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Perplexity Finance

GLOB

Globant S.A.

GLOB

NYSE

Market Closed

Sunday, May 25, 2025

$100.62

-$4.75

4.51%

At close: May 23, 4:00:02 PM EDT

$100.62

$0.00

After hours: 7:56:38 PM EDT

Change

-$4.75

4.51%

Financial Profile

Prev Close

$105.37

Market Cap

$4.43B

Day Range

$99.60 - $103.52

Open

$101.97

P/E Ratio

29.8

52W Range

$88.03 - $238.32

24H Volume

$85.56M

Dividend Yield

0.00%

EPS

3.38

Earnings

Report Date

May 15, 2025

Reported Revenue

611.1M

Miss -4.75%

Avg 1d Change

16.91%

Report Period

Q1 2025

Reported EPS

1.5

Miss -5.06%

Implied Move 1d

8.83%

Transcript

10m 27s

Such statements are subject to the risks 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 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 will now turn the call over to Martin Migoya.

10m 57s

Hello, and good day, everyone. It's great to be here again. We're pleased to report another solid quarter with revenues reaching 611,100,000.0 representing a healthy 8.6% year over year growth in constant currency. Outperforming most of our peers. While our Q1 performance came in below our initial expectations, and our revised annual guidance now aligns more closely with broader industry trends We remain confident in the strength and resilience of our business. The fundamentals that fuel Globant's long term growth are strong. The AI opportunity is both profound and transformative. It is a market that could reach 4,300,000,000,000.0 by 02/1935. Our ten years of strategic investment in artificial intelligence uniquely position us to lead this new era. We're not merely adapting we're helping define the AI powered future of work and digital transformation. That said, we're currently operating in a challenging macroeconomic environment. The probability of a recession in The U. S. Has risen significantly since February. Consumer spending has softened. And uncertainty from trade tariffs has impacted a good portion of our customers. We observed a slower pace of pipeline conversion in The U. S. And growth in some countries in Latin America has been lower than expected. Although some near term challenges are present, we see this as transitory.

12m 37s

As the pipeline remains robust, with a 20% increase over last year. I'm also pleased to see strong growth in markets where Globant has undertaken major investments recently. Including our new market region of The Middle East and APAC, as well as Europe. In this environment, we need to stay focused on long term value creation and transformative impact. Our way forward is based on three core pillars: First, [indiscernible] One of the greatest assets is our a hundred square customer base and the distribution network we have built over time. Throughout our history, we have consistently added new studios and practices such as digital, enterprise and GAT creative studios as innovative services to distribute across a set of clients who value us for pushing boundaries and delivering forward thinking solutions. We continue to deepen these relationships with these strategic clients aiming to unlock new opportunities and deliver transformative value across their business units. Second, our AI studios. They are purpose built to lead comprehensive AI transformation programs for each industry we serve. Their mission is to help clients realize the full potential of AI conducting in-depth assessment across all business areas. Identifying use cases processes and efficiencies and emerging opportunities for intelligent automation.

14m 13s

From this foundation, our AI studios design and implement scalable AI powered solutions that target the most impactful workflows and business outcomes. This industry specific structure approach is supported by our deep technical expertise on our enterprise AI platforms. Enabling the orchestration of intelligent agents that deliver measurable innovation and lasting value to our clients. And finally, the Globant subscription model. This model reimagines how we deliver engineering, creativity and automation services by introducing a consumption based subscription framework. Clients subscribe to AI powered capacity through AI pods. Which are dedicated delivery units that combine the power of autonomous AIA powered by Globant Enterprise AI. With the orchestration and oversight from our experts. Delivery is limited in tokens, representing the complexity and volume of work performed. Client can expand their usage through additional PAX subscriptions, offering a clear scalable path to increase value over time.

15m 23s

This consumption based model aligns incentives around outcomes not ours. It offers a flexible and transparent way to collaborate with our clients while complementing our traditional delivery models. This transformation will integrate directly into our existing client relationship teams, and build on the strong relationship we have established with our network of incredible clients. A network built on trust, long term collaboration and share appreciation for innovation. YPF has already adopted this model. JM Family and other enterprise clients are exploring it as well demonstrating early traction and trust in this new way of engaging with Globant. The Globant subscription model was born from our deep understanding that many organizations struggle to make the savings and efficiencies generated by AI tangible. While the potential of AI is clear, converting this promise into concrete business outcomes remains elusive for most enterprises. Our model addresses this challenge directly. Delivering measurable results through defined output traceable token usage and integrated performance monitoring making AI's value visible actionable and aligned with strategic goals. While we expand our commercial models, we also want to reaffirm the importance of our traditional delivery methods. Fixed price and time and material contracts remain the predominant form of engagement with our clients Many organizations will continue to prefer these models and we are fully equipped with the right talent, proven methodologies and robust value framework to deliver excellence through them as we have been doing during the last twenty two years.

