Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Globant SA (GLOB, Financial) reported a solid quarter with revenues reaching $611.1 million, representing an 8.6% year-over-year growth in constant currency.
- The company has a robust pipeline with a 20% increase over the last year, indicating strong future growth potential.
- Globant SA (GLOB) is well-positioned in the AI market, which is expected to reach $4.3 trillion by 2035, due to its 10 years of strategic investment in artificial intelligence.
- The company has introduced a new AI-powered subscription model, which offers a flexible, transparent way to collaborate with clients and aligns incentives around outcomes.
- Globant SA (GLOB) has seen strong growth in new markets, particularly in the Middle East, APAC, and Europe, with new markets posting an 84.4% year-over-year growth.
Negative Points
- The company's Q1 performance came in below initial expectations, and the revised annual guidance aligns more closely with broader industry events.
- Globant SA (GLOB) is operating in a challenging macroeconomic environment, with a significant probability of a recession in the US and softened consumer spending.
- There has been a slower pace of pipeline conversion in the US, and growth in some Latin American countries has been lower than expected.
- The company experienced a challenging performance in Latin America, with revenues down close to 9% year-over-year, particularly in Mexico and Brazil.
- Adjusted operating margin for the quarter was 14.8%, falling short of expectations due to lower-than-expected revenues.
Q & A Highlights
Q: How quickly do you think you can recover demand or spend specifically in Latin America, and what measures are you taking to reenergize growth there?
A: Martin Migoya, CEO, explained that while there are delays in deals, particularly in Mexico and Brazil, the pipeline is 20% higher than last year, indicating potential recovery. Some recovery is already happening in Argentina and Chile. The expectation is for a stable Q2, with a cautious outlook for the full year due to macroeconomic uncertainties.
Q: If the business environment deteriorates further, do you have measures to protect margins and profitability?
A: Juan Urthiague, CFO, stated that measures are already in place to protect margins and profitability, including optimizing utilization and disciplined pricing strategies. If further deterioration occurs, additional measures will be taken to maintain profitability.
Q: Can you provide insights into the backlog of signed contracts and how it compares to last year?
A: Juan Urthiague, CFO, mentioned that visibility for Q2 is high, and the guidance reflects current visibility, which is slightly lower than prior years. The second half guidance assumes a stable environment without significant improvement or deterioration.
Q: How is the US business performing outside of Latin America, and which sectors are most affected?
A: Martin Migoya, CEO, noted that sectors like entertainment, high tech, and healthcare have been impacted, while financial services and professional services have been more stable. The consumer-facing sectors have been hit hardest due to tariffs and macroeconomic uncertainties.
Q: How are you managing your employee base and resourcing plans for the rest of the year?
A: Juan Urthiague, CFO, explained that Globant continues to maintain a diversified delivery footprint across various countries. The focus remains on prioritizing demand growth areas while maintaining a global delivery strategy to serve a global revenue company.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
