Globant S.A. (NYSE:GLOB) Q3 2022 Earnings Conference Call November 17, 2022 4:30 PM ET Company Participants Arturo Langa - IR MartÃn Migoya - Co-Founder and CEO Juan Urthiague - CFO Patricia Pomies - COO Diego Tartara - Global Chief Technology Officer Conference Call Participants Tien-Tsin Huang - JPMorgan Ashwin Shirvaikar - Citi Moshe Katri - Wedbush Ernesto Gonzalez - Morgan Stanley Bryan Bergin - Cowen Walter Chiarvesio - Santander John Nutt - Piper Sandler Diego Aragão - Goldman Sachs Arturo Langa Good ...

Globant S.A. (NYSE:GLOB) Q2 2022 Earnings Conference Call August 18, 2022 4:30 PM ET Company Participants Arturo Langa - IR MartÃn Migoya - Co-Founder and CEO Juan Urthiague - CFO Patricia Pomies - COO Diego Tartara - Global Chief Technology Officer Conference Call Participants Tien-Tsin Huang - JPMorgan Ryan Potter - Citi Zachary Ajzenman - Cowen Maggie Nolan - William Blair Surinder Thind - Jefferies Arvind Ramnani - Piper Sandler Arturo Langa Good day, and welcome to Globant's Second Quarter 2022 Earning ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $401.4 million, representing a 48.6% year-over-year growth and a 5.7% quarter-over-quarter growth [5][30] - Adjusted gross profit increased to $158.4 million, with a 39.5% adjusted gross margin compared to 39.6% in Q1 2021 [33] - Adjusted net income for Q1 totaled $50.8 million, maintaining a 12.7% adjusted net income margin, with adjusted diluted EPS at $1.19, reflecting a 43.4% year-over-year growth [35][36] Business Line Data and Key Metrics Changes - The Walt Disney Company remains the largest client, with a growth of 55% year-over-year and 5.1% quarter-over-quarter [20] - The rest of the accounts collectively grew by 47.8% year-over-year and 5.7% quarter-over-quarter [20] Market Data and Key Metrics Changes - Geographic distribution of revenues: 63.1% from North America, 23.5% from Latin America, 11.1% from EMEA, and 2.3% from Asia and Oceania [22] - The company’s workforce increased to 24,504, representing a 41.9% year-over-year growth, with IT professionals increasing by 42.2% [23] Company Strategy and Development Direction - The company is focusing on geographic expansion, particularly in Latin America, with plans to increase the workforce in Chile by 40% [8] - The acquisition of GeneXus aims to enhance the company's capabilities in low-code software solutions, addressing a significant trend in the market [9][10] - New Reinvention Studios have been launched to help clients adapt to digital transformation, including a smart payments studio and an EdTech studio [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for digital transformation despite geopolitical uncertainties, predicting that 75% of enterprises will accelerate their digital transformation plans by 2025 [5][6] - The company anticipates Q2 2022 revenues to be at least $425.5 million, reflecting a 39.4% year-over-year growth [37] Other Important Information - The company has launched initiatives to improve employee experience and talent acquisition, including offering 15,000 scholarships for technology training [25][26] - The company is actively monitoring its net promoter score, which stands at 66, indicating strong client satisfaction [22] Q&A Session Summary Question: Insights on low-code, no-code theme and its impact on application development - Management emphasized the importance of low-code/no-code solutions and how they are integrating these into their offerings, including the GeneXus acquisition [41][43] Question: Talent market competition and wage inflation - Management acknowledged increased competition for talent, particularly in Latin America and India, and anticipated wage inflation due to this competition [55][58] Question: Impact of macroeconomic environment on business - Management believes long-term demand for digital transformation services remains strong, despite potential short-term impacts from economic conditions [86][88] Question: M&A strategy and its importance - Management highlighted the significance of M&A for geographical expansion and enhancing their service offerings, especially in light of changing valuations in the market [91][92]

[Cautionary Statements Regarding Forward-Looking Statements](index=5&type=section&id=CAUTIONARY%20STATEMENTS%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=5&type=section&id=Forward-Looking%20Statements%20Disclosure) The report contains forward-looking statements subject to risks and uncertainties, advising readers to consult 'Risk Factors' as actual results may differ - The report includes forward-looking statements identifiable by terms like 'aim', 'anticipate', 'believe', 'expect', 'may', 'will', etc., which are not guarantees of future performance[14](index=14&type=chunk) - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those projected. Readers should consult the 'Risk Factors' and 'Business Overview' sections for a comprehensive understanding of factors that could affect the company[15](index=15&type=chunk) - The company is not obligated to update or revise any forward-looking statements unless required by law[16](index=16&type=chunk) [Currency Presentation and Definitions](index=6&type=section&id=CURRENCY%20PRESENTATION%20AND%20DEFINITIONS) [Currency Definitions](index=6&type=section&id=Currency%20Definitions) This section defines various currencies referenced in the annual report, including USD, EUR, and several Latin American currencies Defined Currencies | Currency | Definition | | :--- | :--- | | "U.S. dollars" and "$" | lawful currency of the United States | | "Argentine pesos" | lawful currency of the Republic of Argentina | | "Colombian pesos" | lawful currency of the Republic of Colombia | | "Uruguayan pesos" | lawful currency of the Republic of Uruguay | | "Mexican pesos" | lawful currency of Mexico | | "Chilean pesos" | lawful currency of Chile | | "Rupees" or "Indian rupees" | lawful currency of the Republic of India | | "Reais" or "Brazilian Real" | lawful currency of Brazil | | "Peruvian Sol" | lawful currency of Peru | | "Romanian Leu" | lawful currency of Romania | | "Belarusian ruble" | lawful currency of Belarus | | "euro" or "€" | single currency of participating member states of the European and Monetary Union | | "pound", "British Sterling pound" or "£" | lawful currency of the United Kingdom | | "Canadian dollars" | lawful currency of Canada | [Company and Industry Definitions](index=6&type=section&id=Company%20and%20Industry%20Definitions) Defines 'Globant' as the company and its subsidiaries, along with key industry terms like 'IT', 'ISO', 'Attrition rate', and 'Globers' - References to 'Globant', 'we', 'our', 'us' or the 'Company' mean Globant S.A. and its consolidated subsidiaries[18](index=18&type=chunk) - Key industry terms defined include 'IT' (information technology), 'ISO' (International Organization for Standardization), 'Attrition rate' (ratio of IT professionals who left to those on payroll), and 'Globers' (employees of Globant)[22](index=22&type=chunk) [Presentation of Financial Information](index=6&type=section&id=PRESENTATION%20OF%20FINANCIAL%20INFORMATION) [Financial Reporting Standards](index=6&type=section&id=Financial%20Reporting%20Standards) Consolidated financial statements are prepared under IFRS, presented in U.S. dollars, with the fiscal year ending December 31st - Consolidated financial statements are prepared under IFRS as issued by the IASB and presented in U.S. dollars[21](index=21&type=chunk) - The fiscal year ends on December 31st of each year[21](index=21&type=chunk) [Presentation of Industry and Market Data](index=6&type=section&id=PRESENTATION%20OF%20INDUSTRY%20AND%20MARKET%20DATA) [Data Sources and Reliability](index=6&type=section&id=Data%20Sources%20and%20Reliability) Market data relies on industry publications and internal estimates, with accuracy and completeness not independently guaranteed - Market data and economic/industry data are sourced from IDC, Gartner, Forrester, internal surveys, and publicly available information[22](index=22&type=chunk) - The accuracy and completeness of third-party industry publications are not guaranteed, and the company's market share estimates are based on internal best estimates[23](index=23&type=chunk)[24](index=24&type=chunk) PART I [ITEM 1. Identity of Directors, Senior Management and Advisers](index=8&type=section&id=ITEM%201.%20Identity%20of%20Directors%2C%20Senior%20Management%20and%20Advisers) Information on directors, senior management, and advisers is not applicable in this section - Information on the identity of directors, senior management, and advisers is not applicable in this section[26](index=26&type=chunk) [ITEM 2. Offer Statistics and Expected Timetable](index=8&type=section&id=ITEM%202.%20Offer%20Statistics%20and%20Expected%20Timetable) Information on offer statistics and expected timetable is not applicable - Information on offer statistics and expected timetable is not applicable[27](index=27&type=chunk) [ITEM 3. Key Information](index=8&type=section&id=ITEM%203.%20Key%20Information) [A. [Reserved]](index=8&type=section&id=A.%20%5BReserved%5D) This sub-item is reserved with no specific information - This section is reserved[28](index=28&type=chunk) [B. Capitalization and Indebtedness](index=8&type=section&id=B.