17m 12s

This quarter, within Globant Enterprise AI, we introduced Globant Coda. A powerful agent driven suite. It brings together our most advanced AI agents platforms into a single cohesive solution that simplifies and accelerates the entire software development life Weeks ago, Globant's Code Fixer, AI agent, achieved the highest score on the SWE bench multimodal benchmark. [indiscernible] for evaluating AI systems on visual software engineering tasks. In this context, our ability to evolve becomes our competitive advantage. Our new AI powered subscription model is helping us to create more scalable, predictable and adaptive partnerships with clients. Enabling continuous delivering of engineering, creativity and business process automation through our AI pod and Enterprise AI platforms. During this quarter, we closed several strategic deals that reflect the creative application of our technology solutions. In The Middle East, we announced a new reinvention partnership with the Saudi Pro League. Implementing our Competition Management Solution. With a new platform, Future SPL Seasons will be managed through a digital ecosystem, This will be powered by AI and data analysis. To speed up manual tasks and allow competition staff to focus on innovation. In The United Kingdom, have reached a major milestone through our partnership with Formula One.

18m 48s

We recently launched the new Team Content Delivery System at the Australian Grand Prix in 2025. This innovative technology solution is designed to enhance the competitive experience for race teams by providing engineers and team principals with real time and archived video and data analysis. We're also partnering with AIB, on their Tailor app. Teller is a specialized transaction processing application in AIB Northern Ireland branches. Integrated with AIB's core system to support efficient transaction management. The bank undertook a significant upgrade on the application to further enhance performance and resilience. We accelerated the development using Globant Enterprise AI to ensure delivery in a record time of eight months. In Argentina, we recently announced a reinvention partnership with YPF, the continent's third largest oil and gas company. We will improve their supply chain management with AgenTik AI and we will create an integrated operating model that will continuously learn and evolve. It will make complex decisions through expert supervised algorithms ensure compliance with the company's internal policies and standards across their extensive supply chain network of approximately 5,000 suppliers. Globant's effort connects with YPF vision to enhance operational efficiency across all areas, and position the company as a global competitive player, generating 30,000,000,000 in exports by 02/1930.

20m 25s

Our creative gut network continues to produce outstanding work for top brands globally. Including Corona for its one hundredth anniversary in Mexico, Food Panda with a new affordability campaign across six Asian markets and Mercado Libre's ongoing expansion. Our global partnerships also continue to evolve. In recent months, received multiple recognitions from Google Amazon Web Services and Adobe, reflecting the strong focus in developing these strategic relationships. As a Founder and CEO, I'm deeply committed to our reinvention vision. We remain focused on delivering high value solutions that reflect both human ingenuity and technological excellence. We will continue to evolve our core strength and business models while pursuing long term value creation. Thank you very much.

21m 21s

Hello. In the first quarter, continued to navigate a fluid global context. Revenues reached $611,100,000 This represents a 7% increase year over year and 8.6% in constant currency. A figure slightly below our February guidance. This performance was influenced by the challenging macroeconomic and geopolitical context. Which has affected spending patterns among some of our largest customers, particularly in LatAm. The market deteriorated towards the February, as a result of the tariff discussions. Still, three of our four regional business units posted solid growth. North America increasing top line 6% year over year. Europe 13.4% year over year and New Markets, continuing to scale exponentially posting an 84.4% year over year growth. However, we saw a challenging performance in LatAm, which was down close to 9% year over year with notable contractions in Mexico and Brazil. Which were partially offset by a strong growth in Argentina. From a vertical perspective, we saw year over year growth across most of our verticals. However, we experienced some delays in project ramps, specifically in some large accounts in tariff impacted industries, such as airlines, pharma and high-tech. Our revenue priority head increased by 2.8% year over year and 2.3% quarter over quarter the first quarter of twenty twenty five.

