

(105,047)

Gross profit

215,414

184,356


76,970

66,287







Selling, general and administrative expenses

(155,250)

(122,283)


(53,796)

(43,091)

Net impairment (losses) gain on account receivables

(3,525)

(616)


19

459

Other Operating (expenses) income, net

-

(720)


-

(720)

Profit from operations

56,639

60,737


23,193

22,935







Finance income

1,377

628


670

363

Finance expense

(7,439)

(4,108)


(2,333)

(1,773)

Other financial results, net

2,172

(5,399)


(1,452)

(2,115)







Share of results of investment in associates

(375)

(183)


(293)

(183)







Other income and expenses, net

(3,624)

35


(3,667)

27

Profit before income tax

48,750

51,710


16,118

19,254







Income tax

(13,222)

(11,148)


(3,779)

(4,176)

Net income for the period

35,528

40,562


12,339

15,078







Other comprehensive income, net of income tax effects






Items that may be reclassified subsequently to profit and loss:






- Exchange differences on translating foreign operations

(2,539)

(958)


(1,002)

(799)

- Net change in fair value on financial assets measured at fair value
through other comprehensive income ("FVOCI")

-

(372)


23

(399)

- Gains and losses on cash flow hedges

(848)

(234)


(14)

(667)

Total comprehensive income for the period

32,141

38,998


11,346

13,213







Net income attributable to:






Owners of the Company

35,528

40,562


12,339

15,078

Net income for the period

35,528

40,562


12,339

15,078







Total comprehensive income for the period attributable to:






Owners of the Company

32,141

38,998


11,346

13,213

Total comprehensive income for the period

32,141

38,998


11,346

13,213













Earnings per share






Basic

0.93

1.11


0.31

0.41

Diluted

0.90

1.08


0.30

0.40







Weighted average of outstanding shares (in thousands)






Basic

38,113

36,481


39,629

36,718

Diluted

39,314

37,595


40,830

37,831

Globant S.A.
Condensed Interim Consolidated Statements of Financial Position as of September 30, 2020 and December 31, 2019

(In thousands of U.S. dollars, unaudited)


September 30, 2020


December 31, 2019

ASSETS





Current assets





Cash and cash equivalents


323,309



62,721


Investments


62,292



19,780


Trade receivables


196,535



156,676


Other assets


9,517



13,439


Other receivables


20,528



19,308


Other financial assets


2,456



4,527


Total current assets


614,637



276,451







Non-current assets





Investments




418


Other assets


6,820



7,796


Receivables


21,168



8,810


Deferred tax assets


42,439



26,868


Investment in associates


3,400



3,776


Other financial assets


5,647



1,683


Property and equipment


87,239



87,533


Intangible assets


35,036



27,110


Right-of-use assets


67,385



58,781


Goodwill


258,860



188,538


Total non-current assets


527,994



411,313


TOTAL ASSETS


1,142,631



687,764







LIABILITIES





Current liabilities





Trade payables


24,669



31,487


Payroll and social security taxes payable


88,525



72,252


Borrowings


3,534



1,198


Other financial liabilities


21,233



8,937


Lease liabilities


19,965



19,439


Tax liabilities


9,447



7,898


Income tax payable


11,335



4,612


Other liabilities


55



368


Total current liabilities


178,763



146,191







Non-current liabilities





Trade payables


6,745



5,500


Borrowings


75,091



50,188


Other financial liabilities


14,696



1,617


Lease liabilities


45,882



41,924


Deferred tax liabilities


1,437



1,028


Provisions for contingencies


11,217



2,602


Total non-current liabilities


155,068



102,859


TOTAL LIABILITIES


333,831



249,050







Capital and reserves





Issued capital


47,605



44,356


Additional paid-in capital


492,233



157,537


Other reserves


(5,944)



(2,557)


Retained earnings


274,906



239,378


Total equity attributable to owners of the Company


808,800



438,714


TOTAL EQUITY AND LIABILITIES


1,142,631



687,764


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


Nine months ended


Three months ended


September 30,
2020

September 30,
2019


September 30,
2020

September
30, 2019







Reconciliation of adjusted gross profit






Gross Profit

215,414

184,356


76,970

66,287

Depreciation and amortization expense

7,329

4,981


2,690

2,061

Share-based compensation expense

3,419

3,667


1,091

1,214

Adjusted gross profit

226,162

193,004


80,751

69,562

Adjusted gross profit margin

38.9%

40.6%


39.0%

40.6%







Reconciliation of selling, general and administrative expenses






Selling, general and administrative expenses

(155,250)

(122,283)


(53,796)

(43,091)

Depreciation and amortization expense

15,459

12,512


5,562

3,985

Share-based compensation expense

16,003

10,371


5,518

3,537

Acquisition-related charges (a)

6,127

5,450


1,879

2,285

COVID-19-related charges (b)

(613)

-


(613)

-

Adjusted selling, general and administrative expenses

(118,274)

(93,950)


(41,450)

(33,284)

Adjusted selling, general and administrative expenses as % of revenues

(20.3)%

(19.8)%


(20.0)%

(19.4)%







Reconciliation of Adjusted Profit from Operations






Profit from Operations

56,639

60,737


23,193

22,935

Share-based compensation expense

19,422

14,038


6,609

4,751

Impairment of tax credits

(8)

-


(8)

-

Impairment of assets

-

720


-

720

Acquisition-related charges (a)

7,303

6,064


2,263

2,530

COVID-19-related charges (b)

2,751

-


(434)

-

Adjusted Profit from Operations

86,107

81,559


31,623

30,936

Adjusted Profit from Operations margin

14.8%

17.2%


15.3%

18.1%







Reconciliation of Net income for the period






Net income for the period

35,528

40,562


12,339

15,078

Share-based compensation expense

19,422

14,038


6,609

4,751

Impairment of tax credits

(8)

-


(8)

-

Impairment of assets

-

720


-

720

Acquisition-related charges (a)

11,063

6,548


5,920

2,917

COVID-19-related charges (b)

2,751

-


(434)

-

Adjusted Net income

68,756

61,868


24,426

23,466

Adjusted Net income margin

11.8%

13.0%


11.8%

13.7%







Calculation of Adjusted Diluted EPS






Adjusted Net income

68,756

61,868


24,426

23,466

Diluted shares

39,314

37,595


40,830

37,831

Adjusted Diluted EPS

1.75

1.65


0.60

0.62

(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.


Globant S.A.
Schedule of Supplemental Information (unaudited)

Metrics

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020







Total Employees

11,283


11,855


12,538


12,333


14,340


IT Professionals

10,462


11,021


11,755


11,573


13,436








North America Revenues %

77.1


75.0


74.5


72.8


70.0


Latin America and Others Revenues %

17.0


20.0


19.5


20.8


22.4


Europe Revenues %

5.9


5.0


6.0


6.4


7.6








USD Revenues %

86.3


86.7


86.8


87.0


84.5


Other Currencies Revenues %

13.7


13.3


13.2


13.0


15.5








Top Customer %

11.9


11.7


11.7


10.7


10.8


Top 5 Customers %

26.1


27.0


29.1


31.9


32.2


Top 10 Customers %

38.6


38.5


41.0


44.9


45.0








Customers Served (Last Twelve Months)

744


822


876


805


893


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

104


107


112


113


118








Investor Relations Contact:
Paula Conde & Amit Singh, Globant
investors@globant.com
+1 (877) 215-5230

Media Contact:
Wanda Weigert, Globant
pr@globant.com
+1 (877) 215-5230

Source: Globant

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SOURCE Globant