Globant S.A. EBITDA jumped on 77.2% and Revenue surged on 26.3%
02/14/2019 • About Globant S.A. (
$GLOB) • By InTwits
Globant S.A. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Globant S.A. is a fast growth stock: 2018 revenue growth was 26.3%, 5 year revenue CAGR was 27.0% at 2018 ROIC 21.2%
- Globant S.A. has low CAPEX intensity: 5 year average CAPEX/Revenue was 5.0%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $39m in 2018, $21m in 2017, $21m in 2016, $12m in 2015, $3m in 2014
- The company has highly profitable business model: ROIC is 21.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Globant S.A.'s Revenue jumped on 26.3%. Revenue growth showed slowdown in 18Q4 - it was 21.4% YoY. During the last 5 years Revenue growth topped in 2017 at 28.1%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.8 pp from 11.9% to 16.7% in 2018.
Gross Margin increased on 2.7 pp from 36.3% to 39.0% in 2018. SG&A as a % of Revenue decreased slightly on 1.3 pp from 26.8% to 25.5% in 2018. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 1.1 pp from 3.1% to 2.0% in 2018. During 2014-2018 SBC as a % of Revenue topped in 2017 at 3.1%.
Net Income margin increased on 2.5 pp from 7.4% to 9.9% in 2018. During 2014-2018 Net Income margin bottomed in 2017 at 7.4%. The efficient tax rate was 23.5% in 2018 while the average for the last five years was 27.3%.
Investments (CAPEX, working capital and M&A)
Globant S.A.'s CAPEX/Revenue was 3.7% in 2018. Globant S.A. showed small CAPEX/Revenue decline of 1.7 pp from 5.4% in 2015 to 3.7% in 2018. For the last three years the average CAPEX/Revenue was 4.6%. CAPEX as a % of Revenue declined at -0.47 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue increased slightly on 1.9 pp from 19.4% to 21.2% in 2018. Accounts payable as a % of Revenue increased slightly on 1.1 pp from 4.4% to 5.5% in 2018.
Globant S.A. has spent
$4m on M&A in 2018 which accounts for 0.79% of revenue.
Return on investment
The company operates at high and attractive ROIC (21.2%) while ROE is a bit lower (17.2%). ROIC increased on 7.8 pp from 13.3% to 21.2% in 2018. ROE increased on 4.2 pp from 12.9% to 17.2% in 2018. During the last 5 years ROE bottomed in 2017 at 12.9%.
Leverage (Debt)
The company paid down all the debt in 2018. Cash surged on 47.8%.
Valuation and dividends
Globant S.A.'s trades at EV/EBITDA 27.1x and P/E 47.2x.
Management team
The company's CEO is Martin Migoya. Martin Migoya is a founder and has 14 years tenure with the company. Globant S.A.'s CFO Juan Urthiague has spent 0 years with the company.
Insider ownership is 3.7%. Insider ownership didn't change in 2018.
At the end of financial year the company had 8,384 employees. The number of employees jumped on 31.1%. Average revenue per employee in 2018 was
$62,298 and it decreased on 3.6%.
