• Revenue: $614.7 million, up 12.7% year-over-year and 4.6% sequentially.
• Adjusted Gross Profit Margin: 38.5%, up 40 basis points sequentially and 30 basis points year-over-year.
• Adjusted Operating Margin: 15.6%, up 50 basis points sequentially and 30 basis points year-over-year.
• Adjusted Net Income: $72.4 million, with an 11.8% adjusted net profit margin, up 40 basis points sequentially.
• Adjusted Diluted EPS: $1.63, up 10.1% year-over-year.
• Free Cash Flow: $69.7 million, compared to $60.6 million in the same period last year.
• Cash and Short-term Investments: $213.5 million, with $27.2 million in net cash.
• Client Revenue: 21 clients generating over $20 million annually; 331 clients contributing more than $1 million annually.
• Top Client Revenue Growth: Revenue from Walt Disney Company increased by 17.5% year-over-year and 14% quarter-over-quarter.
• Regional Revenue Growth: Middle East and APAC up 35.3% sequentially and 53.1% year-over-year; Europe up 24.8% year-over-year.
• Headcount: 29,998 Globers, a 9.1% increase year-over-year.
• Utilization Rate: 79.8%, with a slight increase.
• Attrition Rate: 9%, down from 9.5% in Q3 2023.

• Warning! GuruFocus has detected 4 Warning Signs with GLOB.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Globant SA (NYSE:GLOB) reported a strong quarter with $614.7 million in revenue, marking a 12.7% year-over-year increase.
• AI-related work generated over $250 million in revenue in the first nine months of 2024, up 120% from the same period last year.
• The company secured two of the largest bookings in its history within the last six months, indicating strong demand and future growth potential.
• Globant SA (NYSE:GLOB) is expanding its presence in new markets, with significant growth in the Middle East and APAC regions, showing a 35.3% sequential growth.
• The company has a strong balance sheet with $213.5 million in cash and short-term investments, providing ample liquidity for growth initiatives.

Negative Points

• Globant SA (NYSE:GLOB) faces foreign exchange headwinds, with a 9% year-on-year revenue growth in organic constant currency terms for Q3.
• The utilization rate is below target at 79.8%, with the company aiming for 81% to 82%, indicating potential inefficiencies.
• Despite strong growth, the company is experiencing some pressure on operating margins due to currency fluctuations in Latin America.
• There is a noted under-penetration of AI in some newer technologies, suggesting potential challenges in fully integrating AI solutions.
• Globant SA (NYSE:GLOB) is still in the early stages of establishing its presence in the Middle East, which may require significant investment and time to realize full potential.

Q & A Highlights

Q: Can you provide more insight on the visibility of faster organic growth for next year? A: Juan Urthiague, CFO: The faster organic growth for 2025 is driven by large deals ramping up, strong performance in top accounts, and an increase in AI-related deals. Additionally, macroeconomic factors like elections being over, decreasing interest rates, and controlled inflation are contributing to clearer visibility.

Q: How do you see your work for clients changing into 2025 with the acceleration in AI projects? A: Diego Tartara, CTO: Compared to last year, AI projects are now more intentional with clear business goals, leading to larger and more mature mandates. We foresee a continuation of this trend into 2025, with AI being a significant factor in company forecasts and larger projects.

Q: What is the potential of the Middle East region for Globant? A: Juan Urthiague, CFO: The Middle East offers significant growth potential due to large-scale projects and investments in technology and real estate. The region is starting from a small base, but projects tend to grow quickly, aiming to create new experiences and attract global visitors.

Q: How is Globant incorporating AI agents into the delivery process, and is it replacing human labor? A: Patricia Pomies, COO: AI agents are used to enhance delivery processes by assisting with scope definition and project health checks, not replacing human labor. These agents are part of our internal processes and are used to improve project outcomes and efficiency.

Q: How should we think about employee growth and utilization rates going forward? A: Juan Urthiague, CFO: We expect positive net additions in Q4, primarily hiring in Latin America, India, and Eastern Europe. Utilization rates are targeted to increase from the current 79.8% to 81-82% as the industry accelerates.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.