Globant Reports 2020 Second Quarter Financial Results
Strong Performance Amidst Turbulent Macro
-- Second quarter revenues of $182.7 million, up 16.0% year-over-year
-- IFRS Diluted EPS of $0.26 for the second quarter
-- Non-IFRS Diluted EPS of $0.51 for the second quarter
LUXEMBOURG, Aug. 13, 2020 /PRNewswire/ -- Globant (NYSE: GLOB), a digitally native technology services company, today announced results for the three and six months ended June 30, 2020.
http://mma.prnewswire.com/media/460822/globant_logo.jpg
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 2020 Financial Highlights
-- Revenues rose to $182.7 million, representing 16.0% year-over-year
growth compared to the second quarter of 2019.
-- IFRS Gross Profit margin was 36.3% compared to 38.5% in the second
quarter of 2019.
-- Non-IFRS Adjusted Gross Profit Margin was 38.2% compared to 40.2% in the
second quarter of 2019.
-- IFRS Profit from Operations Margin was 8.1% compared to 12.3% in the
second quarter of 2019.
-- Non-IFRS Adjusted Profit from Operations Margin was 13.5% compared to
16.4% in the second quarter of 2019.
-- IFRS Diluted EPS was $0.26 compared to $0.36 in the second quarter of
2019.
-- Non-IFRS Adjusted Diluted EPS was $0.51 compared to $0.53 in the second
quarter of 2019.
Six months ended June 30, 2020 highlights
-- Revenue rose to $374.3 million, representing 23.2% year-over-year growth
compared to the first six months of 2019.
-- IFRS Gross Profit margin was 37.0% compared to 38.9% in the first six
months of 2019.
-- Non-IFRS Adjusted Gross Profit Margin was 38.9% compared to 40.6% in the
first six months of 2019.
-- IFRS Profit from Operations Margin was 8.9% compared to 12.4% in the
first six months of 2019.
-- Non-IFRS Adjusted Profit from Operations Margin was 14.6% compared to
16.7% in the first six months of 2019.
-- IFRS Diluted EPS was $0.60, compared to $0.68 in the first six months of
2019.
-- Non-IFRS Adjusted Diluted EPS was $1.15, compared to $1.02 in the first
six months of 2019.
Cash and Other Metrics for the Quarter ended June 30, 2020
-- Cash and cash equivalents and Short-term investments totaled $404.1
million as of June 30, 2020, an increase of $321.6 million, from $82.5
million as of December 31, 2019. During the second quarter of 2020, we
raised approximately $301 million in net proceeds from our equity
offering of 2.3 million shares, and we also repaid $50 million under our
credit facility. As of June 30, 2020, we had a total amount of $75
million drawn from our credit facility.
-- Globant completed the second quarter with 12,333 Globers, 11,573 of whom
were technology, design and innovation professionals.
-- The geographic revenue breakdown for the second quarter was as follows:
72.8% from North America (top country: US), 20.8% from Latin America and
others (top country: Argentina) and 6.4% from Europe (top country:
Spain).
-- In terms of currencies, 87.0% of Globant's revenues for the second
quarter were denominated in US dollars.
-- During the twelve months ended June 30, 2020, Globant served a total of
805 customers and continued to increase its wallet share, having 113
accounts with more than $1 million of annual revenues, compared to 97
for the same period one year ago.
-- Globant's top customer, top five customers and top ten customers
represented 10.7%, 31.9% and 44.9% of second quarter revenues,
respectively.
"As we start the second half of 2020, we are seeing ourselves emerge into a new world. The pandemic has already changed many aspects of our lives and I am proud of how our company continues to accompany our employees, vendors, communities and customers to evolve," said Martín Migoya, Globant CEO and co-founder. "The pandemic has sparked the need for digital transformation across many industries and regions. Organizations need to reinvent themselves in order to address new consumer needs, so this presents a unique opportunity for us. As a leader in digital and cognitive transformation we know we can be the best partners to support our clients in their journeys. We will continue to invest in our global expansion and in our expertise around the latest trends to reinforce our positioning as a pure digital player."
"We have achieved solid results while navigating a challenging environment. We delivered revenues and adjusted diluted earnings per share above our expectations. Organic recovery looks strong for the third quarter and we are very enthusiastic with gA's acquisition," explained Juan Urthiague, Globant's CFO.