%20Capitalization%20and%20Indebtedness) Information on capitalization and indebtedness is not applicable in this section - Information on capitalization and indebtedness is not applicable in this section[28](index=28&type=chunk) [C. Reasons for the Offer and Use of Proceeds](index=8&type=section&id=C.%20Reasons%20for%20the%20Offer%20and%20Use%20of%20Proceeds) Information on reasons for the offer and use of proceeds is not applicable - Information on reasons for the offer and use of proceeds is not applicable[29](index=29&type=chunk) [D. Risk Factors](index=8&type=section&id=D.%20Risk%20Factors) Outlines principal factors making investment speculative, including business, industry, Latin American operations, and company ownership risks - Investment in the company is speculative due to factors such as the ongoing impact of the COVID-19 pandemic, challenges in maintaining resource utilization and productivity, and difficulties in attracting and retaining highly-skilled IT professionals[30](index=30&type=chunk)[32](index=32&type=chunk)[38](index=38&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Other significant risks include the inability to achieve anticipated growth, effectively manage rapid business expansion, and accurately price client contracts, which could lead to unprofitability[32](index=32&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk)[50](index=50&type=chunk) - The company faces intense competition, potential loss of key clients or senior management, and the necessity to continuously innovate in emerging technologies to remain competitive[32](index=32&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[66](index=66&type=chunk) - Operating in Latin America presents risks such as adverse economic conditions, government influence, inflation, currency exchange rate fluctuations, and political instability, particularly in Argentina and Colombia[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[144](index=144&type=chunk) - Risks related to company ownership include potential volatility in common share price, classification as a 'passive foreign investment company' (PFIC) for U.S. tax purposes, need for additional capital, and concentration of ownership among existing executive officers and directors[35](index=35&type=chunk)[153](index=153&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) [ITEM 4. Information on the Company](index=33&type=section&id=ITEM%204.%20Information%20on%20the%20Company) - Globant is a leading global technology service provider, publicly traded on the NYSE under 'GLOB', focused on digital transformation and leveraging its Studio Model[189](index=189&type=chunk)[190](index=190&type=chunk)[214](index=214&type=chunk) - The company's revenue distribution for 2021 was **64.1% from North America**, **22.6% from Latin America and Others**, **11.7% from Europe**, and **1.6% from Asia**. **91.9% of 2021 revenues came from existing clients**[194](index=194&type=chunk)[195](index=195&type=chunk) - Key strategic objectives include growing revenue with existing and new clients, remaining at the forefront of emerging technologies, developing products and platforms (e.g., Globant X), attracting and retaining top talent, and selectively pursuing strategic acquisitions[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) [A. History and Development of the Company](index=33&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Globant, founded in 2003, achieved global growth through its Studio Model, strategic acquisitions, and initiatives like 'Be Kind' and 'Augmented Coding' - Founded in 2003, Globant has grown into a global company with a presence in **18 countries**, driven by organic growth and strategic acquisitions[178](index=178&type=chunk)[179](index=179&type=chunk)[182](index=182&type=chunk)[193](index=193& The company established its Studio Model in 2009 to foster creativity and innovation through deep expertise in emerging technologies and industries[180](index=180&type=chunk) - Key acquisitions in recent years include PointSource, Small Footprint Inc., Avanxo, Belatrix, Grupo Assa, BlueCap, Cloudshift, Habitant, Walmeric, Atix Labs, and Navint Group, aimed at expanding capabilities and geographic footprint[182](index=182&type=chunk)[183](index=183&type=chunk) - Major initiatives include 'Be Kind' (sustainability framework launched in 2019), 'Augmented Coding' (AI-powered software development tool launched in 2020), and 'Globant X' (innovation incubator established in 2021)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [B. Business Overview](index=34&type=section&id=B.%20Business%20Overview) Globant is a leading global technology service provider focused on digital transformation, leveraging its Studio Model, customer-centricity, and strategic growth initiatives [Overview](index=34&type=section&id=Overview) Globant is a NYSE-listed global technology service provider, specializing in engineering, innovation, and design, driven by its 'Be Kind' initiative and strong client retention - Globant is a publicly-traded global technology service provider, listed on the NYSE, known for engineering, innovation, and design at scale[189](index=189&type=chunk)[190](index=190&type=chunk) - The company's success is driven by its 'Be Kind' initiative, talent and culture, and services, with **23,526 employees across 18 countries** as of December 31, 2021[192](index=192&type=chunk)[193](index=193&type=chunk) - In 2021, **64.1% of revenues came from North America**, and **91.9% from existing clients**, demonstrating strong client relationships[194](index=194&type=chunk)[195](index=195&type=chunk) [The Market Opportunity](index=35&type=section&id=The%20market%20opportunity) COVID-19 accelerated digital transformation, with spending projected to reach $6.3 trillion by 2024, representing 55% of global tech investment - COVID-19 has accelerated the need for organizations to evolve and accelerate digital transformations[197](index=197&type=chunk) - Digital transformation spending is projected to reach **$6.3 trillion by 2024**, accounting for **55% of all technology investment worldwide**[198](index=198&type=chunk) - Over **50% of global companies** are expected to have an enterprise-wide digital transformation strategy by 2024[198](index=198&type=chunk) [Business and Tech Trends](index=35&type=section&id=Business%20and%20Tech%20trends) Key trends include customer-centricity, AI/ML, 'phygital' models, sustainability, and the metaverse, driving new business and tech landscapes - Customer-centricity and leveraging new technologies are crucial for businesses to differentiate themselves[199](index=199&type=chunk) - By 2026, **85% of enterprises** will combine human expertise with AI, ML, natural language processing, and pattern recognition to enhance foresight and increase worker productivity by **25%**[200](index=200&type=chunk) - New business models will focus on strategic alliances, phygital experiences (combining physical and digital), and sustainability initiatives[200](index=200&type=chunk) - The metaverse is expected to create new spaces for companies to extend their presence and offerings, maximizing client and employee engagement[200](index=200&type=chunk) - Blockchain and decentralization will drive changes in business models, enabling cross-industry connections and integrated functionality through APIs[201](index=201&type=chunk) [Strategy](index=36&type=section&id=Strategy) Strategy focuses on growing revenue, leading in emerging tech via Studio model, developing products, attracting talent, and strategic acquisitions - The company aims to grow revenue by delivering innovative, high value-added solutions and targeting new clients through its engineering, design, and innovation capabilities[202](index=202&type=chunk) - Globant will continue to add Studios to remain at the forefront of innovation and digital transformation, leveraging deep domain expertise[203](index=203&type=chunk) - Globant X, an incubator, is dedicated to productizing transformative technology into platforms and creating new revenue models[204](index=204&type=chunk) - A high priority is placed on recruiting, training, and retaining top-quality talent, expanding delivery centers into new locations globally[205](index=205&type=chunk) - Strategic acquisitions are pursued to deepen client relationships, extend technology capabilities, broaden service offerings, and expand the geographic footprint of delivery centers[206](index=206&type=chunk) [Competitive Strengths](index=36&type=section&id=Competitive%20Strengths) Strengths include deep expertise, long-term blue-chip client relationships, global delivery model, and experienced management - Deep domain expertise across industries and emerging technologies, organized into 'Studios', provides a strong competitive advantage[208](index=208&type=chunk) - Long-term relationships with blue-chip clients such as Google, Electronic Arts, Southwest Airlines Co., and Walt Disney Parks and Resorts Online, with some relationships exceeding ten years[209](index=209&type=chunk) - A global delivery model allows access to diverse talent pools, with a focus on expanding delivery footprint and recruitment efforts in the United States[210](index=210&type=chunk) - The management team comprises seasoned industry professionals with an average of **20 years of experience**, driving growth and entrepreneurial culture[211](index=211&type=chunk) [Our Services](index=37&type=section&id=Our%20services) Services delivered via Studio model, Globant X, and autonomous