Globant SA Q4 FY2024 earnings call

• Martin Migoya highlighted Globant's long-term investment in AI, with AI studios as the epicenter of reinvention strategy, leveraging company-specific data insights and generating synthetic data. The Globant Enterprise AI platform supports AI studios. AI-related projects grew 110% in 2024. Globant GUT Network has close to 10% of total revenue and is growing. Annual revenue reached $2.4 billion in 2024 with 15.3% growth.
• Diego Tartara mentioned Code Fixer AI Agent ranked first in SWE Benchlight evaluation, AI Agents used in industry-specific studios, partnerships with Salesforce, Google, etc., and work in Mexico, Saudi Arabia, Japan.
• Patricia Pomies noted 20 clients generating over $20 million in annual revenue, up from 16 one year ago; 346 clients contributing over $1 million annually, 35 more than one year ago. Revenue from largest client Disney increased 23.7% year-over-year. New markets region had 43.8% quarter-over-quarter and 89% year-over-year revenue growth. Hiring industry-leading talent in key growth sectors. Global revenue sources diversifying. Pipeline strong, reaching record $3.3 billion by end of 2024. Head count at 31,280, utilization rate 79.3%, attrition rate 9.5%. Launched AI Learning Hub and reached 15,000 coding scholarships goal ahead of schedule.
• Juan Urthiague reported Q4 revenues at $642.5 million, up 10.6% year-over-year and 4.5% sequentially. Full-year revenue $2,415.7 million, up 15.3% over prior year. Adjusted gross profit margin 38.3%, adjusted operating margin 15.7%, adjusted net income $78.7 million. Balance sheet healthy with $156.1 million in cash and short-term investments. Generated $101.2 million free cash flow in Q4.

In 2024, AI-related projects contributed over $350 million to Globant's revenue, up 110% from 2023. Globant GUT Network represents close to 10% of total revenue and is showing strong sustained growth. Regionally, North America accounts for 55.2% of the top line, followed by Latin America at 20.4%, Europe at 17.7%, and new markets at 6.7%. In Q4, total revenue reached $642.5 million, an increase of 10.6% year-over-year and 4.5% quarter-over-quarter. Annual revenue in 2024 was $2.4 billion, up 15.3% over the previous year. Adjusted operating profit improved by 20 basis points and adjusted diluted EPS grew 11.5% year-over-year to $6.4.

• Q1 2025: Expected revenues in range of $618 million to $628 million, 8.2%-10% year-over-year increase, 10.2%-12% increase in constant currency. Adjusted operating margins between 15.5% and 16.5%. IFRS effective income tax rate expected 20%-22%. Adjusted EPS for first quarter expected $1.55 to $1.63.
• Full year 2025: Forecast double-digit growth in constant currency terms. Reported revenue estimated $2.635 billion to $2.75 billion, 9.1%-12% year-over-year increase, 10.6%-13.5% increase in constant currency. Adjusted operating margins 15.5%-16.5%. IFRS effective income tax rate 20%-22%. Adjusted EPS expected $6.80 to $7.20.

• Latin America's political and macroeconomic conditions impacting demand, specifically in Mexico and Brazil. Recent volatility affecting demand. Disney's revenues slightly down in Q1 following strong investment phase in H2 2024. Pricing market challenging with neutral to low single-digit price increases expected.

Q: Jim Schneider asked about regional demand environment.

A: Martín Migoya said demand in U.S. is strong, pipeline strong in Europe and new markets. Latin America's situation more stable now with stronger pipeline. AI-related work growing extremely fast 110%.

Q: Puneet Jain asked about ramp timing on Middle East new clients and pricing trends.

A: Martín Migoya said ramping up, growth strong in Middle East in 2026. Juan Urthiague said pricing market challenging with neutral to low single-digit price increases.

Q: Maggie Nolan asked about organic growth drivers in 2025.

A: Juan Urthiague said overall growth midpoint 10.5% in dollars, 12% in constant currency. Organic constant currency growth estimated 9.5%. Driven by new markets, Europe, AI studios and GUT network.

Q: Jamie Friedman asked about benefits of automation and relation to head count vs revenue.

A: Martín Migoya said AI evolving into AI Agents orchestration, decoupling from just people. Diego Tartara added enterprise-ready software requires security, stability, etc.

Q: Jonathan Lee asked about visibility in full year outlook and client growth.

A: Juan Urthiague said visibility similar to last year, pipeline improved but conversion needs to accelerate. Growth from new clients and farming existing clients.

Q: Zachary Ajzenman asked about headwinds like Disney and Latin America.

A: Juan Urthiague said Disney impact around $5-10 million, LatAm had political noise, but comfortable outlook for Disney year and monitoring LatAm.

Q: Sean Kennedy asked about top five customer cohort ex-Disney and underperformance.

A: Juan Urthiague said connection to professional services industry underperforming. Patricia Pomies added reinforcing 100-square strategy for big accounts.

Q: Surinder Thind asked about impact of larger project wins scaling down.

A: Juan Urthiague said different industry and region behaviors, company diversified. Martín Migoya said projects constantly turning over and offering adapting to new technologies.

Q: Divya Goyal asked about AI implementation stage and client thoughts.

A: Diego Tartara said demand inclined to enterprise services, AI more adopted on efficiency side, change in consumption and budgeting with shorter contracts.