2020 Third quarter Outlook
Based on current market conditions, Globant is providing the following estimates for the third quarter of 2020:
-- Third quarter 2020 Revenues are estimated to be at least $203 million,
or 18.5% year over year growth.
-- Third quarter 2020 Non-IFRS Adjusted Profit from Operations Margin is
estimated to be in the range of 13.5%-15.5%.
-- Third quarter 2020 Non-IFRS Adjusted Diluted EPS is estimated to be at
least $0.58 (assuming an average of 40.9 million diluted shares
outstanding during the third quarter).
Due to the ongoing uncertainty related to the potential impacts of COVID-19 on the Company's full year financial results, Globant is not providing a full year 2020 financial outlook at this time.
Conference Call and Webcast
Martín Migoya and Juan Urthiague will discuss the second 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 12,300 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 of Digital Strategy Consulting Services 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 June 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 six months ended June 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)
Six months ended Three months ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
---
Revenues 374,280 303,685 182,708 157,534
Cost of revenues (235,836) (185,616) (116,467) (96,889)
Gross profit 138,444 118,069 66,241 60,645
Selling, general and
administrative expenses (101,454) (79,192) (49,582) (40,560)
Net impairment losses on
account receivables (3,544) (1,075) (1,927) (639)
Profit from operations 33,446 37,802 14,732 19,446
Finance income 707 265 451 95
Finance expense (5,106) (2,335) (2,651) (1,267)
Other financial results,
net 3,624 (3,284) 907 (1,371)
Share of results of
investment in associates (82) (82) -
Other income (expense),
net 43 8 27 27
Profit before income tax 32,632 32,456 13,384 16,930
Income tax (9,443) (6,972) (3,365) (3,545)
Net income for the period 23,189 25,484 10,019 13,385
Other comprehensive income, net of income tax effects
Items that may be reclassified subsequently to profit and
loss:
-Exchange differences on
translating foreign
operations (1,537) (159) 567 457
-Net change in fair
value on financial
assets measured at FVOCI (23) 27 91 (8)
-Gains and losses on
cash flow hedges (834) 433 1,235 1,315
Total comprehensive
income for the period 20,795 25,785 11,912 15,149
Net income attributable to:
Owners of the Company 23,189 25,484 10,019 13,385
Net income for the period 23,189 25,484 10,019 13,385
Total comprehensive income for the period attributable to:
Owners of the Company 20,795 25,785 11,912 15,149
Total comprehensive
income for the period 20,795 25,785 11,912 15,149
Earnings per share
Basic 0.62 0.70 0.27 0.37
Diluted 0.60 0.68 0.26 0.36
Weighted average of outstanding shares (in thousands)
Basic 37,347 36,361 37,686 36,516
Diluted 38,420 37,467 38,759 37,622
Globant S.A.
Condensed Interim Consolidated Statements of Financial Position as of June
30, 2020 and December 31, 2019
(In thousands of U.S. dollars, unaudited)
June 30, 2020 December 31, 2019
---
ASSETS
Current assets
---
Cash and cash
equivalents 356,869 62,721
Investments 47,205 19,780
Trade receivables 169,969 156,676
Other assets 9,294 13,439
Other receivables 20,620 19,308
Other financial
assets 4,797 4,527
Total current
assets 608,754 276,451
Non-current assets
---
Investments - 418
Other assets 7,513 7,796
Receivables 19,416 8,810
Deferred tax assets 26,875 26,868
Investment in
associates 3,694 3,776
Other financial
assets 3,809 1,683
Property and
equipment 87,749 87,533
Intangible assets 30,078 27,110
Right-of-use
assets 70,216 58,781
Goodwill 187,925 188,538
Total non-current
assets 437,275 411,313
TOTAL ASSETS 1,046,029 687,764
LIABILITIES
Current liabilities
---
Trade payables 22,680 31,487
Payroll and social
security taxes
payable 67,000 72,252
Borrowings 1,691 1,198
Other financial
liabilities 5,865 8,937
Lease liabilities 20,755 19,439
Tax liabilities 6,927 7,898
Income tax payable 5,731 4,612
Other liabilities 39 368
Total current
liabilities 130,688 146,191
Non-current liabilities
---
Trade payables 7,396 5,500
Borrowings 75,121 50,188
Other financial
liabilities 1,305 1,617
Lease liabilities 48,670 41,924
Deferred tax
liabilities 1,223 1,028
Provisions for
contingencies 3,368 2,602
Total non-current
liabilities 137,083 102,859
TOTAL LIABILITIES 267,771 249,050
Capital and reserves
Issued capital 47,505 44,356
Additional paid-in
capital 473,137 157,537
Other reserves (4,951) (2,557)
Retained earnings 262,567 239,378
Total equity
attributable to
owners of the
Company 778,258 438,714
TOTAL EQUITY AND
LIABILITIES 1,046,029 687,764
Globant S.A.
