Globant S.A. EBITDA surged on 64.7% and EBITDA Margin increased on 5.1 pp from 16.7% to 21.8%
02/20/2020 • About Globant S.A. (
$GLOB) • By InTwits
Globant S.A. reported 2019 financial results today. Here are the key drivers of the company's long term financial model:
- Globant S.A. is a fast growth stock: 2019 revenue growth was 26.2%, 5 year revenue CAGR was 27.0% at 2019 ROIC 16.7%
- Globant S.A. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.5%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $21m in 2019, $14m in 2018, $12m in 2017, $4m in 2016, $6m in 2015
- In the last 5 years the company invested considerably less than D&A: $90m vs. $120m. In 2019 this situation was still the same: CAPEX was 20 while D&A was 63
- The company has highly profitable business model: ROIC is 16.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.7x while industry average is -2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 26.2%. Revenue growth showed acceleration in 19Q4 - it increased 31.3% YoY. During 2015-2019 Revenue growth topped in 2017 at 28.1% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 108 pp from -70.6% to -178% in FY2019.
Gross Margin showed almost no change in 2019. SG&A as a % of Revenue increased slightly on 0.66 pp from 25.5% to 26.2% in 2019. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2019.
Net Income margin decreased slightly on 1.7 pp from 9.9% to 8.2% in 2019.
Investments (CAPEX, working capital and M&A)
In 2019 the company had CAPEX/Revenue of 3.1%. CAPEX/Revenue decreased on 2.4 pp from 5.5% in 2016 to 3.1% in 2019. It's average level of CAPEX/Revenue for the last three years was 3.8%. CAPEX as a % of Revenue stuck to a declining trend at -0.63 pp per annum in 2015-2019.
Accounts receivable as a % of Revenue increased on 2.5 pp from 21.2% to 23.8% in 2019. Accounts payable as a % of Revenue increased on 2.3 pp from 5.5% to 7.8% in 2019.
Return on investment
The company operates at good ROIC (16.7%) and ROE (13.9%). ROIC decreased on 4.5 pp from 21.2% to 16.7% in 2019. ROE decreased on 3.3 pp from 17.2% to 13.9% in 2019.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 1.1x. Net Debt / EBITDA surged on 1.6x from -0.9x to 0.7x in 2019. Debt jumped while cash dropped on 19.2%.
Globant S.A. has short term refinancing risk: cash is only 87.1% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 28.2x and P/E 73.3x.
Management team
The company's CEO is Martin Migoya. Martin Migoya is a founder and has 15 years tenure with the company. Juan Urthiague is a Globant S.A.'s CFO. Juan Urthiague has spent 1 year at the company.
The company has 2.9% shares owned by insiders. Insider ownership dropped on 21.1%.
The company has 11,855 employees. The number of employees jumped on 41.4%. Average revenue per employee in 2019 was
$55,616 and it dropped on 10.7%.
