Globant(GLOB) - 2023 Q2 - Quarterly Report

First Quarter 2023 Results Overview Financial Highlights Globant reported strong financial performance for Q1 2023, with revenues increasing by 17.7% year-over-year to $472.4 million, while IFRS margins saw a slight decrease, Non-IFRS Adjusted Diluted EPS grew to $1.28, up from $1.19 in Q1 2022 | Metric | Q1 2023 | Q1 2022 | YoY Change | Source | | :-------------------------------- | :------ | :------ | :--------- | :----- | | Revenues | $472.4M | $401.4M | +17.7% | [4, 5] | | IFRS Diluted EPS | $0.84 | $0.86 | -2.3% | [4, 5] | | Non-IFRS Adjusted Diluted EPS | $1.28 | $1.19 | +7.6% | [4, 5] | | IFRS Gross Profit Margin | 35.6% | 38.0% | -2.4 pp | [5] | | Non-IFRS Adjusted Gross Profit Margin | 38.2% | 39.5% | -1.3 pp | [5] | | IFRS Profit from Operations Margin | 9.4% | 12.6% | -3.2 pp | [5] | | Non-IFRS Adjusted Profit from Operations Margin | 15.1% | 16.8% | -1.7 pp | [5] | - Cash and cash equivalents and Short-term investments decreased by $56.1 million to $284.8 million as of March 31, 2023, primarily due to bonus payments, platform investments, and inorganic expansion initiatives, with the credit facility remaining fully undrawn[5] Operational Metrics Globant's operational metrics for Q1 2023 show continued growth in its customer base and an increase in the number of high-revenue accounts, alongside a slight shift in geographic revenue distribution and currency denomination | Metric | Q1 2023 | Q1 2022 (LTM) | YoY Change | | :------------------------------------ | :------ | :------------ | :--------- | | Total Globers | 26,288 | 24,504 | +7.3% | | Technology, Design & Innovation Professionals | 24,496 | 23,158 | +5.8% | | Customers Served (Last Twelve Months) | 1,342 | 982 | +36.7% | | Customers with >$1M Annual Revenues (LTM) | 276 | 206 | +34.0% | | Geographic Revenue Breakdown (Q1 2023) | Percentage | | :------------------------------------- | :--------- | | North America (top country: US) | 61.4% | | Latin America (top country: Argentina) | 21.8% | | EMEA (top country: Spain) | 13.4% | | Asia and Oceania (top country: India) | 3.4% | | USD Revenues | 74.8% | | Customer Concentration (Q1 2023) | Percentage of Revenues | | :------------------------------- | :--------------------- | | Top Customer | 9.4% | | Top Five Customers | 24.5% | | Top Ten Customers | 34.8% | Management Commentary Globant's CEO highlighted robust Q1 performance driven by strategic growth pillars, including the expansion of Create and Commerce Studios and significant investment in AI through the MINDS program and platforms like MagnifAI and Augoor, while the CFO emphasized industry-leading revenue growth, successful M&A, and a positive outlook for the remainder of 2023, supported by a strong balance sheet - CEO Martín Migoya highlighted strategic growth pillars, including the launch of Create and Commerce Studios to enhance user experience and efficiency, and the consolidation of AI-focused offerings into the MINDS program, applying generative AI in MagnifAI and Augoor platforms[6] - CFO Juan Urthiague noted industry-leading 17.7% YoY revenue growth, meeting adjusted operating profit margin guidance, successful M&A in the U.S. and Europe, and confidence in sequential growth for Q2 and a positive full-year outlook, backed by strong balance sheet management[6] Business Outlook Q2 and Full Year 2023 Guidance Globant has increased its guidance for both Q2 and the full fiscal year 2023, projecting continued strong revenue growth and healthy Non-IFRS Adjusted Profit from Operations Margins and Diluted EPS | Metric | Q2 2023 Outlook | FY 2023 Outlook | | :------------------------------------ | :-------------- | :-------------- | | Revenues | At least $496.0M | At least $2,074.0M | | YoY Revenue Growth | 15.5% | At least 16.5% | | Non-IFRS Adjusted Profit from Operations Margin | 15-16% | 15-17% | | Non-IFRS Adjusted Diluted EPS | At least $1.33 | At least $5.71 | | Assumed Diluted Shares Outstanding (Q2/FY) | 43.4M | 43.4M | Company Information About Globant Globant is a digitally native technology services company focused on helping organizations reinvent themselves through innovation, design, and engineering at scale, boasting over 26,000 employees across more than 25 countries and serving major clients like Google and Santander, earning recognition as a Worldwide Leader in CX Improvement - Globant is a digitally native technology services company with over 26,000 employees in more than 25 countries, serving clients such as Google, Electronic Arts, and Santander[9] - The company has been recognized as a Worldwide Leader in CX Improvement by IDC MarketScape and featured as a business case study at Harvard, MIT, and Stanford[10] Non-IFRS Financial Measures Globant provides non-IFRS financial measures in addition to IFRS results to illustrate underlying business trends, manage operations, and evaluate performance, excluding items like share-based compensation, depreciation, amortization, and acquisition-related charges, and are not directly comparable to IFRS or other companies' non-IFRS metrics - Globant provides non-IFRS financial measures to illustrate underlying business trends, establish budgets, and evaluate performance, excluding items such as share-based compensation, depreciation, amortization, impairment, and acquisition-related charges[12] - Non-IFRS measures are not calculated according to IFRS and should not be evaluated in isolation but considered alongside comparable IFRS measures[12] - The company does not provide quantitative reconciliation for forward-looking Non-IFRS Adjusted Profit from Operations Margin or Diluted EPS due to the uncertainty of certain significant items[13] Forward-Looking Statements This section contains forward-looking statements regarding future financial and operating performance, strategies, and business plans, which are subject to various risks and uncertainties, including resource utilization, talent retention, pricing accuracy, growth management, and global economic conditions, which could cause actual results to differ materially from projections, and investors are cautioned not to rely solely on these statements - The release contains forward-looking statements regarding future financial and operating performance, strategies, priorities, and business plans, identifiable by terms like 'believe,' 'may,' 'will,' 'estimate,' and 'expect.'