23m 7s

Reflecting the value and efficiency we deliver and our ability to remain disciplined in pricing. Turning to our margin trends. Our adjusted gross margin for the quarter stood at 38%, flat on a year over year basis, reflecting our premium positioning geographic diversification and improving service mix. Our adjusted operating margin for the quarter was 14.8%. While this metric fell short of our expectations, this was mainly driven by our lower than expected revenues. Our adjusted net income for the first quarter of twenty twenty five was $67,800,000 translating into an adjusted diluted EPS of $1.5 for the quarter. Almost flat on a year over year basis. Turning to our balance sheet. As of the first quarter of twenty twenty five, our cash and cash equivalents and short term investments stood at $120,200,000 and our net debt was $167,000,000 translating into a healthy low net debt ratio. Reflecting our prudent balance sheet management and providing us with substantial financial flexibility and liquidity. Regarding free cash flow, we consumed $5,700,000 in the first quarter. In line with prior years. Looking ahead, considering the impact our customers of the macroeconomic uncertainties and tariffs, and given our exposure to B2B2C customers, which affects our visibility, have undertaken a thorough review of our forecast with the goal of derisking our estimates to the extent possible.

24m 51s

Based on this, introducing our second quarter twenty twenty five guidance of at least $612,000,000 in revenues. Or 4.2% year over year growth. This expected growth includes a neutral FX impact. For the full year 2025, we are revising our revenue guidance of at least $2,464,000,000 which represents 2% year over year growth which translates into a similar figure constant currency terms. In terms of profitability, we are targeting an adjusted operating margin of at least 15% both for the second quarter of twenty twenty five and the full year 2025. The IFRS effective income tax rate is expected to be in the 20% to 22% range for both the second quarter the full year 2025. For adjusted diluted EPS, we forecast at least $1.52 for Q2. Assuming an average of 45,700,000.0 diluted shares outstanding during the second quarter. And at least $6.1 for the full year 2025, assuming an average of 45,800,000.0 diluted shares outstanding during 2025. We are taking clear and decisive steps to maximize our financial health and navigate the current environment effectively. Our short term focus for the remainder of the year will be on driving growth through strategic investments in our AI industry studios and our 100 square accounts.

26m 34s

While focusing at the same time on protecting our margins and cash flow.

26m 39s

With respect to margins, the main areas of focus are: optimizing utilization, which stood at 78.2% in Q1 twenty twenty five compared to 79.3% in both previous quarter and Q1 twenty twenty four. Disciplined pricing strategies. Strategic geographic mix of our talent and revenues, footprint optimization and infrastructure streamlining are ongoing, particularly through the integration of recently acquired companies. SG and A investments will be sharply focused on bolstering our sale capabilities and go to market initiatives. While concurrently maintaining a lean overall structure. As of Q1 twenty twenty five, adjusted SG and A a percentage of sales stood at 18.3%. And we target this metric to trend downwards by the end of the year, as our top line expands. With regards to our cash generation, we are actively working to improve this critical metric through several initiatives. This include extending supplier payment terms wherever possible targeting a reduction in our DSO and implementing a significant reduction in our capital expenditures. With a clear prioritization towards investments in artificial intelligence. A prudent M and A activity to ensure accretive transactions in a fluid market. However, as discussed by Martin, we will remain bold our technology bets. And will continue to execute decisively on our long term strategic goals.

28m 23s

This balanced approach is of utmost importance to us. Thank you for your continued support, See you shortly at the q and a session.

28m 45s

You, Juan, and hi, everyone. So as we go through the Q and A section of this call, will first announce your name, this point, please unmute your line and then ask your question. Then please mute your line after your question is done. I would also like to ask for you to please limit yourself to one question and one follow-up. So with that in mind, we will take our first question from the line of Tien Tsin Huang from JPMorgan. Tien Tsin, please go ahead. Your line is open. Hey, thank you, Arturo. Just just want to, I I know that environment's been challenging for a lot of the companies here. I'm just curious how how quickly do you think you can recover you know, some of the the demand or spend specifically in in Latin America just to start with that? Because it sounds like that's where a lot of the the change emerged. What do you doing to to reenergize growth there? Have you seen some of the work get canceled? These just delays? I'm just trying to get a better understanding of how that might shape up here in the short term. And the midterm.

29m 45s

Starting with LATAM and any other areas that we're a little Thank you.

29m 49s

Hey, Tien Tsin. How are you? Thank you very much for the question. Listen. I believe that I mean, there's a there's a piece of information inside what we said on on on my initial opening. That was the the size of the pipeline. And surprisingly, the size of the pipeline is 20% higher than in the same period last year. And even higher than than q four. So that that's a pretty good sign of of how things are evolving. I think that many of the deals are just being delayed, Mexico is suffering. Brazil is suffering. And, there's a lot of uncertainty and and decision just being pushed out. And, that that started, a week later than our February earnings call. And, and evolve into this, into this quarter that we're reporting now and and and we want to be very sensible about that that information and say, listen, we're seeing an adjustment for the full for the full year. I see, a pretty good probability for q two. And, not seeing major major struggles. Of course, unless something good new news appears in the market, which I don't think is the case. But, I see that number quite solid right now.

