Globant(US:GLOB)2023-08-18 02:31Financial Data and Key Metrics Changes - In Q2 2023, total revenue reached $497.5 million, marking a record high and representing a 15.9% year-over-year growth and a 5.3% quarter-over-quarter growth [20][73] - Adjusted net income for Q2 was $58.9 million, with an adjusted net income margin of 11.8%, up 10 basis points quarter-over-quarter [91] - The adjusted operating margin for the quarter was 15%, within the guidance range provided earlier [46] - The company expects full-year 2023 revenue to be at least $2.094 billion, indicating a solid 17.6% year-over-year growth [79] Business Line Data and Key Metrics Changes - The Media and Entertainment division experienced a 5.5% growth rate, while Healthcare demonstrated exceptional growth at 18.8% due to the acquisition of ExperienceIT [44][45] - Technology and Telecommunications saw a slight decrease of 5.0%, indicating moderated spending patterns among high-tech clients [44] - The adjusted gross profit margin reached 38.3%, up 10 basis points quarter-over-quarter, with adjusted gross profit increasing to $190.6 million, a 13.5% year-over-year growth [77] Market Data and Key Metrics Changes - In Q2, 60.6% of revenue came from North America, 22% from Latin America, 14.1% from EMEA, and 3.3% from Asia and Oceania [36] - The company reported a healthy pipeline, the largest in its history, with bookings in the first half of 2023 over 40% larger than those in the second half of 2022 [74] Company Strategy and Development Direction - The company aims to expand its regional teams by adding 20,000 professionals over the next five years, focusing on Latin America and recently commencing operations in Portugal [12] - The introduction of new Studios, such as Amazon Web Services and Microsoft, aims to leverage expertise in cloud technologies and enhance service offerings [9][30] - The company is committed to investing in AI development and product offerings, with a focus on enhancing digital experiences and accelerating software development [27][57] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth of the addressable market, estimated to reach up to $8.9 trillion by 2030 [5] - The company anticipates strong sequential growth in Q3 and Q4, with adjusted EPS for Q3 expected to be at least $1.46 [48][92] - Management noted that the current environment shows signs of stabilization, particularly with the largest client, Disney, showing flat sequential performance [36][75] Other Important Information - The company achieved a Net Promoter Score (NPS) of 83, its best ever, indicating high client satisfaction [68] - The annual attrition rate is currently 11.6%, the lowest in the company's history, with a utilization rate of 80.1% [37] Q&A Session Summary Question: Expectations for organic sequential growth - Management indicated that organic sequential growth is expected to improve, with Q2 showing about 4.3% and Q3 projected at around 6% [51] Question: Headcount growth and utilization plans - Management confirmed that headcount is expected to rise in the second half of the year, supported by a strong pipeline and low attrition rates [98] Question: Organic versus inorganic growth contributions - The company estimates organic growth at about 11.3% to 11.4% for the year, with Pentalog contributing approximately 180 basis points to growth [105]