culture, fostering innovation in Reinvention and Digital Studios, and Agile Pods - Services are delivered through a Studio model, Globant X, and a global autonomous culture, aimed at helping clients adapt and thrive[213](index=213&type=chunk) - The Studio model organizes expertise into smaller operating units, fostering creativity and innovation across emerging technologies and industries[214](index=214&type=chunk) - Reinvention Studios focus on industry-specific transformation (e.g., Airlines, Bluecap Future Finance, Gaming, Life Sciences, Media and Entertainment, Travel and Hospitality)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Digital Studios develop business models and technical capabilities in the latest technologies (e.g., Agile Delivery, Blockchain, Business Hacking, CloudOps, Conversational Interfaces, Cultural Hacking, Cybersecurity, Data & AI, Design, Digital Lending, Digital Sales, Digital Experience Platforms, Digital Marketing, Enterprise Applications, Internet of Things, Metaverse, Process Optimization, Product, Quality Engineering, Salesforce, Scalable Platforms, Smart Venues, UI Engineering, Sustainable Business)[215](index=215&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[234](index=234&type=chunk)[236](index=236&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[244](index=244&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk)[266](index=266&type=chunk)[269](index=269&type=chunk)[271](index=271&type=chunk)[275](index=275&type=chunk)[277](index=277&type=chunk)[279](index=279&type=chunk) - Globant X is an incubator focused on productizing transformative technology into platforms[281](index=281&type=chunk) - The global autonomous culture is driven by Agile Pods, self-organized teams responsible for creating, building, and sustaining features, products, or platforms, promoting productivity and continuous improvement[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) [Our Delivery Model](index=53&type=section&id=Our%20Delivery%20Model) Delivery model emphasizes cultural affinity, global footprint, and diverse talent access for efficient solution delivery and competitive advantage - The delivery model focuses on cultural affinity with clients to enhance interaction, responsiveness, and efficient solution delivery[286](index=286&type=chunk) - Global presence in many countries provides a competitive advantage by accessing abundant high-quality talent, cultural similarities, and geographic proximity to clients[287](index=287&type=chunk) [About Our Be Kind Initiative](index=53&type=section&id=About%20our%20Be%20Kind%20initiative) The 'Be Kind' initiative, central to Globant's culture, focuses on employee well-being, diversity, ethical AI, and environmental sustainability - The 'Be Kind' initiative is a core cultural component focused on transforming organizations and lives[288](index=288&type=chunk) - It encompasses four pillars: 'Be kind to yourself' (employee well-being), 'Be kind to peers' (diversity, equity, and inclusion, including a goal of **50% women/non-binary in management by 2025**), 'Be kind to humanity' (ethical AI, Be Kind Tech Fund for purpose-driven startups), and 'Be kind to the planet' (carbon neutrality, Science-Based Targets commitment)[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) [Our Talent and Our Culture](index=54&type=section&id=Our%20talent%20and%20our%20culture) Globant's culture is entrepreneurial and team-oriented, fostering career growth through Globant University, Leadership Accelerator, and Globant Ventures - Globant's culture is entrepreneurial, flexible, sustainable, and team-oriented, based on motivational pillars of Autonomy, Mastery, and Purpose, and six core values including 'Think Big', 'Constantly Innovate', and 'Be Kind'[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk)[303](index=303&type=chunk) - The company supports employee career growth through five dimensions: Technology, Clients, Industries, Specialty, and Geocultural diversity, offering numerous learning and development opportunities[302](index=302&type=chunk)[304](index=304&type=chunk)[610](index=610&type=chunk)[618](index=618&type=chunk) - Globant University provides a digital ecosystem for continuous career development, including MyGrowth for tracking job positions and Campus for learning resources. The Leadership Accelerator Program (LeAP) strengthens leadership skills[603](index=603&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[609](index=609&type=chunk)[613](index=613&type=chunk)[614](index=614&type=chunk) - Entrepreneurship is fostered through Globant Ventures, an accelerator for tech startups in cutting-edge areas like AI[306](index=306&type=chunk) Globers Attrition Rate | Year | Attrition Rate | | :--- | :--- | | 2021 | 18.7% | | 2020 | 13.0% | | 2019 | 14.6% | [Availability of High-Quality Talent](index=56&type=section&id=Availability%20of%20high-quality%20talent) Latin America and India offer a competitive advantage with abundant, multilingual IT talent pools and strong academic programs - Latin America offers an abundantly skilled IT talent pool, with over **345,000 engineering and technology graduates annually** from 2012-2016[307](index=307&type=chunk) - The region's professionals possess diverse skills and multilingual capabilities (English, Spanish, Portuguese, Italian, German, French), providing a distinct advantage for serving U.S. and European markets[307](index=307&type=chunk) - India also offers significant graduate talent, with approximately **4 million people employed in the IT-BPM industry** and over **5 million graduates annually**[308](index=308&type=chunk) [Government Support and Incentives](index=56&type=section&id=Government%20Support%20and%20Incentives) Globant benefits from government tax incentives in Argentina, Uruguay, India, Belarus, and Colombia, reducing operating costs - In Argentina, the Knowledge Economy Law (effective Jan 1, 2020) provides beneficiaries with a **60% reduction in corporate income tax** for micro/small enterprises, **40% for medium**, and **20% for large**, along with a non-transferable tax credit of up to **70%** (**80% for certain new hires**) of social security contributions and **0% export duties**[310](index=310&type=chunk)[311](index=311&type=chunk)[104](index=104&type=chunk) - Uruguay's Free Trade Zone regime offers almost full tax exemption (Corporate Income Tax, Net Wealth Tax, VAT) and customs duties exemption, with foreign employees potentially opting out of the social security system[314](index=314&type=chunk)[315](index=315&type=chunk)[320](index=320&type=chunk)[104](index=104&type=chunk) - India's Special Economic Zones Act of 2005 provides a **100% deduction of profits** from export services for the first five years and **50% for the next five years**, with other tax benefits[317](index=317&type=chunk)[104](index=104&type=chunk) - Belarus's High Technology Park (HTP) offers exemption from Corporate Income Tax and VAT, with a special legal regime extended until **2049**[319](index=319&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk)[104](index=104&type=chunk) - Colombia's Free Trade Zone Regime (Law 1004 of 2005) offers a corporate income tax rate of **20%** (**15% lower than national rate**), customs tax exemptions, and the ability to export to third-party countries and the national territory[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) [Methodologies and Tools](index=58&type=section&id=Methodologies%20and%20Tools) Globant uses ISO 9001:2015 and CMMI Level 3 certified methodologies and proprietary tools like 'Glow' for efficient software delivery and resource management - The company uses proprietary internal applications and tools to manage projects, build applications, and assess software vulnerability[325](index=325&type=chunk)[355](index=355&type=chunk) - A Quality Management System, certified under **ISO 9001:2015** and **CMMI Maturity Level 3**, ensures continuous process improvement and client satisfaction[326](index=326&type=chunk)[327](index=327&type=chunk)[329](index=329&type=chunk) - 'Glow', a proprietary software application, is used as a management tool to match open positions with available 'Globers', facilitating rapid staffing and efficient resource utilization[330](index=330&type=chunk)[331](index=331&type=chunk)[355](index=355&type=chunk) [Clients](index=59&type=section&id=Clients) Globant serves diverse medium to large clients globally, with revenue from long-term projects and existing clients, led by Walt Disney Parks and Resorts Online - Clients are primarily medium to large-sized companies in North America, Europe, Asia, and Latin America, across diverse industries[333](index=333&type=chunk) - Client relationships are often based on master services agreements (MSAs) and statements of work (SOWs), with **40% of revenue from long-term projects** (over 24 months)[334](index=334&type=chunk) Client Revenue Concentration (2021, 2020, 2019) | Client Group | 2021 Revenue % | 2020 Revenue % | 2019 Revenue % | | :--- | :--- | :--- | :--- | | Top client (Walt Disney Parks and Resorts Online) | 10.9% | 11.0% | 11.2% | | Top five clients | 26.7% | 30.6% | 26.1% | | Top ten clients | 39.1% | 42.2% | 39.5% | | Top twenty clients | 52.0% | 54.4% | - | Client Distribution by Revenue (2021, 2020) | Revenue Band | 2021 Clients | 2020 Clients | | :--- | :--- | :--- | | Over $5 Million | 42 | 32 | | $1 - $5 Million | 143 | 97 | | $0.5 - $1 Million | 106 | 60 | | $0.1 - $0.5 Million | 287 | 185 | | Less than $0.1 Million | 560 | 424 | | Total Clients | 1,138 | 798 | [Sales and Marketing](index=60&type=section&id=Sales%20and%20Marketing) Sales and marketing strategy focuses on leveraging expertise, growing existing clients, new client acquisition, and strategic acquisitions, driven by the 'RDA' model - The growth strategy is based on four pillars: leveraging broad expertise, growing within existing clients, acquiring new clients, and pursuing strategic acquisitions[338](index=338&type=chunk) - The 'RDA' (retain, develop, acquire) strategy is fundamental, focusing on maintaining wallet share, expanding existing client relationships, and targeting new client accounts[340](index=340&type=chunk) - The sales and marketing team, comprising **220 personnel**, has broad geographic coverage in **18 countries**[339](index=339&type=chunk) - New client acquisition involves identifying growth potential, engaging market-facing management, and using ideation/discovery sessions to develop specific value propositions[341](index=341&type=chunk)[342](index=342&type=chunk)[344](index=344&type=chunk) - For existing clients, the '50 Squared' model focuses on top **50 high-potential accounts** for exponential growth, led by senior sales, technology, and operations personnel[346](index=346&type=chunk) [Seasonality](index=62&type=section&id=Seasonality) Business is seasonal, with higher Q3/Q4 revenues due to utilization, lower Q1/Q2 due to slowdowns, and salary increases impacting margins - Business is seasonal, with higher revenues and profitability in Q3 and Q4 due to peak IT professional utilization[350](index=350&type=chunk) - Q1 and Q2 typically have lower revenues due to seasonal slowdowns, fewer working days in the Southern Hemisphere (summer), and the timing of the Easter holiday[350](index=350&type=chunk) - Annual salary increases implemented in Q2 and Q4 also affect margins[350](index=350&type=chunk) [Competition](index=62&type=section&id=Competition) The IT services market is intensely competitive, with Globant facing large firms and in-house departments, competing on innovation, expertise, and price - The technology and IT services market is intensely competitive, highly fragmented, and subject to rapid change[66](index=66&type=chunk) - Principal competitive factors include innovation, technical expertise, end-to-end solutions, reputation, employee recruiting/retention, client responsiveness, scale, financial stability, and price[66](index=66&type=chunk) - Competitors include large global consulting/outsourcing firms (e.g., Accenture Interactive), digital agencies (e.g., Razorfish), traditional IT outsourcing providers (e.g., Cognizant), and in-house client departments[67](index=67&type=chunk)[352](index=352&type=chunk) - Many competitors possess greater financial, technical, and marketing resources, potentially leading to more aggressive pricing and loss of market share[68](index=68&type=chunk)[69](index=69&type=chunk)[352](index=352&type=chunk) [Intellectual Property](index=62&type=section&id=Intellectual%20Property) Globant protects IP via NDAs, trade secrets, patents, copyrights, and trademarks, granting clients licenses for preexisting IP in delivered solutions - Intellectual property is protected through nondisclosure agreements, trade secrets, patents, copyrights, and trademarks[89](index=89&type=chunk)[353](index=353&type=chunk) - Clients typically own the intellectual property in delivered software solutions, but are granted a perpetual, worldwide, royalty-free license to use Globant's preexisting IP necessary for the solutions[354](index=354&type=chunk) - Proprietary internal tools include 'Glow', 'Nails', and 'Service Over Platforms (SoP)'[355](index=355&type=chunk) - Registered IP includes the trademarks 'Globant' and 'StarMe Up', and several software patents in the United States and Spain[356](index=356&type=chunk) [Facilities and Infrastructure](index=63&type=section&id=Facilities%20and%20Infrastructure) As of December 31, 2021, Globant operates 56 offices across 15 countries, totaling over 1 million square feet for development and client management Office Locations and Square Footage (as of December 31, 2021) | Country | Number of Offices | Type | Square Feet | | :--- | :--- | :--- | :--- | | Argentina | 15 | Development and Delivery Center / Client Management Center | 378,009 | | Brazil | 5 | Development and Delivery Center / Client Management Center | 19,096 | | Chile | 1 | Development and Delivery Center / Client Management Center | 14,187 | | Colombia | 6 | Development and Delivery Center / Client Management Center | 174,538 | | France | 1 | Client Management Center | 592 | | India | 2 | Development and Delivery Center | 134,151 | | United Kingdom | 2 | Development and Delivery Center / Client Management Center | 3,735 | | Mexico | 4 | Development and Delivery Center / Client Management Center | 99,351 | | Peru | 1 | Development and Delivery Center | 30,419 | | Spain | 7 | Development and Delivery Center / Client Management Center | 38,568 | | United States | 7 | Development and Delivery Center / Client Management Center | 69,987 | | Luxembourg | 1 | Principal Executive Office | 150 | | Uruguay | 2 | Development and Delivery Center / Client Management Center | 54,853 | | Belarus | 1 | Development and Delivery Center | 28,794 | | Romania | 1 | Development and Delivery Center | 8,396 | | Total | 56 | | 1,054,826 | [Regulatory Overview](index=63&type=section&id=Regulatory%20Overview) Global operations are subject to diverse regulations (trade, tax, data protection), increasing costs and risks, but benefit from tax incentives in key countries - Operations are subject to a variety of rules and regulations across multiple countries, including import/export controls, trade restrictions, tariffs, taxation, anti-corruption laws, and data protection requirements[87](index=87&type=chunk)[359](index=359&type=chunk) - Non-compliance could result in fines, penalties, criminal sanctions, and reputational damage[87](index=87&type=chunk) - The company benefits from tax incentives in Argentina (Knowledge Economy Law), Uruguay (Free Trade Zone), India (Special Economic Zones), and Belarus (High Technology Park)[104](index=104&type=chunk)[360](index=360&type=chunk) [C. Organizational Structure](index=70&type=section&id=C.%20Organizational%20Structure) Globant S.A., incorporated in Luxembourg in 2012, serves as the holding company with principal subsidiaries across multiple countries - Globant S.A. was incorporated in Luxembourg on December 10, 2012, serving as the holding company for its consolidated subsidiaries[417](index=417&type=chunk) - Principal operating subsidiaries are located in Argentina, Chile, Colombia, India, Mexico, Peru, Spain, United Kingdom, United States, and Uruguay[194](index=194&type=chunk)[418](index=418&type=chunk) [D. Property, Plant and Equipment](index=70&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment) Details on property, plant, and equipment are found in the 'Facilities and Infrastructure' section of the Business Overview - Information on property, plant, and equipment is detailed under 'Business Overview - Facilities and Infrastructure'[419](index=419&type=chunk) [ITEM 4A. Unresolved Staff Comments](index=70&type=section&id=ITEM%204A.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - There are no unresolved staff comments[420](index=420&type=chunk) [ITEM 5. Operating and Financial Review and Prospects](index=70&type=section&id=ITEM%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) Detailed analysis of financial condition and operating results under IFRS, covering performance factors, income statement, and non-IFRS data [A. Operating Results](index=71&type=section&id=A.%20Operating%20Results) Operating results are driven by market demand, innovation, and talent, with 2021 revenues increasing 59.3% to $1.3 billion, improving margins - Operating results are affected by market demand for integrated engineering, design, and innovation technology services, economic conditions, and the ability to innovate and expand service offerings[423](index=423&type=chunk)[424](index=424&type=chunk) - Talent management, including attracting, retaining, and efficiently utilizing skilled IT professionals, and managing operating costs and foreign exchange rates, are crucial factors[424](index=424&type=chunk) Revenue Growth (2021 vs 2020) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change % | | :--- | :--- | :--- | :--- | | Revenues | $1,297,078 | $814,139 | 59.3% | Revenues by Contract Type (2021 vs 2020) | Contract Type | 2021 (in thousands) | 2021 % | 2020 (in thousands) | 2020 % | | :--- | :--- | :--- | :--- | :--- | | Time & Materials | $1,062,171 | 81.9% | $698,943 | 85.9% | | Fixed Price | $218,846 | 16.9% | $107,033 | 13.1% | | Subscription resales | $16,039 | 1.2% | $8,156 | 1.0% | | Others | $22 | —% | $7 | —% | | Total Revenues | $1,297,078 | 100.0% | $814,139 | 100.0% | Revenues by Client Location (2021 vs 2020) | Geography | 2021 (in thousands) | 2021 % | 2020 (in thousands) | 2020 % | | :--- | :--- | :--- | :--- | :--- | | North America | $830,904 | 64.1% | $574,150 | 70.5% | | Europe | $151,302 | 11.7% | $61,780 | 7.6% | | Asia | $20,915 | 1.6% | $8,349 | 1.0% | | Latin America and other | $293,957 | 22.6% | $169,860 | 20.9% | | Total