Globant S.A. (NYSE:GLOB) Q3 2023 Earnings Call Transcript November 16, 2023
Globant S.A. beats earnings expectations. Reported EPS is $1.48, expectations were $1.43.
Arturo Langa: [Starts Abruptly] Before we begin, I would like to remind you that some of the comments on our call today may be deemed forward-looking statements. This includes our business and financial outlook and the answers to some of your questions. Such statements are subject to the risk and uncertainties as described in the company’s earnings release and other filings with the SEC. Please note that we follow IFRS accounting rules in our financial statements. During our call today, we will report non-IFRS or adjusted measures, which is how we track performance internally and the easiest way to compare Globant to our peers in the industry. You will find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published on our Investor Relations website announcing this quarter’s results. I now like to turn the call over to Martin Migoya, our CEO.
Martin Migoya: Good afternoon, and welcome everyone. It’s a pleasure for me to be back to deliver this earnings call speech and to share with you how we’re progressing on our growth vision. Let’s begin with our quarterly performance. In Q3, we brought in $545.3 million in revenue, representing 18.8% year-over-year growth and 9.6% quarter-over-quarter growth. Our revenue for the last 12 months has now surpassed $2 billion, a first for Globant. Over the past quarter, we saw expansion across our key geographies, all of our verticals, as well as among our top clients. We are exceptionally proud to have delivered this market-leading growth, even in a period of global economic challenges. We have maintained profitability, a healthy balance sheet and free cash flow.
We look forward to executing our commercial strategy to increase market share worldwide. As a nod to this expansion, Fortune has recently included Globant on its list of 100 Fastest-Growing Companies. Globant was ranked first among peers in the information technology services category, recognized for its revenue, profit and stock return over the last three years. We are optimistic as we see technology spending continue to lead the global growth story, affecting nearly every area and function of organizations of all sectors. Globant’s service offering now encompasses sophisticated technology consultancy and digital solutions, breakthroughs in the creative industry, and from a broad array of AI-based solutions to our expertise in working with world-class enterprise systems.
We are in a position to take advantage of the fastest-growing areas of the technology sector. Companies across industries will keep investing in technology as new innovations from AI and other trends expand our total addressable market. According to Gartner, worldwide spending on IT services is expected to reach $2.1 trillion over the next four years. Recent surveys from leading financial and consulting institutions also reflect that digital transformation is front and center, as CEOs and the full C-suite continue to prioritize AI, cloud, digital transformation, analytics, CRM and ERP applications, all of which are core to Globant’s key competencies. With our current Top 50 clients alone taking into consideration that global firms spend from 5% to 15% of revenue on technology, our addressable market is close to $100 billion.
Our 100-squared program is our focus to take advantage of this opportunity. Artificial intelligence is having its iPhone moment with Generative AI and its latest announcements two weeks ago. Gartner forecasts that the market for artificial intelligence services will reach $443 billion by 2027. As I shared in our past earnings calls, at Globant, we are already employing generative AI in our proprietary platforms that help us work better as well as for our clients. AI will be the dominant growth driver in the IT services market. We see two major trends in AI adoption. The first is driven by professionals who use these tools to boost their efficiency and enable their creativity as they produce their own content. This is happening organically. It will be difficult for companies to have an inflexible position to force the adoption of these tools.
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