Financial and operational results
FY ended 12/31/2019
Globant S.A. ($GLOB) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 253.8 | 322.9 | 413.4 | 522.3 | 659.3 | 26.2% |
| Gross Profit | 93.5 | 131.5 | 150.3 | 203.8 | 254.2 | 24.7% |
| SG&A | 71.6 | 81.9 | 110.8 | 133.2 | 172.5 | 29.5% |
| EBITDA | 33.0 | 60.5 | 49.3 | 87.3 | 143.8 | 64.7% |
| EBIT | 23.7 | 49.6 | 33.2 | 66.8 | 80.7 | 20.9% |
| Interest expence | 0.1 | 0.0 | 0.1 | 0.2 | | |
| Tax | 18.4 | 14.3 | 8.1 | 15.9 | | |
| Net Income | 31.7 | 35.9 | 30.5 | 51.7 | 54.0 | 4.5% |
| Stock Based Compensation | 2.4 | 3.6 | 12.9 | 10.6 | 15.4 | 45.6% |
Balance Sheet
|
|---|
| Cash | 36.7 | 50.5 | 52.5 | 77.6 | 62.7 | -19.2% |
| Accounts Receivable | 46.0 | 54.2 | 80.1 | 110.9 | 156.7 | 41.3% |
| Accounts Payable | 4.4 | 5.6 | 11.6 | 17.6 | 31.5 | 79.1% |
| Short Term Debt | 0.3 | 0.4 | 12.0 | 0.0 | 72.0 | |
| Long Term Debt | 0.3 | 0.0 | 0.0 | 0.0 | 92.1 | |
Cash flow
|
|---|
| Capex | 13.6 | 17.7 | 19.6 | 19.2 | 20.4 | 6.3% |
| Acquisitions | 10.6 | 16.6 | 19.1 | 4.1 | | |
Ratios
|
|---|
| Revenue growth | 27.1% | 27.2% | 28.1% | 26.3% | 26.2% | |
| EBITDA growth | 9.5% | 83.1% | -18.5% | 77.2% | 64.7% | |
|
|---|
| Gross Margin | 36.8% | 40.7% | 36.3% | 39.0% | 38.5% | -0.5% |
| EBITDA Margin | 13.0% | 18.7% | 11.9% | 16.7% | 21.8% | 5.1% |
| EBIT Margin | 9.4% | 15.4% | 8.0% | 12.8% | 12.2% | -0.5% |
| SG&A, % of revenue | 28.2% | 25.4% | 26.8% | 25.5% | 26.2% | 0.7% |
| SBC, % of revenue | 0.9% | 1.1% | 3.1% | 2.0% | 2.3% | 0.3% |
| Net Income Margin | 12.5% | 11.1% | 7.4% | 9.9% | 8.2% | -1.7% |
| CAPEX, % of revenue | 5.4% | 5.5% | 4.7% | 3.7% | 3.1% | -0.6% |
|
|---|
| ROIC | 15.6% | 25.6% | 13.3% | 21.2% | 16.7% | -4.5% |
| ROE | 22.0% | 19.5% | 12.9% | 17.2% | 13.9% | -3.3% |
| Net Debt/EBITDA | -1.1x | -0.8x | -0.8x | -0.9x | 0.7x | 1.6x |
| Interest expence / Average debt | 19.7% | 8.4% | 0.8% | | | |
People
|
|---|
| Insider ownership | 3.7% | 3.7% | 3.7% | 3.7% | 2.9% | -0.8% |
| Employees | | 5,631 | 6,397 | 8,384 | 11,855 | 41.4% |
| Revenue/Employee, th. $ | | 57 | 65 | 62 | 56 | -10.7% |
Globant S.A. ($GLOB) key quoterly financial indicators
| mln. $ | 19Q1 | 19Q2 | 19Q3 | 19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 146 | 158 | 171 | 184 | | 22.0% | 23.5% | 27.1% | 31.3% |
| EBITDA | 24 | 25 | 29 | 27 | | 30.0% | 19.6% | 18.6% | 14.8% |
| Net Income | 12 | 13 | 15 | 13 | | 18.0% | -9.8% | -3.8% | 13.0% |
Balance Sheet
|
|---|
| Cash | 42 | 42 | 57 | 63 | | 18.0% | -14.7% | -23.2% | -18.8% |
| Short Term Debt | 16 | 15 | 49 | 72 | | 166.4% | 148.9% | | |
| Long Term Debt | 31 | 54 | 61 | 92 | | | | | |
Ratios
|
|---|
| Gross Margin | 39.0% | 38.0% | 39.0% | 38.0% | | 1.3% | -0.3% | -0.5% | -2.2% |
| EBITDA Margin | 16.4% | 15.8% | 17.0% | 14.7% | | 1.0% | -0.5% | -1.2% | -2.1% |
| Net Income Margin | 8.2% | 8.2% | 8.8% | 7.1% | | -0.3% | -3.0% | -2.8% | -1.1% |
