Market Opportunity & Growth - The total market for generative AI is projected to reach a five-year CAGR of 73.5% by 2028[5] - Worldwide IT services spending is expected to reach $2.1 trillion by 2027[6] - The digital business services market is estimated to reach $702 billion by 2027[6] - Product engineering and operational technology services are forecasted to reach $334 billion globally by 2027[7] - Generative AI's annual spending worldwide is projected to reach $151 billion by 2027[7] Financial Performance & Metrics - Globant's Last Twelve Months (LTM) Q1'25 total revenue is $2.5 billion[39] - The company's revenue CAGR from 2014 to 2024 was 28.3%[9, 39, 45] - LTM Q1'25 Revenue per IT Professional was $87.8K[39] - The Adjusted Gross Profit Margin for Q1'25 was 38.0%[39] - The Adjusted Profit from Operations Margin for Q1'25 was 14.8%[39]

Company Performance - Globant reported quarterly earnings of $1.50 per share, missing the Zacks Consensus Estimate of $1.58 per share, and showing a decrease from $1.53 per share a year ago, resulting in an earnings surprise of -5.06% [1] - The company posted revenues of $611.09 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.83%, compared to $571.08 million in the same quarter last year [2] - Over the last four quarters, Globant has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Outlook - Globant shares have declined approximately 37.7% since the beginning of the year, contrasting with the S&P 500's gain of 0.2% [3] - The current consensus EPS estimate for the upcoming quarter is $1.66 on revenues of $639.83 million, and for the current fiscal year, it is $6.80 on revenues of $2.61 billion [7] - The estimate revisions trend for Globant is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] Industry Context - The Internet - Software and Services industry, to which Globant belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Financial Data and Key Metrics Changes - Revenues reached $611.1 million, representing a 7% year-over-year increase and 8.6% in constant currency, slightly below initial guidance [6][22] - Adjusted gross margin for the quarter stood at 38%, flat year-over-year, while adjusted operating margin was 14.8%, falling short of expectations due to lower revenues [24][25] - Adjusted net income for Q1 was $67.8 million, translating into an adjusted diluted EPS of $1.50, almost flat year-over-year [25][26] - Cash and cash equivalents and short-term investments were $120.2 million, with net debt at $167 million, indicating a low net debt ratio and substantial financial flexibility [25][26] Business Line Data and Key Metrics Changes - North America saw a 6% year-over-year revenue increase, Europe grew by 13.4%, and new markets experienced an 84.4% year-over-year growth, while Latin America declined by nearly 9% [22][23] - Revenue per IT head increased by 2.8% year-over-year, reflecting the value and efficiency delivered [24] Market Data and Key Metrics Changes - The macroeconomic environment has been challenging, with a significant rise in the probability of a recession in the U.S. and softening consumer spending impacting customer decisions [8][22] - Pipeline conversion has slowed, particularly in the U.S., while growth in some Latin American countries has been lower than expected [8][9] Company Strategy and Development Direction - The company is focusing on three core pillars: deepening relationships with strategic clients, expanding AI studios for comprehensive AI transformation, and implementing a subscription model for service delivery [10][12][14] - The subscription model aims to provide a flexible, consumption-based framework for clients, aligning incentives around outcomes rather than hours worked [12][14] - The company is committed to long-term value creation and transformative impact, despite current macroeconomic challenges [9][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and resilience of the business, noting a robust pipeline with a 20% increase year-over-year [9][34] - The company anticipates a recovery in Latin America, with improvements noted in Argentina and Chile, although Mexico and Brazil remain challenging [36][116] - Revised revenue guidance for Q2 is at least $612 million, reflecting a cautious outlook amid macroeconomic uncertainties [26][39] Other Important Information - The company introduced Globant Coda, an AI-driven suite aimed at simplifying and accelerating the software development lifecycle [15] - Recent partnerships include a reinvention partnership with the Saudi Pro League and a collaboration with Formula One to enhance competitive experiences [17][18] Q&A Session Summary Question: Recovery of demand in Latin America - Management noted that many deals are being delayed rather than canceled, with a robust pipeline indicating potential recovery [34][36] Question: Backlog of signed contracts - The company indicated a high level of visibility and comfort regarding the backlog relative to revenue guidance, though uncertainty remains for the second half of the year [50][51] Question: Performance of top clients - Most top clients performed similarly, with stabilization expected in Q2, although those with consumer-facing exposure faced more challenges [62][64] Question: Competitive position in application development - The company maintains a balanced approach across application development, cloud, and creative services, positioning itself well in a complex market [75][76] Question: Margins in Latin America - Margins are not significantly different across regions, with a focus on maintaining healthy relationships and pricing strategies [88][90] Question: Traction of new commercial models - AI revenue is growing significantly, with the new subscription model generating early interest, although it is not yet a substantial percentage of total revenue [94][96]