[14] - Actual results may differ materially due to risks and uncertainties, including the ability to maintain resource utilization, attract and retain IT professionals, accurately price contracts, manage rapid growth, retain senior management, innovate, and manage global economic conditions[14] - Investors should not make investment decisions based on these estimates and forward-looking statements, and the company undertakes no obligation to publicly update them[15] Condensed Interim Consolidated Financial Statements Statements of Comprehensive Income The Condensed Interim Consolidated Statements of Comprehensive Income provide a detailed breakdown of Globant's revenues, costs, profits, and other comprehensive income for the three months ended March 31, 2023, compared to the same period in 2022 | Metric (in thousands of U.S. dollars) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenues | 472,421 | 401,378 | | Cost of revenues | (304,124) | (248,967) | | Gross profit | 168,297 | 152,411 | | Selling, general and administrative expenses | (119,357) | (101,638) | | Profit from operations | 44,223 | 50,736 | | Net income for the period | 36,385 | 36,807 | | Total comprehensive income for the period | 43,357 | 34,504 | | Diluted Earnings per share | 0.84 | 0.86 | | Weighted average of diluted outstanding shares | 43,237 | 42,741 | Statements of Financial Position The Condensed Interim Consolidated Statements of Financial Position present Globant's assets, liabilities, and equity as of March 31, 2023, compared to December 31, 2022, showing changes in financial health and structure over the quarter | Metric (in thousands of U.S. dollars) | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | TOTAL ASSETS | 2,186,231 | 2,199,460 | | Current assets | 837,464 | 858,225 | | Non-current assets | 1,348,767 | 1,341,235 | | TOTAL LIABILITIES | 563,492 | 643,047 | | Current liabilities | 381,763 | 427,840 | | Non-current liabilities | 181,729 | 215,207 | | Total equity | 1,622,739 | 1,556,413 | Selected Cash Flow Data The Selected Cash Flow Data outlines the cash generated from operating, investing, and financing activities for the three months ended March 31, 2023, providing insight into the company's liquidity and cash management | Metric (in thousands of U.S. dollars) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Income for the period | 36,385 | 36,807 | | Cash flows from operating activities | 33,827 | (22,663) | | Cash flows from investing activities | (46,880) | (51,148) | | Cash flows from financing activities | (25,960) | (13,492) | | Net decrease in cash & cash equivalents | (39,013) | (87,303) | Supplemental Financial Information Non-IFRS Financial Reconciliations This section provides reconciliations of IFRS to Non-IFRS financial measures, including adjusted gross profit, selling, general and administrative expenses, profit from operations, net income, and diluted EPS, for the three months ended March 31, 2023 and 2022 | Metric (in thousands of U.S. dollars) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Gross Profit (IFRS) | 168,297 | 152,411 | | Adjusted gross profit (Non-IFRS) | 180,319 | 158,429 | | Adjusted gross profit margin (Non-IFRS) | 38.2% | 39.5% | | Profit from Operations (IFRS) | 44,223 | 50,736 | | Adjusted Profit from Operations (Non-IFRS) | 71,358 | 67,537 | | Adjusted Profit from Operations margin (Non-IFRS) | 15.1% | 16.8% | | Net income for the period (IFRS) | 36,419 | 36,623 | | Adjusted Net income (Non-IFRS) | 55,404 | 50,800 | | Adjusted Diluted EPS (Non-IFRS) | 1.28 | 1.19 | Schedule of Key Metrics This schedule provides a quarterly overview of key operational and financial metrics from Q1 2022 to Q1 2023, including employee counts, geographic and currency revenue distribution, and customer growth and concentration | Metrics | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Total Employees | 24,504 | 25,924 | 26,541 | 27,122 | 26,288 | | IT Professionals | 23,158 | 24,410 | 24,922 | 25,331 | 24,496 | | North America Revenues % | 64.1 | 64.5 | 64.9 | 61.7 | 61.4 | | Latin America Revenues % | 23.5 | 23.8 | 21.9 | 22.7 | 21.8 | | EMEA Revenues % | 10.1 | 9.7 | 10.0 | 11.9 | 13.4 | | Asia and Oceania Revenues % | 2.3 | 2.0 | 3.2 | 3.7 | 3.4 | | USD Revenues % | 80.6 | 79.0 | 81.2 | 77.5 | 74.8 | | Top Customer % | 11.0 | 10.5 | 10.7 | 10.8 | 9.4 | | Top 5 Customers % | 28.0 | 25.7 | 24.7 | 25.1 | 24.5 | | Top 10 Customers % | 38.6 | 36.7 | 34.5 | 34.3 | 34.8 | | Customers Served (Last Twelve Months)* | 982 | 1,043 | 1,114 | 1,249 | 1,342 | | Customers with >$1M in Revenues (Last Twelve Months) | 206 | 233 | 255 | 259 | 276 | Contact Information Investor and Media Contacts This section provides contact details for investor relations and media inquiries for Globant - Investor Relations Contact: Arturo Langa, investors@globant.com, +1 (877) 215-5230[22] - Media Contact: Wanda Weigert, pr@globant.com, +1 (877) 215-5230[22]