Globant SA Q1 FY2025 earnings call

• Martin Migoya noted solid Q1 performance with 8.6% constant currency growth but below initial expectations. The AI market could reach $4.3T by 2035, and Globant's 100 square accounts, AI studios, and subscription model are key pillars. Notable deals include partnerships with Saudi Pro League, Formula 1, AIB, and YPF. - Juan Urthiague discussed navigating a fluid global context, revised full-year 2025 revenue guidance to at least $2,464M (2.0% YoY growth), targeted adjusted operating margin of at least 15% for Q2 and full-year 2025, and focused on driving growth via AI studios and 100-squared accounts while managing margins and cash flow.

In the first quarter, revenues reached $611.1 million, representing a 7% year-over-year increase and 8.6% in constant currency. This was slightly below February guidance due to macroeconomic and geopolitical challenges. North America saw a 6.0% year-over-year growth, Europe 13.4% year-over-year, and New Markets 84.4% year-over-year growth. However, Latin America was down nearly 9% year-over-year. Revenue per IT head increased 2.8% year-over-year and 2.3% quarter-over-quarter. Adjusted gross margin was 38% for the quarter, flat year-over-year.

• Q2 2025 revenue guidance: at least $612M (4.2% year-over-year growth). - Full-year 2025 revenue guidance: at least $2,464M (2.0% year-over-year growth). - Targeted adjusted operating margin of at least 15% for Q2 and full-year 2025. - Adjusted diluted EPS forecast: at least $1.52 for Q2 and at least $6.10 for full-year 2025.

• Challenging macroeconomic environment with increased recession probability in the US, softened consumer spending, and trade tariff uncertainties impacting customers. - Slower pipeline conversion in the US and lower growth in some Latin American countries.

Q: How quickly can demand recover in Latin America and what's being done to reenergize growth?

A: Pipeline is 20% higher than last year, many deals delayed. Recovery already happening in Argentina, Chile, and other geographies; Mexico improving slowly.

Q: Frame backlog and coverage level relative to revenue guidance?

A: Second quarter visibility is high, but more uncertainty in second half. Current forecast includes embedded visibility, lower than prior years.

Q: Backlog and coverage vs Q1 last year?

A: Level of comfort and visibility for Q2 is high, but second half has more uncertainty.

Q: US business impact from tariffs?

A: Entertainment, high-tech, healthcare, travel/hospitality affected; professional and financial services more stable.

Q: Managing employee base and resourcing?

A: Global delivery footprint strategy continues, prioritizing demand areas; diversified locations including Colombia, India, Argentina.

Q: Competitive position in application dev vs infrastructure?

A: Balanced approach between AI studios, subscription model, and traditional services; revenue per head up due to higher value services, Europe/New Markets contribution, and careful pricing.

Q: Traction of new commercial models?

A: AI revenue growing, subscription model gaining early interest but not substantial yet.

Q: Revised growth outlook composition?

A: Majority contracted, reduced risk on farming side; mid-single digit growth expected for top customer.

Q: Capital positioning and profitability measures?

A: Net debt ~$155M, prioritizing AI investments, extending payment terms, reducing CapEx, cautious M&A; working on utilization, infrastructure efficiencies, and pricing.

Q: Restructuring efforts?

A: No specific restructuring planned; pipeline and tech needs remain, uncertainty to resolve.

Q: Factors driving upside/downside in guidance?

A: Uncertainty in macro and tariffs; stabilization in Q2, no major improvement assumed in guidance.