Peers in Application Software
Below you can find Globant S.A. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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 ($INS) | 14.2% | 71.0% | 12.2% | 119.0% | |
| |
|---|
| Median (152 companies) | 13.9% | 14.3% | 14.8% | 15.1% | 9.3% |
|---|
| Globant S.A. ($GLOB) | | 27.2% | 28.1% | 26.3% | 26.2% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 97.4% | 98.0% | 97.6% | 96.5% | |
| hopTo Inc ($HPTO) | 87.8% | 95.9% | 98.2% | 95.4% | |
| Aware, Inc. ($AWRE) | 87.2% | 90.3% | 94.6% | 92.3% | |
| Alteryx, Inc. ($AYX) | 80.5% | 81.3% | 83.4% | 91.0% | |
| Aspen Technology, Inc. ($AZPN) | 88.7% | 89.7% | 90.2% | 89.9% | |
| |
|---|
| Median (151 companies) | 63.0% | 64.2% | 64.6% | 66.0% | 52.9% |
|---|
| Globant S.A. ($GLOB) | 36.8% | 40.7% | 36.3% | 39.0% | 38.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aspen Technology, Inc. ($AZPN) | 42.2% | 46.0% | 45.2% | 43.3% | |
| ANSYS, Inc. ($ANSS) | 45.8% | 45.1% | 41.9% | 41.4% | |
| Paycom Software, Inc. ($PAYC) | 19.5% | 35.1% | 34.4% | 35.9% | |
| j2 Global, Inc. ($JCOM) | 40.6% | 41.7% | 36.5% | 35.7% | |
| Adobe Inc. ($ADBE) | 25.9% | 31.2% | 34.2% | 35.3% | |
| |
|---|
| Median (153 companies) | -11.3% | -5.3% | -4.2% | -3.3% | 12.0% |
|---|
| Globant S.A. ($GLOB) | 13.0% | 18.7% | 11.9% | 16.7% | 21.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| TimefireVR Inc ($TFVR) | 350.5% | 4.3% | | 1,021.9% | |
| MGT Capital Investments Inc ($MGTI) | 36.5% | 221.4% | 129.8% | 344.5% | |
| Integrated Ventures Inc ($INTV) | | | | 199.9% | 15.2% |
| ShotSpotter, Inc. ($SSTI) | 18.3% | 28.9% | 27.1% | 24.3% | |
| Ellie Mae, Inc. ($ELLI) | 20.6% | 16.7% | 21.1% | 19.4% | |
| |
|---|
| Median (154 companies) | 2.7% | 2.9% | 2.3% | 2.4% | 3.2% |
|---|
| Globant S.A. ($GLOB) | 5.4% | 5.5% | 4.7% | 3.7% | 3.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| InsPro Technologies Corp ($ITCC) | | | | 127.4% | |
| Manhattan Associates, Inc. ($MANH) | 78.7% | 99.3% | 102.5% | 80.9% | |
| Intuit Inc. ($INTU) | 23.7% | 52.1% | 72.6% | 66.8% | |
| Aspen Technology, Inc. ($AZPN) | | | | 58.1% | |
| Paycom Software, Inc. ($PAYC) | 30.5% | 75.4% | 51.1% | 47.5% | |
| |
|---|
| Median (180 companies) | -13.1% | -9.8% | -11.8% | -10.6% | 8.5% |
|---|
| Globant S.A. ($GLOB) | 15.6% | 25.6% | 13.3% | 21.2% | 16.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Upland Software, Inc. ($UPLD) | | 16.4x | 115.6x | 16.7x | |
| Nuance Communications, Inc. ($NUAN) | 5.7x | 5.3x | 7.1x | 15.2x | |
| Asure Software Inc ($ASUR) | 4.5x | 3.6x | 9.5x | 14.5x | |
| SS&C Technologies Holdings, Inc. ($SSNC) | 7.3x | 4.6x | 3.1x | 8.5x | |
| Avaya Holdings Corp. ($AVYA) | | | | 7.4x | |
| |
|---|
| Median (69 companies) | -0.8x | -0.9x | -0.9x | -0.6x | -0.9x |
|---|
| Globant S.A. ($GLOB) | -1.1x | -0.8x | -0.8x | -0.9x | 0.7x |