Financial Data and Key Metrics Changes - Revenues reached $611.1 million, representing a 7% year-over-year increase and 8.6% in constant currency, slightly below February guidance [21][5][24] - Adjusted gross margin for the quarter stood at 38%, flat year-over-year, while adjusted operating margin was 14.8% [23][24] - Adjusted net income for Q1 2025 was $67.8 million, translating into an adjusted diluted EPS of $1.50, almost flat year-over-year [24] - Cash and cash equivalents and short-term investments were $120.2 million, with net debt at $167 million, indicating a low net debt ratio [24][25] Business Line Data and Key Metrics Changes - North America saw a 6% year-over-year revenue increase, Europe grew by 13.4%, and new markets experienced an 84.4% year-over-year growth [22] - Latin America faced a decline of nearly 9% year-over-year, with notable contractions in Mexico and Brazil, partially offset by strong growth in Argentina [22][21] Market Data and Key Metrics Changes - The macroeconomic environment has been challenging, with a significant rise in the probability of a U.S. recession and softening consumer spending [7][6] - The pipeline remains robust with a 20% increase over last year, despite near-term challenges [8][21] Company Strategy and Development Direction - The company is focusing on three core pillars: expanding its 100 square accounts, enhancing AI studios for comprehensive AI transformation, and implementing a subscription model for service delivery [9][10][12] - The subscription model aims to provide a consumption-based framework for clients, aligning incentives around outcomes rather than hours worked [12][14] - The company is committed to long-term value creation and transformative impact, particularly in AI and digital transformation [6][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current challenging macroeconomic environment but remains confident in the strength and resilience of the business [5][6] - The company has revised its full-year revenue guidance to at least $2.004 billion, representing 2% year-over-year growth [25] - Management expects a solid second quarter with guidance of at least $612 million in revenues, reflecting a cautious but optimistic outlook [25][26] Other Important Information - The company has introduced Globant Coda, an AI-driven suite aimed at simplifying the software development lifecycle [15] - Recent partnerships include a reinvention partnership with the Saudi Pro League and a major milestone with Formula One [16][17] Q&A Session Summary Question: Recovery of demand in Latin America - Management indicated that many deals are being delayed rather than canceled, with a 20% increase in the pipeline providing optimism for recovery [33][34][36] Question: Protecting margins amid potential deterioration - Management confirmed that measures are in place to protect margins and profitability, with a focus on disciplined pricing and cash flow management [42][43] Question: Backlog and revenue guidance - Management stated that visibility is high for the second quarter, with a focus on maintaining a derisked revenue forecast [50][51] Question: Performance of top clients - Management noted stabilization in performance among top clients, with new markets continuing to outperform [62] Question: Capital positioning and cash flow generation - Management emphasized a focus on protecting cash flow and reducing capital expenditures while prioritizing AI investments [118][119]

Core Insights - Globant reported Q1 2025 revenues of $611.1 million, reflecting a 7% year-over-year growth despite a challenging macroeconomic environment [5][8][7] - The company emphasizes its focus on AI-related opportunities and a comprehensive growth strategy that integrates client-centric vision with industry-specialized AI Studios [4][5] - Adjusted diluted EPS for Q1 2025 was $1.50, slightly down from $1.53 in Q1 2024, while IFRS diluted EPS was $0.68 compared to $1.02 in the same period last year [7][8] Financial Performance - Revenues for Q1 2025 were $611.1 million, a 7.0% increase from $571.1 million in Q1 2024 [5][8] - IFRS Gross Profit Margin was 34.9%, down from 35.4% in Q1 2024, while Non-IFRS Adjusted Gross Profit Margin remained stable at 38.0% [8] - Profit from Operations Margin under IFRS was 8.2%, compared to 8.4% in Q1 2024, and Non-IFRS Adjusted Profit from Operations Margin was 14.8%, down from 15.0% [8] Customer and Market Insights - The geographic revenue breakdown for Q1 2025 showed 55.5% from North America, 19.6% from Latin America, 18.2% from Europe, and 6.7% from New Markets [8][25] - Globant served a total of 1,004 customers in the last twelve months, with 341 accounts generating over $1 million in annual revenues, an increase from 318 in the previous year [8][25] - 67.2% of revenues for Q1 2025 were denominated in US dollars, indicating a strong reliance on the US market [8][25] Future Outlook - For Q2 2025, revenues are estimated to be at least $612.0 million, representing a 4.2% year-over-year growth [13] - The fiscal year 2025 revenue forecast is at least $2,464.0 million, implying a minimum of 2.0% year-over-year growth [13] - Non-IFRS Adjusted Diluted EPS for Q2 2025 is estimated to be at least $1.52, with a projected average of 45.7 million diluted shares outstanding [13]