Supplemental Non-IFRS Financial Information
(In thousands of U.S. dollars, unaudited)
Six months ended Three months ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
---
Reconciliation of adjusted gross profit
Gross Profit 138,444 118,069 66,241 60,645
Depreciation and
amortization expense 4,639 2,920 2,349 1,693
Share-based
compensation expense 2,328 2,453 1,207 1,010
Adjusted gross profit 145,411 123,442 69,797 63,348
Adjusted gross profit
margin 38.9 % 40.6 % 38.2 % 40.2 %
Reconciliation of selling, general and administrative
expenses
Selling, general and
administrative
expenses (101,454) (79,192) (49,582) (40,560)
Depreciation and
amortization expense 9,897 8,527 5,003 4,108
Share-based
compensation expense 10,485 6,834 5,327 3,857
Acquisition-related
charges (a) 4,248 3,165 1,490 1,333
Adjusted selling,
general and
administrative
expenses (76,824) (60,666) (37,762) (31,262)
Adjusted selling,
general and
administrative
expenses as % of
revenues (20.5)% (20.0)% (20.7)% (19.8)%
Reconciliation of Adjusted Profit from Operations
Profit from Operations 33,446 37,802 14,732 19,446
Share-based
compensation expense 12,813 9,287 6,534 4,867
Acquisition-related
charges (a) 5,040 3,534 1,878 1,588
COVID-19-related
expenses (b) 3,185 1,469 -
Adjusted Profit from
Operations 54,484 50,623 24,613 25,901
Adjusted Profit from
Operations margin 14.6 % 16.7 % 13.5 % 16.4 %
Reconciliation of Net income for the period
Net income for the
period 23,189 25,484 10,019 13,385
Share-based
compensation expense 12,813 9,287 6,534 4,867
Acquisition-related
charges (a) 5,143 3,631 1,926 1,614
COVID-19-related
expenses (b) 3,185 1,469 -
Adjusted Net income 44,330 38,402 19,948 19,866
Adjusted Net income
margin 11.8 % 12.6 % 10.9 % 12.6 %
Calculation of Adjusted Diluted EPS
Adjusted Net income 44,330 38,402 19,948 19,866
Diluted shares 38,420 37,467 38,759 37,622
Adjusted Diluted EPS 1.15 1.02 0.51 0.53
(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 expenses 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.
Globant S.A.
Schedule of Supplemental Information (unaudited)
Metrics Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
=== ===
Total Employees 9,905 11,283 11,855 12,538 12,333
IT Professionals 9,215 10,462 11,021 11,755 11,573
North America
Revenues % 75.2 77.1 75.0 74.5 72.8
Latin America and
Others Revenues % 16.1 17.0 20.0 19.5 20.8
Europe Revenues % 8.7 5.9 5.0 6.0 6.4
USD Revenues % 88.7 86.3 86.7 86.8 87.0
Other Currencies
Revenues % 11.3 13.7 13.3 13.2 13.0
Top Customer % 10.4 11.9 11.7 11.7 10.7
Top 5 Customers % 27.2 26.1 27.0 29.1 31.9
Top 10 Customers % 41.0 38.6 38.5 41.0 44.9
Customers Served
(Last Twelve
Months) 585 744 822 876 805
Customers with >$1M
in Revenues (Last
Twelve Months) 97 104 107 112 113
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
View original content:http://www.prnewswire.com/news-releases/globant-reports-2020-second-quarter-financial-results-301112072.html
SOURCE Globant