31m 29s

And the full year too. So recovery in Latin America is already happening. I mentioned some of the deals that are pushing us forward. Some of that recovery is coming from Argentina, Some of that recovery is coming from Chile and some other geographies. Mexico is also improving slowly It's not being seen on the numbers of of q one, but we are seeing it a little bit better. So with with all that, I think we're going to have, like, like like a like a quarter like we described in Q2. But, you know, unfortunately, the the whole year, lower than what we expected at the very beginning of the year. I don't know, Juan, if you want to add something into that.

32m 17s

Hello, Tien Tsin. So basically, when you look at the q two number, which is, you know, just slightly above where we ended Q1. The idea is that we're trying to put out a guidance for the year which if you do the math, it's basically a very similar second half relative to the first half. We are trying to be sensitive enough so that the rest of I mean, the rest of the year looks at least where where we are today, you know. We we don't see further deterioration. When you look at the second quarter number, we feel it's a it's a it's a it's quite solid at this point. So that seems to be kind of a lower number, a lower end basically or a bottom for the year. And the pipeline that Martin is describing you know, is what somehow gives us some comfort of hopefully a better second half. Which it's not embedded in the numbers that were provided. That we're providing because we don't want to go through through another situation where the uncertainty doesn't allow us to, you know, to put out the numbers that we want. So that's the the business is there.

33m 37s

The pipeline is there. We are trying to put numbers in a place where we feel comfortable and and and we are confident we're gonna be able to meet at least the $612,000,000 that we guided for the second quarter.

33m 49s

Yeah. I I would like to reiterate, Tien Tsin, the the I mean, the amount of opportunities, the quality of the opportunities, I think is is outstanding. And and the things that are happening on the market with the technologies outstanding. So the the just the people are saying, okay. Let let's put this on hold. Let's put that on hold. In many different industries, I would say that, financial services was, you know, the the the least affected but then all the rest of it of the of the lines, were kind of, in in in in tough environments. Right? But the long term the long term, again, the long term for the business, think, is outstanding. The amount of opportunities are raising quality of opportunities are raising too. So I'm very positive about the future as always.

34m 44s

Okay. You know, it's unusual for Globant to to miss the the quarterly outlook. I'm I'm sure you'll learn [indiscernible] [indiscernible] and ability to continue for whatever reason, do you have levers to pull to protect [indiscernible] and and the profits given what you've learned so far since late February. To today? Do you have levers to pull?

35m 15s

Yeah. I I I guess the line is a little bit but I think you asked about protecting margins and profitability if the business deteriorates. As we as I discussed in my in my remarks, we have already taken a number of measures to protect those margins, to protect operating margin as well, and and and to meet the EPS guidance. We feel that those measures that are in place should be at least for what we see the business today they are enough, but definitely if we see another change in the market, we will be able to we will have to take further additional measures to protect profitability. I mean, we definitely believe that growth is is okay, but it's also important profitability and protecting margins. That's why we mentioned specifically a number of things that we are doing. And also on the cash flow front, We are trying to take measures in every front until we see, you know, an acceleration in the top line.

36m 23s

Yeah. High priority initiatives, all of them. Alright. Thank you.

36m 29s

Thank you, Dicin. Thank you.

36m 32s

Thank you, Tien Tsin. The next question comes from the line of Jim Schneider from Goldman Sachs. Jim, please go ahead. Your line is open.

36m 39s

Good afternoon. Thanks for taking my question. On first of all, wondering if you could maybe frame for us sort of the backlog that you see, not the pipeline, but the backlog of signed contracts? And maybe your coverage level of backlog relative to the revenue guidance At this point in time, maybe comparing that versus what you were seeing in Q1 of last year maybe just as a first start?

37m 8s

Yes. And also for hi, Jean. Thank you for the question. You know, for the second quarter, I think that the level of comfort, level of visibility is high enough. We try to to make sure that the number that was provided is at least the number that we are targeting and we're trying to meet. For for sure, there is more uncertainty for the second half of the year. That's why when you look at our second half implied guidance, it's basically somehow following with with the current numbers with just a small improvement in Q3. So I think that the the way we've built the current forecast includes the or has embedded the current visibility, which of course is a little bit lower than prior years. That's why we did have to adjust our full year guidance.

38m 2s

Thank you. And then maybe as a follow-up, could you talk about maybe parts of The U. S. Business outside of the LatAm, which is clearly being impacted by tariffs. What parts of the business there slowed? Was it confined to one or two geographies, whether it be airlines or something else? Maybe just talk about the profile of The U. S. Business, please.