Core Insights - Globant has partnered with the Saudi Pro League (SPL) to implement a digital Competition Management Solution through its sports division, Sportian, aimed at enhancing operational efficiency and reducing manual tasks [1][6][8] - The new platform will automate various processes such as player enrollment, matchday operations, and compliance, while ensuring data security [2][4][8] - This collaboration aligns with Saudi Arabia's Vision 2030, aiming to elevate the SPL's status in the global sports arena [6][14] Company Overview - Globant is a digitally native company focused on transforming businesses through innovative technology solutions, with a strong presence in the MENA region [1][7] - The company has over 31,200 employees across 35 countries and has been recognized as a leader in AI services and media consultation [9][16] - Sportian, Globant's sports division, provides end-to-end digital solutions for various sports federations and leagues, enhancing operational intelligence and compliance [5][11] Industry Context - The SPL is the premier football league in Saudi Arabia and aims to become one of the world's top leagues through a comprehensive transformation strategy [12][14] - The SPL's transformation strategy includes five strategic pillars focused on talent development, fan engagement, club support, global reach, and economic impact [17] - The partnership with Globant is expected to raise the operational standards of the SPL to match leading football tournaments globally [8][14]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Globant, with a focus on how actual results compare to estimates, which could significantly impact the stock price [1][2]. Earnings Expectations - Globant is expected to report quarterly earnings of $1.58 per share, reflecting a year-over-year increase of 3.3% [3]. - Revenue is projected to be $622.45 million, representing a 9% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 2.87% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. - The current Earnings ESP for Globant is -1.71%, suggesting a likelihood of missing the consensus EPS estimate [11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the deviation of actual earnings from consensus estimates, with positive readings being more reliable [6][7]. - Stocks with a positive Earnings ESP and a strong Zacks Rank (1-3) have historically shown a nearly 70% chance of delivering a positive surprise [8]. Historical Performance - In the last reported quarter, Globant exceeded the expected earnings of $1.74 per share by posting $1.75, resulting in a surprise of 0.57% [12]. - Over the past four quarters, Globant has beaten consensus EPS estimates twice [13]. Conclusion - Globant does not currently appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [16].

Group 1: Artificial Intelligence - Generative AI presents opportunities for businesses, with a focus on enhancing customer experience and the importance of design in AI solutions [1][3][30] - Action-enabled AI products will achieve breakthroughs, allowing companies to leverage unstructured data while addressing regulatory concerns to improve accuracy and inclusivity [1][30] - The regulatory environment surrounding AI is still developing, necessitating organizations to be aware of legal, ethical, and moral implications as they adopt AI solutions [30][31] Group 2: Quantum Computing - Quantum computing is transitioning from theory to practical applications, particularly in finance and pharmaceuticals, with companies expected to explore its business impact and invest accordingly [1][2] Group 3: Robotics - The robotics market is at a critical juncture due to the development of versatile robots, with AI enhancing their capabilities across various industries [1][2] - Companies are likely to adopt Robotics as a Service (RaaS) models, impacting sectors such as entertainment while facing challenges related to legal and employment structures [1][2] Group 4: Blockchain - Blockchain technology retains significance in specific industries, particularly for data security and digital identity management, despite facing challenges in scalability and energy consumption [2] Group 5: Immersive Experiences - Interest in 3D immersive experiences remains strong, with the launch of Apple's Vision Pro expected to drive advancements in spatial computing and provide new methods for data collection and customer engagement [2]

Core Viewpoint - Globant is set to release its first quarter results for 2025 on May 15, 2025, after market hours, highlighting its ongoing commitment to transparency and communication with investors [1]. Group 1: Earnings Release Information - The earnings release will be followed by a video conference call led by CEO Martin Migoya at 4:30 pm ET, which will include a Q&A session with key executives [2]. - A shareholder letter will be made available on Globant's investor relations website, providing additional insights into the company's performance [2]. Group 2: Company Overview - Globant is a digitally native company focused on creating innovative technology solutions, emphasizing its expertise in AI to bridge the gap between businesses and consumers [3]. - The company employs over 31,200 individuals across 35 countries and serves notable clients such as Google, Electronic Arts, and Santander [4]. - Globant has received recognition as a Worldwide Leader in AI Services (2023) and in Media Consultation, Integration, and Business Operations Cloud Service Providers (2024) according to IDC MarketScape [4]. - The company is noted as the fastest-growing IT brand and the 5th strongest IT brand globally in 2024, as per Brand Finance [4].

He also leads the investing group IPO Edge , which offers actionable information on growth stocks through first-look IPO filings, previews on upcoming IPOs, an IPO calendar for tracking what’s on the horizon, a database of U.S. IPOs, and a guide to IPO investing to walk you through the entire IPO lifecycle - from filing to listing to quiet period and lockup expiration dates.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to init ...