Financial and operational results
FY ended 12/31/2018
Globant S.A. ($GLOB) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 199.6 | 253.8 | 322.9 | 413.4 | 522.3 | 26.3% |
| Gross Profit | 77.9 | 93.5 | 131.5 | 150.3 | 203.8 | 35.6% |
| SG&A | 57.3 | 71.6 | 81.9 | 110.8 | 133.2 | 20.2% |
| EBITDA | 30.2 | 33.0 | 60.5 | 49.3 | 87.3 | 77.2% |
| EBIT | 22.1 | 23.7 | 49.6 | 33.2 | 66.8 | 101.4% |
| Interest expence | 0.5 | 0.1 | 0.0 | 0.1 | 0.2 | 60.0% |
| Tax | 8.9 | 18.4 | 14.3 | 8.1 | 15.9 | 96.4% |
| Net Income | 25.2 | 31.7 | 35.9 | 30.5 | 51.7 | 69.2% |
| Stock Based Compensation | 0.6 | 2.4 | 3.6 | 12.9 | 10.6 | -18.0% |
Balance Sheet
|
|---|
| Cash | 34.2 | 36.7 | 50.5 | 52.5 | 77.6 | 47.8% |
| Accounts Receivable | 40.1 | 46.0 | 54.2 | 80.1 | 110.9 | 38.5% |
| Accounts Payable | 5.7 | 4.4 | 5.6 | 11.6 | 17.6 | 51.0% |
| Short Term Debt | 0.5 | 0.3 | 0.4 | 12.0 | 0.0 | -100.0% |
| Long Term Debt | 0.8 | 0.3 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 11.4 | 13.6 | 17.7 | 19.6 | 19.2 | -2.2% |
| Acquisitions | -0.2 | 10.6 | 16.6 | 19.1 | 4.1 | -78.4% |
Ratios
|
|---|
| Revenue growth | 26.1% | 27.1% | 27.2% | 28.1% | 26.3% | |
| EBITDA growth | 1,970.2% | 9.5% | 83.1% | -18.5% | 77.2% | |
|
|---|
| Gross Margin | 39.0% | 36.8% | 40.7% | 36.3% | 39.0% | 2.7% |
| EBITDA Margin | 15.1% | 13.0% | 18.7% | 11.9% | 16.7% | 4.8% |
| EBIT Margin | 11.1% | 9.4% | 15.4% | 8.0% | 12.8% | 4.8% |
| SG&A, % of revenue | 28.7% | 28.2% | 25.4% | 26.8% | 25.5% | -1.3% |
| SBC, % of revenue | 0.3% | 0.9% | 1.1% | 3.1% | 2.0% | -1.1% |
| Net Income Margin | 12.6% | 12.5% | 11.1% | 7.4% | 9.9% | 2.5% |
| CAPEX, % of revenue | 5.7% | 5.4% | 5.5% | 4.7% | 3.7% | -1.1% |
|
|---|
| ROIC | 21.1% | 15.6% | 25.6% | 13.3% | 21.2% | 7.8% |
| ROE | 27.0% | 22.0% | 19.5% | 12.9% | 17.2% | 4.2% |
| Net Debt/EBITDA | -1.1x | -1.1x | -0.8x | -0.8x | -0.9x | -0.1x |
| Interest expence / Average debt | 35.4% | 11.8% | 8.4% | 0.8% | | |
People
|
|---|
| Insider ownership | 3.7% | 3.7% | 3.7% | 3.7% | 3.7% | 0.0% |
| Employees | | | 5,631 | 6,397 | 8,384 | 31.1% |
| Revenue/Employee, th. $ | | | 57 | 65 | 62 | -3.6% |
Globant S.A. ($GLOB) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 120 | 128 | 135 | 140 | | 34.9% | 28.4% | 22.7% | 21.4% |
| EBITDA | 18 | 21 | 24 | 24 | | 41.5% | 174.5% | 60.5% | 75.6% |
| Net Income | 10 | 14 | 16 | 12 | | 14.7% | 579.9% | 94.6% | -0.3% |
Balance Sheet
|
|---|
| Cash | 36 | 49 | 74 | 78 | | 20.9% | 65.0% | 110.5% | 47.8% |
| Short Term Debt | 6 | 6 | 0 | 0 | | 3,654.4% | -41.4% | -100.0% | -100.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 37.7% | 38.3% | 39.5% | 40.2% | | 0.3% | 3.9% | 3.1% | 3.2% |
| EBITDA Margin | 15.4% | 16.3% | 18.2% | 16.8% | | 0.7% | 8.7% | 4.3% | 5.2% |
| Net Income Margin | 8.5% | 11.3% | 11.6% | 8.2% | | -1.5% | 9.1% | 4.3% | -1.8% |
Peers in Application Software
Below we provide Globant S.A. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Globant S.A. ($GLOB) | | 27.1% | 27.2% | 28.1% | 26.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Globant S.A. ($GLOB) | 39.0% | 36.8% | 40.7% | 36.3% | 39.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Globant S.A. ($GLOB) | 15.1% | 13.0% | 18.7% | 11.9% | 16.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Globant S.A. ($GLOB) | 5.7% | 5.4% | 5.5% | 4.7% | 3.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Globant S.A. ($GLOB) | 21.1% | 15.6% | 25.6% | 13.3% | 21.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -0.9x | -0.9x | -0.9x | -0.6x |
|---|
| Globant S.A. ($GLOB) | -1.1x | -1.1x | -0.8x | -0.8x | -0.9x |