38m 24s

Yes. Look, it was pretty much all over the place. Entertainment was performing, you know, a little bit lower High-tech, it was, like, lowest. [indiscernible] take and took some deep Although we're seeing it recovering much better now, Travel and hospitality has gone down. It's interesting because, you know, between professional services and and financial services, well, kind of the the most even performances. But then all the rest that is related to consumer got and took and took a big hit. So it's a pretty obvious it's pretty obvious to us that that is something something much larger than Chats you know, one one specific sector, hitting the the thing.

39m 25s

Think the fact that you know, Jim, the fact that we are a company that of course, we have a wide array of services, but a big part of what we do is still on the on the growth side. Right? On the on the mid have a lot of b two b two c customers. With consumers that, you know, somehow are being impacted by tariffs, by the uncertainty of what's going to be like in The U. S. Going forward. And those are the industries that initially at least on many of our customers put some kind of a break on on certain projects. That happens in in, as Martin was saying, in terms of the automotive, you know, some of the technology customers that we have, some of the retailers. So mostly, you see that concentrated on consumer facing customers.

40m 17s

Thank you.

40m 19s

Thank you, Tim. Thank you, Jim.

40m 21s

Thank you, Jim. Our next question comes from the line of Ryan Bergen from TD Cowen. Ryan, your line is open.

40m 27s

Hey, guys. Thanks for taking the questions. I wanted to ask in about your top 10 clients. Can you dig in a little bit further on what you saw specifically in some of those accounts and how you are thinking about those accounts now in 2Q in the second half? Obviously, Disney and then potentially some Middle Eastern clients and any other ones you think are important to call Yeah. Yeah. In general, I mean, if you look at the performance on a sequential basis, pretty much most groups performed in in a similar fashion. You know? However, already into getting into Q2, we see stabilization That's why the expected number is slightly ahead of of the Q1 number. We are not seeing mean, probably the ones that have more consumer facing exposure suffered a little bit more. But, in general, already into Q2, we see more stabilization. Clearly, new markets will will continue to outperform with very high year over year growth and we're going to see sequential growth there as well. At this point, we're also seeing positive numbers in Europe, positive numbers in The US, maybe the one reason that will stay behind will continue to be Latin America.

41m 48s

At least during the second quarter.

41m 50s

Okay. Okay.

41m 52s

And how are you managing kind of the, you know, the employee base here and the resourcing plans? As you go forward? Can you talk about your intentions here as you move through the balance of year?

42m 1s

Yeah. I think the strategy is the same. I mean, we have been globalizing our delivery footprint in the last ten years. When we did the IPO, Argentina was 70% of our employees. Today, you know, we have a very balanced portfolio of comp of countries from where we serve. You know, being Argentina, Colo make Colombia, Colombia, India, Argentina, the three main locations that will continue to be the case. We are not I mean, we will continue to be a diversified delivery footprint as well today. And that's gonna continue Of course, we will prioritize you know, where demand is going. As we have always done. But in general, the growth strategy doesn't change. Having a global delivery footprint to serve more global customers. As as you can see today, you know, US is about 55% of revenues. Europe is getting very close to becoming the second the second largest you know, revenue generation area. And we have seen a a very nice uptick in the share of new markets. So, we are building a global delivery footprint for a global revenue company.

43m 15s

Right. Right. Okay. Thank you.

43m 17s

Thank you, Brian.

43m 18s

Thank you, Brian.

43m 21s

The next question comes from the lines of Jamie Freeman from Susquehanna. Jamie, please go ahead. Hi. Thanks for taking my question. I was wondering if you could comment on the competitive position of the company apropos of application development [indiscernible] [indiscernible] infrastructure. You know, is it is it difficult to compete purely as a great application development provider yet having less mindshare in infrastructure in this environment?

44m 10s

So so it's interesting to I mean, first, I think it's interesting to to to go through our revenue per head. Right? When you see the revenue per head still growing, it's a measure of that we are, you know, adding more value to our customer. Customers and seeking deals that are, you know, a lot of value added, for our customers. On the enterprise side, on the cloud migrations, studio sorry. The cloud, CloudOps Studio, that we have is performing very well. And we have very deep expertise there as pretty much everything we do is going into into, into cloud, into into, infrastructure side.

44m 52s

I think that with all the AI projects that are happening, that that area, that specific area is gaining a lot of momentum. And I believe that in essence, every day becomes more and more the AI landscape becomes more and more complex. Every day is more and more difficult to create something only thinking on cloud or only thinking on AI. You need everything together.