Revenues | $1,297,078 | 100.0% | $814,139 | 100.0% | Revenues by Industry Vertical (2021 vs 2020) | Industry Vertical | 2021 (in thousands) | 2021 % | 2020 (in thousands) | 2020 % | | :--- | :--- | :--- | :--- | :--- | | Banks, Financial Services and Insurance | $308,227 | 23.8% | $193,364 | 23.8% | | Media and Entertainment | $272,703 | 21.0% | $187,071 | 23.0% | | Consumer, Retail & Manufacturing | $197,620 | 15.2% | $105,876 | 13.0% | | Professional Services | $167,997 | 13.0% | $103,133 | 12.7% | | Technology & Telecommunications | $155,665 | 12.0% | $96,643 | 11.9% | | Health Care | $96,334 | 7.4% | $53,781 | 6.6% | | Travel & Hospitality | $87,567 | 6.8% | $67,634 | 8.3% | | Other Verticals | $10,965 | 0.8% | $6,637 | 0.7% | | Total | $1,297,078 | 100.0% | $814,139 | 100.0% | Client Concentration (2021 vs 2020) | Client Group | 2021 (in thousands) | 2021 % | 2020 (in thousands) | 2020 % | | :--- | :--- | :--- | :--- | :--- | | Top client | $141,100 | 10.9% | $89,158 | 11.0% | | Top five clients | $345,835 | 26.7% | $249,451 | 30.6% | | Top ten clients | $506,572 | 39.1% | $343,431 | 42.2% | | Top twenty clients | $674,883 | 52.0% | $442,902 | 54.4% | - Net income for 2021 was **$96.4 million**, up from **$54.2 million in 2020**, with an effective tax rate decreasing to **22.8% from 29.2%**[463](index=463&type=chunk)[464](index=464&type=chunk) [B. Liquidity and Capital Resources](index=80&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) Liquidity from operating activities supports capital expenditures and acquisitions; 2021 saw $89.6 million in capex and $310.4 million in acquisitions - Primary liquidity sources are cash flows from operating activities, with cash needs for capital expenditures and working capital[475](index=475&type=chunk)[476](index=476&type=chunk) - Management believes existing funds are sufficient for the next 12 months, but future capital requirements may necessitate additional equity or debt financing[478](index=478&type=chunk) Capital Expenditures (2021 vs 2020) | Category | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Total fixed assets acquisitions | $53,159 | $30,095 | | Total intangible assets acquisitions | $52,449 | $75,021 | | Additions related to business combinations | ($15,983) | ($52,033) | | Total Capital Expenditures | $89,625 | $53,083 | - In 2021, the company invested **$89.6 million** in capital expenditures, including delivery centers and internal developments, and completed five acquisitions (Cloudshift, Habitant, Walmeric, Atix Labs, Navint Group) with a total fair value of consideration of **$310.4 million**[483](index=483&type=chunk)[488](index=488&type=chunk)[489](index=489&type=chunk)[490](index=490&type=chunk)[491](index=491&type=chunk)[492](index=492&type=chunk)[1331](index=1331&type=chunk) Cash Flows Summary (2021 vs 2020) | Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $178,974 | $99,872 | | Net cash used in investing activities | ($272,880) | ($124,015) | | Net cash provided by financing activities | $243,986 | $241,546 | | Cash and cash equivalents at end of year | $429,019 | $280,124 | - Net cash provided by operating activities increased by **$79.1 million in 2021**, primarily due to a **$116.0 million increase** in profit before income tax adjusted for non-cash items[496](index=496&type=chunk) - The Second Amended and Restated Credit Agreement (2020, amended 2021) provides for up to **$100 million** in delayed-draw term loans and **$250 million** in revolving credit, maturing February 5, 2025, with interest based on LIBOR[110](index=110&type=chunk)[111](index=111&type=chunk)[504](index=504&type=chunk) [C. Research and Development, Patents and Licenses, etc.](index=85&type=section&id=C.%20Research%20and%20Development%2C%20Patents%20and%20Licenses%2C%20etc.) Details on research and development, patents, and licenses are found in the 'Intellectual Property' section of the Business Overview - Information on research and development, patents, and licenses is detailed under 'Information of the company - Business Overview — Intellectual Property'[516](index=516&type=chunk) [D. Trend Information](index=85&type=section&id=D.%20Trend%20Information) Trend information is in 'Operating Results', with no material adverse trends identified since December 31, 2021 - Trend information is detailed under 'Operating Results — Factors Affecting Our Results of Operations'[516](index=516&type=chunk) - No material adverse trends, uncertainties, demands, commitments, or events have been identified since December 31, 2021, that are likely to significantly affect revenues, income, profitability, liquidity, or capital resources[516](index=516&type=chunk) [E. Critical Accounting Estimates](index=85&type=section&id=E.%20Critical%20Accounting%20Estimates) Critical accounting estimates are detailed in Note 4 of the audited consolidated financial statements - Critical accounting estimates are detailed in Note 4 to the audited consolidated financial statements[517](index=517&type=chunk) [ITEM 6. Directors, Senior Management and Employees](index=85&type=section&id=ITEM%206.%20Directors%2C%20Senior%20Management%20and%20Employees) Details leadership structure, compensation, board practices, and employee information, emphasizing talent development and equity compensation [A. Directors and Senior Management](index=85&type=section&id=A.%20Directors%20and%20Senior%20Management) Board of directors and senior management, as of February 10, 2022, includes key executives and independent directors overseeing company operations Board of Directors (as of February 10, 2022) | Name | Position | Age | Current Term Expiring | | :--- | :--- | :--- | :--- | | Martín Migoya | Chairman of the Board and Chief Executive Officer | 53 | 2024 | | Martín Gonzalo Umaran | Director - Chief Corporate Development Officer & President for EMEA | 53 | 2023 | | Guibert Andrés Englebienne | Director - President of Globant X and Globant Ventures - President for Latin America | 55 | 2023 | | Francisco Álvarez-Demalde | Director | 43 | 2022 | | Mario Eduardo Vázquez | Director | 86 | 2022 | | Philip A. Odeen | Director | 86 | 2024 | | Linda Rottenberg | Director | 53 | 2023 | | Richard Haythornthwaite | Director | 65 | 2024 | | Maria Pinelli | Director | 59 | 2022 | Senior Management (as of February 11, 2022) | Name | Position | | :--- | :--- | | Martín Migoya | Chief Executive Officer | | Martín Gonzalo Umaran | Chief Corporate Development Officer - President for EMEA | | Guibert Andrés Englebienne | President of Globant X and Globant Ventures - President for Latin America | | Juan Ignacio Urthiague | Chief Financial Officer | | Patricia Pomies | Chief Operating Officer | | Yanina Maria Conti | Chief Accounting Officer | | Gustavo Barreiro | Chief Information Officer | | Wanda Weigert | Chief Brand Officer | | Diego Tártara | Chief Technology Officer | | Mercedes María Mac Pherson | Chief Talent & Diversity Officer | | Patricio Pablo Rojo | General Counsel | [B. Compensation](index=91&type=section&id=B.%20Compensation) Director and senior management compensation totaled $6.7 million in 2021, including equity incentive plans and non-competition agreements Total Remuneration of Directors and Senior Management (2021, 2020, 2019) | Year | Amount (in thousands) | | :--- | :--- | | 2021 | $6,709 | | 2020 | $6,643 | | 2019 | $6,914 | - The 2014 Equity Incentive Plan grants stock options, RSUs, and PRSUs to employees and senior management, with **40% of recent awards tied to performance** and **60% to retention**[510](index=510&type=chunk)[546](index=546&type=chunk)[550](index=550&type=chunk)[554](index=554&type=chunk)[555](index=555&type=chunk)[556](index=556&type=chunk)[557](index=557&type=chunk)[558](index=558&type=chunk) - Founders have non-competition agreements providing compensation upon termination, ranging from **24 to 36 times their highest monthly compensation**, plus continued health coverage and life insurance[566](index=566&type=chunk) - Independent directors are eligible for cash and/or share-based compensation, subject to shareholder approval[564](index=564&type=chunk) [C. Board Practices](index=94&type=section&id=C.%20Board%20Practices) Board of directors, with 7-15 members, manages the company, establishes committees, indemnifies directors, and manages conflicts of interest - The board of directors consists of at least seven and no more than fifteen members, elected for staggered terms of up to four years[569](index=569&type=chunk)[571](index=571&type=chunk) - The board can delegate daily management and establish committees, including an audit committee, compensation committee, and corporate governance and nominating committee[572](index=572&type=chunk)[573](index=573&type=chunk)[579](index=579&type=chunk) - Directors are entitled to indemnification, except for liability due to willful misconduct, bad faith, gross negligence, or reckless disregard of duties[577](index=577&type=chunk)[578](index=578&type=chunk) - Directors with conflicting interests in a transaction must disclose it, recuse themselves from deliberations, and not vote on the matter[575](index=575&type=chunk) - The Audit Committee oversees corporate accounting and financial reporting, appoints independent auditors, and reviews financial statements and critical accounting policies[580](index=580&type=chunk) - The Compensation Committee reviews and approves compensation policies for officers and directors, and administers equity and benefit plans[582](index=582&type=chunk) - The Corporate Governance and Nominating Committee identifies director candidates, recommends governance guidelines, and oversees board and committee evaluations[585](index=585&type=chunk) [D. Employees](index=96&type=section&id=D.