• Annual Revenue: $2.4 billion, up 15.3% year over year.
• Q4 Revenue: $642.5 million, up 10.6% year over year and 4.5% quarter over quarter.
• AI-Related Revenue: Over $350 million in 2024, up 110% from 2023.
• Adjusted Operating Margin: 15.7% in Q4, highest in the past eight quarters.
• Adjusted Net Income: $78.7 million in Q4, with a 12.2% adjusted net profit margin.
• Adjusted Diluted EPS: $1.75 in Q4, up 8% year over year.
• Full Year Adjusted Diluted EPS: $6.40, up 11.5% year over year.
• Free Cash Flow: $101.2 million in Q4; $138.1 million for the full year.
• Client Growth: 20 clients generating over $20 million annually, up from 16 clients a year ago.
• Regional Revenue Growth: New markets region up 89% year over year; Europe up 23.3%; North America up 6.5%.
• Headcount: 31,280 total employees, a 7.3% increase over last year.
• Utilization Rate: 79.3%.
• Attrition Rate: 9.5%.
• 2025 Revenue Guidance: $2.635 billion to $2.705 billion, representing a 9.1% to 12% year over year increase.
• 2025 Adjusted EPS Guidance: $6.80 to $7.20.

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

Release Date: February 20, 2025

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 revenue growth of 10.6% year over year and 4.5% quarter over quarter, reaching $642.5 million in Q4 2024.
• AI-related projects contributed significantly to revenue, with a 110% increase from 2023, totaling over $350 million.
• The company achieved a record annual revenue of $2.4 billion, marking a 15.3% increase over the previous year.
• Globant SA (NYSE:GLOB) expanded its client base, with 20 clients generating over $20 million in annual revenue, up from 16 clients the previous year.
• The company's adjusted operating margin improved to 15.7%, the highest in the past eight quarters, reflecting a 40 basis point increase year over year.

Negative Points

• Globant SA (NYSE:GLOB) faces challenges in Latin America due to political and macroeconomic volatility, impacting demand in regions like Mexico and Brazil.
• The company anticipates a more muted start to 2025 due to lower billable days, negative seasonality, and project roll-offs in the sports vertical.
• Revenue from the top client, Walt Disney Company, is expected to decline slightly in Q1 2025 after a strong investment phase in H2 2024.
• Pricing remains challenging, with only neutral to low single-digit price increases expected, particularly in cost-saving projects with high competition.
• The utilization rate decreased slightly to 79.3%, indicating potential inefficiencies in resource allocation.

Q & A Highlights

Q: Can you comment on the overall demand environment you're seeing on a regional basis, particularly in the US, Middle East, and Latin America? A: The demand in the US is strong, with a robust pipeline. Europe is structuring well with significant customers, and new markets are promising with large contracts. Latin America is stabilizing after political turmoil, and the pipeline is strong, especially in AI-related work, which is growing rapidly. However, the conversion of this pipeline slowed last quarter but is now accelerating.

Q: How should we think about the ramp timing for new clients in the Middle East? A: We are currently ramping up, with technology rolling out as parks and resorts are built or ready. Growth will be strong this year and even stronger in 2026. We are expanding into different industries in the region, including hospitality, financial companies, and airlines, which have significant potential.

Q: What are the pricing trends you are seeing, and are you able to get price increases from your customers? A: The pricing market remains challenging. We can secure price increases in projects focused on generating more revenue for customers, but cost-saving projects face more competition. Overall, we expect neutral to low single-digit price increases this year.

Q: What are the organic growth drivers for 2025, and what is embedded in the guidance from an organic perspective? A: The organic constant currency growth is estimated at 9.5%, driven by strong performance in new markets and Europe. The US is expected to improve in conversion, while Latin America will likely grow slower. Growth will come from creative work in our AI studios, which are building transformative solutions for customers.

Q: How are you thinking about the benefits of automation and its relation to headcount versus revenue? A: As AI productivity tools evolve, they enhance our people's productivity. Our enterprise AI platform provides independence from LLMs and traceability, allowing us to charge based on performance rather than effort. This will lead to a decoupling from headcount and more leverage on AI tools, offering significant value to customers.

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