45m 23s

And and this is where we're going. I mean, Globant became with time, a much more balanced company in terms of our studios. We are playing on the digital side. We're also playing on the enterprise side with a good of our business, and we're also playing on the now on the creative side. So the three components are very important components of pretty much any solution that you build today. So I I think that if you only focus on one of them, it would be difficult But as we are very balanced between the three of them, I think that we are in a pretty good position to to create much better solutions for our customers. Through our AI studios, through our now our subscription model, you know, the way to change how companies come by these kind of services in some way, we're simplifying the access to technology to companies, and and this is extremely important you know, option that we are providing now to our customers that is being very well accepted and a very good and important conversation starter for many of our customers.

46m 43s

And again, the most important asset we have built are all those customers with with whom we we we have a very good relationship that they value us for how we can innovate, for how we can implement many of the latest technologies to them. So I believe that every day more, and that a testament of how we have been doing things. It's about having a balanced approach because it's not just about having one of those things.

47m 16s

That's a great those are great points. In terms of the increase in the revenue per head, that's very interesting. Do you see that more as the revenue realization related to automation or the there's a reduced linearity [indiscernible] Any context you could give us about the revenue per head would be helpful. Yeah, there is Jamie, there is a little bit of everything. A little bit of higher value added services. A little bit of an improvement in how we deliver some of our services There is also higher share of Europe and new markets with come at a higher revenue per head than Latin America. You have different factors And, also, there is a lot of careful in terms of managing our pricing. I mean, there is today a lot of deals that you know, are not good enough in our view. And and and we also try to protect our margins through having a a, you know, good grip on on on pricing. I mean, there there is a lot of deals out there that we could get at very low pricing low margins or even negative margins. We're trying to put everything in balance. And that's why you're seeing our revenue per head going up sequentially and year over year.

48m 44s

Yeah. And some of our competitors are are, you know, like, chasing those deals in which you need to pay, to get them and and then get some kind of deal in in exchange of that. But we are totally way of that saying, listen. We don't want to enter into into a deal in which we need to [indiscernible] any kind of, advantage and or maybe I would say, in those days in which we don't like the the the profit that we are making. I mean, if we're if we're not making a good profit, we'll walk away. And we have been extremely selective on those deals. And buying revenue today is, a pretty pretty common standard in in many occasions, and we don't like those seats.

49m 38s

Perfect. Thank you so much.

49m 40s

Thank you very much.

49m 41s

Thank you.

49m 43s

Thank you, Jamie. Our next question comes from the line of Maggie Nolan from William Blair. Maggie, please go ahead.

49m 50s

Hi, thank you.

49m 52s

I'm curious if your margins are different on the Latin American revenue compared to the rest of the business? And how maybe softness in Latin America is flowing through the margins and impacting the financials right now?

50m 12s

Not necessarily. I mean margins are I would say they're not very different in in in the different regions. You don't see a lot of dispersion there. I think what is relevant is that we need to to remain sensitive in terms of how we price the deals, in terms of looking the right margins for the deals, protecting I I think at at the end of the day, you know, it's very easy sometimes to to get deals at lower prices. We we discussed this many times. You know. Taking prices down is very easy. Taking them up again is very hard. So it's it's always a balance. Of course, we are we we don't like to lose deals, we try to win as many deals as we can. But that has to have a limit at some point. I don't know, Mahdi. Yeah. And also also, I I think Maggie hey. How are you? I think that you know, a good customer with good margin is also a signal of of the health of that relationship. Right? And and we always prefer to to pursue you know, healthy relationships.

51m 24s

And to and to put that in front of everything. And so so for us, you know, a deal in Latin America or a deal in The US, it should be healthy anyway. So we have a pretty centralized way of understanding margins, understanding how we want to close the deals. And that's something that that we try to to across to to spread across all the all the places.

51m 47s

So I don't know if that answer your question.

51m 51s

Yes. That's helpful. Thank you. And then on the new commercial models, how much traction are you getting there? Is there anything that you can quantify maybe as a percentage or part of your AI revenue? And then is your goal to have this become a material percentage of revenue over time?

52m 9s

So AI revenue is growing a lot. I mean, it's something that that is surprising us the way the amount of deals. And it's interesting to see that that growth is connected to the complexity of the market. So as it becomes more and more complex, and companies wants to implement that and, again, you know, I I said this many times, AI projects are very good for for media for social media and are very easy if you want to do a demo or or do it in social media. But then when you want to take to enterprise levels, it's a totally different it's a totally different game. So there's a lot of, you know, activity around that. Pretty much AI is involved in every single project. I mean, that's not a single project that we are pitching today that has that doesn't have a component even even in those very old customers, all of them, are getting some kind of flavor and components around that. Now our latest you know, model our latest subscription model what it does is provides the customers with a with a way of changing that engagement that we have had for the last twenty two years into evolved new model.