%20Employees) Globant's 23,526 'Globers' are a critical asset, supported by global talent access, continuous development programs, and equity incentive plans - As of December 31, 2021, Globant had **23,526 employees ('Globers') across 18 countries**, with a decentralized model to improve talent access and retention[193](index=193&type=chunk)[589](index=589&type=chunk)[593](index=593&type=chunk) Employee Headcount by Functional Area (as of December 31, 2021) | Functional Area | Number of Employees | | :--- | :--- | | Technology | 20,707 | | Operations | 1,460 | | Sales and Marketing | 220 | | Management and administration | 1,139 | | Total | 23,526 | Employee Headcount by Geographical Location (as of December 31, 2021) | Country | Number of Employees | | :--- | :--- | | Argentina | 5,369 | | Brazil | 708 | | Colombia | 5,314 | | Chile | 1,278 | | United Kingdom | 175 | | Uruguay | 1,013 | | United States | 709 | | Mexico | 3,236 | | Peru | 1,272 | | India | 3,518 | | Spain | 534 | | Belarus | 203 | | Romania | 164 | | France | 6 | | Canada | 9 | | Luxembourg | 1 | | Costa Rica | 11 | | Germany | 6 | | Total | 23,526 | - The 'Globant University' digital ecosystem and 'Leadership Accelerator Program' (LeAP) support continuous career development and leadership skill enhancement[603](index=603&type=chunk)[613](index=613&type=chunk) - The 2021 Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase common shares through payroll deductions, with a maximum of **100,000 shares** initially issuable[619](index=619&type=chunk)[622](index=622&type=chunk)[626](index=626&type=chunk) - The 2021 Stock-Equivalent Units (SEUs) plan grants awards to eligible employees, settled in cash or common shares, tied to retention and performance[639](index=639&type=chunk)[642](index=642&type=chunk) [E. Share Ownership](index=99&type=section&id=E.%20Share%20Ownership) As of Feb 11, 2022, directors and executive officers own 2.67% of shares; major holders include BlackRock (8%), Wasatch (6%), and Morgan Stanley (5%) - As of February 11, 2022, directors and executive officers beneficially own an aggregate of **1,120,509 common shares**, representing **2.67% of total outstanding shares**[643](index=643&type=chunk)[646](index=646&type=chunk) Major Shareholders (as of February 11, 2022) | Shareholder | Number of Shares | Percentage | | :--- | :--- | :--- | | BlackRock, Inc. | 3,356,942 | 8% | | Wasatch Advisors, Inc. | 2,816,656 | 6% | | Morgan Stanley | 2,109,208 | 5% | - As of February 11, 2022, there were **41,894,982 issued and outstanding common shares**[644](index=644&type=chunk) [ITEM 7. Major Shareholders and Related Party Transactions](index=103&type=section&id=ITEM%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) Details major shareholders and the company's policy for related party transactions, emphasizing conflict avoidance and audit committee oversight [A. Major Shareholders](index=103&type=section&id=A.%20Major%20Shareholders) Details beneficial ownership by directors, senior management, and major shareholders (BlackRock, Wasatch, Morgan Stanley) as of February 11, 2022 - As of February 11, 2022, directors and executive officers, as a group, beneficially own **1,120,509 common shares**, representing **2.67% of the total outstanding shares**[643](index=643&type=chunk)[646](index=646&type=chunk) Beneficial Ownership of Common Shares (as of February 11, 2022) | Shareholder | Number of Shares | Percentage | | :--- | :--- | :--- | | BlackRock, Inc. | 3,356,942 | 8% | | Wasatch Advisors, Inc. | 2,816,656 | 6% | | Morgan Stanley | 2,109,208 | 5% | - As of February 11, 2022, there were **41,894,982 issued and outstanding common shares**, with approximately **95.90% held by 178 record holders** in the United States[644](index=644&type=chunk)[645](index=645&type=chunk) [B. Related Party Transactions](index=105&type=section&id=B.%20Related%20Party%20Transactions) Company policies and audit committee oversight manage related party transactions and conflicts of interest, ensuring alignment with company interests - The company has a written code of business conduct and ethics (amended January 26, 2022) and a related party transactions policy (adopted November 5, 2015) to manage conflicts of interest[649](index=649&type=chunk)[650](index=650&type=chunk) - Potential conflicts of interest and related party transactions must be reported and reviewed by corporate counsel, then summarized for the audit committee[649](index=649&type=chunk) - The audit committee approves related-party transactions, considering all relevant facts and circumstances to ensure they align with the company's best interests[649](index=649&type=chunk) - No outstanding balances or revenues from related party operations were disclosed for the years ended December 31, 2021 and 2020[1178](index=1178&type=chunk)[1179](index=1179&type=chunk) [C. Interests of Experts and Counsel](index=105&type=section&id=C.%20Interests%20of%20Experts%20and%20Counsel) Information on the interests of experts and counsel is not applicable - Information on the interests of experts and counsel is not applicable[651](index=651&type=chunk) [ITEM 8. Financial Information](index=105&type=section&id=ITEM%208.%20Financial%20Information) Covers consolidated financial statements, legal proceedings, and dividend policy, confirming audited financials and retention of funds for expansion [A. Consolidated Statements and Other Financial Information](index=105&type=section&id=A.%20Consolidated%20statements%20and%20other%20financial%20information) Confirms Consolidated Financial Statements are in Item 18, addresses legal proceedings, and outlines the company's dividend policy - Consolidated Financial Statements are included in the annual report under Item 18[652](index=652&type=chunk) - The company may be involved in litigation, including patent infringement and class actions, and accrues liabilities for probable and estimable future costs[653](index=653&type=chunk) - A **$7.25 million claim** by Certified Collectibles Group, LLC was settled in July 2021, with **$2.7 million covered by insurance**[654](index=654&type=chunk) - The company reached a preliminary agreement with the U.S. IRS for **$1.3 million** in payroll and employment tax assessments for 2013-2015[655](index=655&type=chunk) - The company anticipates retaining all available funds for business operations and expansion, and does not expect to pay dividends in the foreseeable future[658](index=658&type=chunk) - Luxembourg law requires at least **5% of net income** to be allocated to a legal reserve until it reaches **10% of issued share capital**, which is not available for distribution[659](index=659&type=chunk) [B. Significant Changes](index=107&type=section&id=B.%20Significant%20Changes) As of the annual report date, no significant changes are reported - As of the date of this annual report, there are no significant changes to inform[661](index=661&type=chunk) [ITEM 9. The Offer and Listing](index=107&type=section&id=ITEM%209.%20The%20Offer%20and%20Listing) Details the NYSE listing of common shares under 'GLOB' since July 18, 2014, with other offering information not applicable - The company's ordinary shares began trading on the NYSE under the symbol 'GLOB' on July 18, 2014, following its IPO[662](index=662&type=chunk)[664](index=664&type=chunk) - Information regarding the plan of distribution, selling shareholders, dilution, and expenses of the issue is not applicable in this section[663](index=663&type=chunk)[665](index=665&type=chunk)[666](index=666&type=chunk) [ITEM 10. Additional Information](index=107&type=section&id=ITEM%2010.%20Additional%20Information) Provides additional information on share capital, articles of association, material contracts, exchange controls, and Luxembourg/U.S. taxation [A. Share Capital](index=107&type=section&id=A.%20Share%20capital) Information on share capital is not applicable in this section - Information on share capital is not applicable in this section[667](index=667&type=chunk) [B. Memorandum and Articles of Association](index=107&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) Globant S.A., a Luxembourg joint stock company, had $50.27 million in share capital as of Dec 31, 2021, governed by articles on shares and board structure - Globant S.A. is a Luxembourg joint stock company, incorporated on December 10, 2012[669](index=669&type=chunk) - As of December 31, 2021, issued share capital was **$50,269,076.40**, represented by **41,890,897 common shares** with a nominal value of **$1.20 each**[670](index=670&type=chunk) - Shareholders have pre-emptive subscription rights on new common shares issued for cash, which the board can waive or limit[673](index=673&type=chunk)[680](index=680&type=chunk)[681](index=681&type=chunk) - The company may repurchase its own shares under certain conditions, with prior authorization from shareholders[682](index=682&type=chunk) - Each common share entitles the holder to one vote at general meetings, which distinguish between ordinary and extraordinary resolutions[692](index=692&type=chunk)[693](index=693&type=chunk)[694](index=694&type=chunk)[695](index=695&type=chunk) - The board of directors, consisting of **7 to 15 members** elected for staggered terms, manages the company and can delegate daily management and establish committees[714](index=714&type=chunk)[716](index=716&type=chunk)[717](index=717&type=chunk)[718](index=718&type=chunk) [C. Material Contracts](index=110&type=section&id=C.