53m 26s

And I will let Diego to to explain a bit more about that. But I think that having this new conversation is triggering a lot of interest a lot of early interest from our customers. We already closed, many deals around that. We are not disclosing any any numbers. It's not substantial yet. But my plan moving forward is that some point, we'll start disclosing it as it gains momentum And And I hope that this is something that will be leading again. Right? It's like when like, you subscribe to any subscription that you may imagine that you can subscribe to Globant and get the engineering that you need, the creativity that you need, the process automation that you need, and pay for consumption, instead of just paying for the hour only paying with a monthly with a monthly fee. So so this is a pretty revolutionary approach. We haven't seen any of our competitors doing it. And we're extremely proud that we cracked that nut And as I said in my remark, when you you know, AI efficiencies has been a little bit elusive. To to to become tangible. And with this model, what we are doing is we're providing our customers an effective way to make those savings real.

54m 52s

So whenever you had a team of five engineers, they call it that way, Now you may have a subscription that is much cheaper than those five engineers. But on the back, there's a set of agents you know, producing the software supervised [indiscernible] that allow that the quality and the output hallucination, and it's the same Globant quality as always. So that produce a much better alignment of interest between our customers and us, and that produce something that we are looking for, which is more and more conversations around that new model and that new way of doing things. Daniel, if you want to add No. I think, I think, Maggie, to to put it super simple, this is it has been a discussion we've been having, about the future of the company and how we provide value for a long, long time, I think you know, time and people have been a good proxy of the value being delivered to our client, and that is no longer the case. So our immediate approach was, you know, let's engage in a different way. One would think, like, immediately that that the the best way and approach has to do with you know, Turkey solution, a fixed price.

56m 16s

And truth to be told is that we don't like those type of contracts. But but let me tell you why. Those have an end.

56m 24s

Don't speak about a relationship. Those have a set mandate. And the relationship you have with your client makes change, which is, you know, evolving product, discovery, etcetera, a case you don't want. That's not the type of relationship with it. So we started exploring a new way of doing things. And, and I think we want a subscription model pretty much represent that. Let's, represent the value we are delivering in a different way Let's measure that. Let's make sure we continue to provide value and efficiencies and quality the way Globant has been doing it. Taking advantage of the latest technology. And all they can do, let's take that to the limit. And that's what we have put together.

57m 14s

Very interesting. Thank you all.

57m 17s

You, Maggie. Thank you, Maggie. The next comes from the line of Jonathan Lee from Guggenheim. Jonathan, please go ahead.

57m 27s

Great. Thanks for taking my question.

57m 29s

How should we be thinking about the revised growth outlook as it relates to composition between ongoing ramps versus hunting versus farming? And how does that compare to composition from prior years?

57m 40s

So when you look at the full year number today, Jonathan you look at Q1, you look at the Q2 guidance, you're going to see that it's basically pretty much maintaining the same level of of revenues for for this for the rest of the year. So the and and and the the way we are building that is with a majority of of that already contracted. And we try to on purpose to reduce as much as possible any potential upside coming from coming or even from taking more risk on the farming side. So, if if we try to put out a number that we feel, it is derisked to the extent possible. Of course, as always, think things can change. But we put a lot of effort into trying to put a number that has a higher degree of certainty than than the ones or or maybe a lower risk than the one we would have taken in another moment. Given the uncertainty that we're seeing, given that we were expecting a better Q1 than what it ended up being We're expecting a recovery already into Q2 that is not showing. You know, it's it's pretty much stable.

58m 56s

And and we try to say, okay. If this is not happening as we expected, back in February, let's let's somehow assume that this uncertainty that we're seeing continues throughout the rest of the year. And let's try to put a number you know, that that removes most of that uncertainty so I said, to the extent possible.

59m 19s

Thanks for that color, Juan. And just as a follow-up, yeah, can you update us on what you're seeing at your top customer? Understand there was some pull forward late last year, but is there still an expectation for that account to be up, call it, mid to high single digits this year?

59m 33s

At this point, we are seeing that account in, you know, finishing around the mid single digit number given that it started a little bit below where, you know, we were planning before. And looking already into the second quarter. So we feel that it should be more in line with a mid single digit type of year over year growth at this point. We are already now in the process of having some conversations about some new things that that they have recently mentioned. On the press. That is something that's gonna take some more time materialize.

1h 16s

Understood. Thank you.

1h 19s

Thank you, Jonathan. We cannot hear you, Arturo.

1h 26s

Sorry. Excuse me. The next question comes from the line of Sean Kennedy from Mitsuko. Sean, please go ahead.