%20Material%20Contracts) Material contracts include a $350 million credit agreement, underwriting agreements for public offerings, and key acquisition agreements - The Second Amended and Restated Credit Agreement (February 6, 2020, amended October 2021) provides Globant, LLC with up to **$100 million** in delayed-draw term loans and **$250 million** in revolving credit, maturing February 5, 2025[730](index=730&type=chunk) - Underwriting agreements for public offerings include **2.3 million common shares sold in June 2020 for $135.00 per share**, and **1.38 million common shares sold in May 2021 for $214.00 per share**[731](index=731&type=chunk)[735](index=735&type=chunk) - Key acquisition agreements include the July 2020 Equity Purchase Agreement for Grupo ASSA (**$74.5 million aggregate purchase price**) and the December 2020 Equity Purchase Agreement for BlueCap Management Consulting (**€120 million aggregate purchase price**)[732](index=732&type=chunk)[733](index=733&type=chunk)[734](index=734&type=chunk) [D. Exchange Controls](index=111&type=section&id=D.%20Exchange%20Controls) Details on exchange controls are found in the 'Foreign Exchange Controls' section of the Business Overview - Information on exchange controls is detailed under 'Information on the Company — Business Overview — Regulatory Overview — Foreign Exchange Controls'[736](index=736&type=chunk) [E. Taxation](index=115&type=section&id=E.%20Taxation) Summarizes Luxembourg and U.S. tax implications for common shares, including corporate taxes, dividend withholding, and PFIC status - Luxembourg-resident companies are subject to corporate income tax (CIT) and municipal business tax (MBT), with an effective maximum aggregate rate of **24.94% in Luxembourg City as of 2019**[741](index=741&type=chunk)[742](index=742&type=chunk) - Dividends paid by the company are generally subject to a **15% Luxembourg withholding tax**, unless reduced by a double tax treaty or exempt under the participation exemption regime[747](index=747&type=chunk) - For U.S. Holders, distributions are generally foreign source dividend income, and the company does not expect to be classified as a Passive Foreign Investment Company (PFIC)[774](index=774&type=chunk)[780](index=780&type=chunk) - The 2017 Tax Act eliminated 'downward attribution' for CFC rules, potentially impacting U.S. subsidiaries and **10% U.S. Shareholders**[778](index=778&type=chunk) [F. Dividends and Paying Agents](index=118&type=section&id=F.%20Dividends%20and%20Paying%20Agents) Information on dividends and paying agents is not applicable - Information on dividends and paying agents is not applicable[784](index=784&type=chunk) [G. Statement by Experts](index=118&type=section&id=G.%20Statement%20by%20Experts) Information on the statement by experts is not applicable - Information on the statement by experts is not applicable[785](index=785&type=chunk) [H. Documents on Display](index=118&type=section&id=H.%20Documents%20on%20Display) As a foreign private issuer, Globant is exempt from certain U.S. securities laws, with SEC filings available online - As a foreign private issuer, Globant is exempt from certain U.S. securities laws, including frequent periodic reports, detailed executive compensation disclosures, proxy statements, and Regulation FD[786](index=786&type=chunk)[787](index=787&type=chunk) - SEC filings, including this annual report on Form 20-F, are available on the SEC's website (http://www.sec.gov)[786](index=786&type=chunk)[788](index=788&type=chunk) [I. Subsidiaries Information](index=118&type=section&id=I.%20Subsidiaries%20Information) Information on subsidiaries is not applicable in this section - Information on subsidiaries is not applicable in this section[789](index=789&type=chunk) [ITEM 11. Quantitative and Qualitative Disclosures About Market Risk](index=122&type=section&id=ITEM%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk stems from credit, interest rate, and foreign currency fluctuations, managed through client limits, fixed-rate debt, and hedging strategies - Market risk exposure primarily results from concentration of credit risk, fluctuations in interest rates, and foreign currency rates[790](index=790&type=chunk) - Credit risk is considered low due to dispersed trade receivables across large clients and maintaining cash with high-credit quality financial institutions[791](index=791&type=chunk)[792](index=792&type=chunk)[793](index=793&type=chunk)[1388](index=1388&type=chunk) - Interest rate risk is low, with credit lines bearing fixed interest rates, and the company has used interest rate swaps for hedging[794](index=794&type=chunk)[795](index=795&type=chunk)[1380](index=1380&type=chunk) - Foreign exchange risk arises from operations in Latin America and Asia, where most operating expenses are in non-U.S. dollar currencies (e.g., Argentine peso, Colombian peso, Indian Rupee, Mexican peso, Uruguayan peso, Brazilian real, Euros, British pound)[796](index=796&type=chunk)[797](index=797&type=chunk)[799](index=799&type=chunk)[1373](index=1373&type=chunk) Revenue by Currency (2021, 2020, 2019) | Currency | 2021 % | 2020 % | 2019 % | | :--- | :--- | :--- | :--- | | USD | 75.4% | 86.0% | 85.5% | | EUR | 8.6% | 4.4% | 4.3% | | CLP | 4.4% | 0.4% | 0.4% | | ARS | 3.6% | 4.1% | 4.1% | | MXN | 3.1% | 2.7% | 3.0% | | BRL | 1.8% | 1.3% | 1.2% | | GBP | 1.6% | 0.2% | 0.5% | | COP | 0.8% | 1.0% | 1.0% | | PEN | 0.7% | —% | —% | | Others | —% | 0.1% | —% | | Total | 100.0% | 100.0% | 100.0% | - The company uses foreign exchange forward and future contracts to mitigate foreign exchange rate fluctuations, particularly for the Argentine peso, which experienced significant devaluations in 2021 (**22.09%**) and 2020 (**40.58%**)[801](index=801&type=chunk)[802](index=802&type=chunk)[803](index=803&type=chunk)[804](index=804&type=chunk)[1377](index=1377&type=chunk)[1379](index=1379&type=chunk)[1432](index=1432&type=chunk)[1438](index=1438&type=chunk) [ITEM 12. Description of Securities Other Than Equity Securities](index=124&type=section&id=ITEM%2012.%20Description%20of%20Securities%20Other%20Than%20Equity%20Securities) Information on debt securities, warrants, other securities, and American Depositary Shares is not applicable - Information on debt securities, warrants and rights, other securities, and American Depositary Shares is not applicable[805](index=805&type=chunk)[806](index=806&type=chunk)[807](index=807&type=chunk)[808](index=808&type=chunk) PART II [ITEM 13. Defaults, Dividend Arrearages and Delinquencies](index=126&type=section&id=ITEM%2013.%20Defaults%2C%20Dividend%20Arrearages%20and%20Delinquencies) Information on defaults, dividend arrearages, and delinquencies is not applicable - Information on defaults, dividend arrearages, and delinquencies is not applicable[810](index=810&type=chunk) [ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds](index=126&type=section&id=ITEM%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20of%20Proceeds) Information on material modifications to security holder rights and use of proceeds is not applicable - Information on material modifications to the rights of security holders and use of proceeds is not applicable[811](index=811&type=chunk) [ITEM 15. Controls and Procedures](index=126&type=section&id=ITEM%2015.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were effective as of Dec 31, 2021, excluding recent 2021 acquisitions - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of December 31, 2021[812](index=812&type=chunk)[813](index=813&type=chunk) - Internal control over financial reporting was assessed as effective as of December 31, 2021, based on criteria established in 'Internal Control — Integrated Framework (2013)' issued by COSO[814](index=814&type=chunk)[815](index=815&type=chunk) - Walmeric, Atix, and Navint, acquired in 2021, were excluded from the assessment of internal control over financial reporting, collectively representing **0.9% of consolidated assets** and **0.8% of consolidated revenues**[816](index=816&type=chunk)[867](index=867&type=chunk)[868](index=868&type=chunk) - No changes in internal controls over financial reporting materially affected or are reasonably likely to materially affect internal control during the reporting period[818](index=818&type=chunk) [ITEM 16A. Audit Committee Financial Expert](index=127&type=section&id=ITEM%2016A.%20Audit%20Committee%20Financial%20Expert) Mario Vázquez is designated as an 'audit committee financial expert' under SEC rules - Mario Vázquez is designated as an 'audit committee financial expert' under SEC rules[819](index=819&type=chunk) [ITEM 16B. Code of Ethics](index=127&type=section&id=ITEM%2016B.%20Code%20of%20Ethics) Globant adopted a Code of Ethics, updated March 1, 2022, covering anti-money laundering, company image, audits, and diversity - The company adopted a code of business conduct and ethics on July 23, 2014, and approved the 2022 Code of Ethics, effective March 1, 2022[820](index=820&type=chunk) - The new code addresses anti-money laundering, protection of Globant's image, proper use of social media, third-party audits, government investigations, and integration and diversity[820](index=820&type=chunk) [ITEM 16C. Principal Accountant Fees and Services](index=127&type=section&id=ITEM%2016C.%20Principal%20Accountant%20Fees%20and%20Services) Details principal auditor fees for 2021 and 2020, categorized by service type, with all services pre-approved by the audit committee Principal Auditor Fees (in thousands of dollars) | Fee Type | 2021 | 2020 | | :--- | :--- | :--- | | Audit Fees | $1,513 | $1,216 | | Audit Related Fees | $331 | $100 | | Tax Services Fees | $0 | $0 | | All Other Fees | $0 | $0 | | Total | $1,844 | $1,316 | - All fees and retention terms for audit and non-audit services performed by independent auditors must be pre-approved by the audit committee[822](index=822&type=chunk) - The audit committee oversees the relationship with independent audi

Financial Data and Key Metrics Changes - Q4 2021 revenue reached $379.8 million, representing 63.3% year-over-year growth and 11.1% growth over Q3 [8][52] - For the full year 2021, revenue was nearly $1.3 billion, indicating a 59.3% year-over-year growth, the strongest since the IPO [9][59] - Adjusted net income for Q4 was $45.8 million, a 65.7% increase year-over-year, with an adjusted net income margin of 12.1% [56] - Adjusted diluted EPS for Q4 was $1.07, reflecting a 58.3% year-over-year growth [57] - Full year 2021 adjusted net income was $158.4 million, a 74.9% increase year-over-year, with an adjusted net income margin of 12.2% [60] Business Line Data and Key Metrics Changes - The Walt Disney Company remains the largest client, growing 69.1% year-over-year in Q4 [37] - The company had 12 accounts generating over $20 million in revenue, up from 7 the previous year [38][81] - 63.9% of revenues came from North America, 23.5% from Latin America, 10.7% from Europe, and 1.9% from Asia [38] Market Data and Key Metrics Changes - The company expanded its geographic footprint by adding Costa Rica and Ecuador to its Latin America operations and entering Germany, Austria, and Switzerland in Europe [12][13] - The company reported a net promoter score of 64, significantly above the industry benchmark of 30-40 [39] Company Strategy and Development Direction - The company aims to be the partner of choice for clients in digital transformation, focusing on geographic expansion, reinvention studios, and growing platforms [11] - The launch of the Metaverse Studio aims to help companies leverage opportunities in the Metaverse [17] - The company is developing a new platform, Project-yard, to reduce carbon emissions and operational costs of digital products [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in robust growth levels for the upcoming years, with no material impact from COVID-19 observed [53] - The demand for end-to-end digital services is stronger than pre-pandemic levels, with expectations for continued growth [53] - The company anticipates Q1 2022 revenues to be at least $395 million, representing a 46.2% year-over-year growth [63] Other Important Information - The company became carbon-neutral in 2021 and aims to save 10 million tons of CO2 emissions through its digital sovereignty strategy [48] - The Be Kind initiative has been integrated into the company's identity, focusing on diversity, equality, and inclusion [46][49] Q&A Session Summary Question: Visibility and backlog replenishment for 2022 - Management indicated good visibility for 2022, with solid demand and healthy backlog fulfillment capabilities [70][71] Question: Factors influencing margin guidance - Management expects to offset cost inflation with pricing and utilization improvements, aiming for margins in the mid to upper part of the guidance range [74] Question: Drivers behind the sharp increase in revenue outlook - The increase is attributed to strong relationships with existing clients and the removal of previous cautiousness in guidance [80][81] Question: Global diversification and onsite market mix - Currently, the company operates at a 95% offshore and 5% onsite model, with plans to increase onsite presence as demand normalizes [89][90] Question: Attrition rate stabilization - Management believes the attrition rate has stabilized and expects it to normalize in the coming quarters [92][93]

Globant） Seek Reinvention F4Q21 Investor Presentation Investment highlights Pure play in the digital and cognitive space Organized by Studios, delivering domain expertise in emerging technologies and industries Proven ability to acquire and integrate complementary, bolt-on acquisitions Experienced and founder led management team Global presence, leveraging next-gen software and the right talent and skills Strong set of Accelerators that leverage AI and other technologies to reinvent key aspects of organizat ...

Globant S.A. (NYSE:GLOB) Q3 2021 Earnings Conference Call November 18, 2021 4:30 PM ET Company Representatives Martin Migoya - Co-Founder, Chief Executive Officer Juan Urthiague - Chief Financial Officer Patricia Pomies - Chief Operating Officer Diego Tartara - Global Chief Technology Officer Amit Singh - Head of Finance for the U.S. and Global Head of Investor Relations Conference Call Participants Tien-Tsin Huang - J.P. Morgan Ashwin Shirvaikar - Citi Bryan Bergin - Cowen Maggie Nolan - William Blair Artu ...

Globant) Create your way forward F2Q21 Investor Presentation highlights Investment Pure play in the digital and cognitive space Global presence, leveraging next-gen software and the right talent and skills Organized by Studios, delivering domain expertise in emerging technologies Proven ability to acquire and integrate complementary, bolt-on acquisitions Experienced and founder led management team Strong set of Accelerators that leverage AI and other technologies to reinvent key aspects of organizations Rec ...

Globant SA (NYSE:GLOB) Q2 2021 Earnings Conference Call August 12, 2021 4:30 PM ET Company Participants Amit Singh - Head, Finance & IR, U.S. Martin Migoya - Co-founder, Chairman, CEO & President Guibert Englebienne - Co-Founder, President, Globant X, Globant Ventures & Latin America and Director Diego Tartara - CTO Patricia Pomies - COO Juan Urthiague - CFO & IR Officer Conference Call Participants Tien-Tsin Huang - JPMorgan Chase & Co. Ashwin Shirvaikar - Citigroup Bryan Bergin - Cowen and Company Maggie ...

Financial Data and Key Metrics Changes - The company reported Q1 2021 revenues of $270.2 million, representing a 41% year-over-year growth, the highest since its IPO in 2014 [7][46] - Adjusted gross profit increased to $107 million, with a gross margin of 39.6%, slightly up from 39.5% in Q1 2020 [48] - Adjusted net income for Q1 totaled $34.2 million, representing a 12.7% adjusted net income margin, compared to 11.7% in Q1 2020 [50][51] - Adjusted diluted EPS for Q1 was $0.83, up from $0.59 in Q1 2020 [52] Business Line Data and Key Metrics Changes - Disney was the largest customer, growing 27.4% year-over-year, while other accounts collectively grew 42.8% year-over-year [40] - The company added 994 IT professionals in Q1, a 39% year-over-year increase, to meet strong market demand [35] Market Data and Key Metrics Changes - Europe saw a revenue growth of 183.7% year-over-year, while Latin America grew 80.2% year-over-year [43] - North America and Asia also experienced strong growth, with increases of 19.3% and 78.7% year-over-year, respectively [43] Company Strategy and Development Direction - The company aims to position itself as a leader in the digital transformation space, focusing on acquiring talent and expanding its service offerings [14][17] - Recent acquisitions include CloudShift and HABITANT, aimed at enhancing cloud operations and digital marketing capabilities [15][99] - The company is expanding its geographic footprint with new operations in Spain, Mexico, Colombia, Chile, and Argentina [17] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the demand environment post-COVID, with strong bookings and revenue trends [47][114] - The company plans to continue investing in global operations and training programs to meet future demand [58] Other Important Information - The company is working towards being carbon-neutral in 2021 as part of its sustainability initiatives [118] - The "Be Kind" initiative aims to promote diversity and inclusion within the company [38][39] Q&A Session Summary Question: Update on talent management and utilization - Management expressed confidence in recruitment and utilization rates, noting that attrition remains stable despite a competitive labor market [64][66] Question: Insights on gross margin expectations - Management expects gross margins to remain in the 38% to 40% range, with salary increases being offset by strong business performance [67][68] Question: Recovery in client spending post-COVID - Management identified cruise lines and airlines as sectors still recovering, while other segments are experiencing strong growth [70][72] Question: Organic vs. inorganic growth - Organic growth for Q1 was estimated at over 23%, with a projected 37% for Q2, while acquisitions are integrated rapidly into the business [96][98] Question: Carbon-neutral status - The company is on track to achieve carbon neutrality in 2021, combining reduced travel and compensation for carbon footprints [118][120]