1h 32s

Hi, thanks for taking my question. So I was wondering about the demand environment for professional services It seems like it recovered a bit this quarter sequentially. And has your outlook changed significantly over the last few months with those pressure pressuring the sector broadly?

1h 49s

Yeah. So, you know, part of the recovery comes from you know, during q four, typically, there are four logs in in that sector. Those are not in in q one. They they typically happen in December. Part of the recovery is there. And we see a stable you know, a stable number for that industry. We're not seeing big changes neither positive nor negative. So it's gonna be stable. We wanna see better numbers [indiscernible] We are gonna see better numbers in in in travel and hospitality. We're gonna see better numbers in health care, for example.

1h 1m 28s

Great. Thanks. And then for Latin America, Latin specifically, are there I Globant was overweight financial services. Are there is it kind of just a broad pullback in demand environment or is it really focused on a few key kind of sectors down there?

1h 1m 48s

It's mostly focused on countries than than sectors. Argentina is is doing extremely well. You know? Showing very, very solid growth. But that is being offset by some of our customers in Brazil and Mexico. In Mexico, that's mainly BFSI. But when you look at BFSI as a whole, you know, we are having good traction in The US. We're having good traction in Europe. So it's not it's not a sector that as a whole will look bad. It's gonna actually look look good. Even with the issues in in in some of our customers in Latin America.

1h 2m 24s

Great. Thank you. Appreciate the color.

1h 2m 26s

Thank you.

1h 2m 27s

Thank you.

1h 2m 30s

Thank you, Sean. The next question comes from the line of Devi Agoyal from Scotiabank. Diviya, please go ahead.

1h 2m 38s

Good afternoon, everyone. I just wanted to get some color on the capital positioning of the company with [indiscernible] current macro dynamics. So if you could provide how have some of the capital priorities changed? And what are some of the imminent measures you are taking or have taken in order to ensure you meet the profitability guidelines that you've put forth?

1h 3m 2s

Thank you, Olivia for the question. I think the first part was about capital, right, and protection of cash flow generation Am I right? The second part was all margin, but just ratio. Okay. So Yeah. I wanted to try to understand capital positioning of the company. Sorry.

1h 3m 20s

Yeah. The capital position. Okay. So, we closed the quarter with about, a hundred and $55,000,000 in net debt. We have about we have a facility which is up to $725,000,000. You have to keep in mind that [indiscernible] consume cash in the first half of the year and generates a lot of cash in the second half of the year. Having said that, the plan I mentioned in my initial remarks, is to protect and actually generate more cash We have taken measures to make our CapEx investments lower for the year. And prioritize those areas that are related to our AI investments at the expense of some of maybe you know, certain offices and certain things that we were able to to postpone for for the future. So we will be protecting cash flow generation As I mentioned, cutting or reducing a little bit our prioritizing our CapEx investments. Extending DSO payment terms whenever possible towards to some of our vendors. At the same time, we're working very hard to reduce the DSO.

1h 4m 36s

Yeah. And also and also on the m and a side. Right? Yeah. On the m and a side, we're we're we'll be much more focused on on really adding value and generating deals that are accretive for the company. Everything changed when the multiple changes, so we need to we have a new reality there, and we'll be much more cautious on that on that specific much more limited. We have always been cautious. So much more limited in terms of, how we do M and A. Right?

1h 5m 12s

And then on on the margins, the second part of your question, I also mentioned, you know, some some actions that we're taking trying to, you know, you know, work on utilization levels, which are below our target. We are working on efficiencies in terms of infrastructure, offices, We're working on protecting our margin through being cautious in terms of pricing. And so on and so forth.

1h 5m 39s

That's helpful. Just to just to complete the discussion here, are you undertaking or anticipate undertaking any specific restructuring efforts in any of the global geographies you operate in?

1h 5m 52s

No.

1h 5m 53s

No, Divya, that's not in the plan. We see a lot of, as Martin described, the pipeline is there. The need for technology is there.

1h 6m 3s

I think uncertainty will have to go away at some point and and companies will continue investing in growth and they as they have been doing in the last twenty years.

1h 6m 11s

And companies cannot avoid, you know, to go through these transformation processes. I mean, pretty much nobody can can look away from the efficiencies that can be made using AI. In every single sector of the company. The efficiencies that can be done on how we interact with consumers, customers, how emotional you become when you connect with them, And all things AI helps a lot. So pretty much no customer on any sector can look away from that. So that is materializing into a pipeline growth. And of course, I think decisions will be a little bit more fluid moving forward.

1h 6m 49s

But we hope that, that's the new reality. But but, yeah, the very beginning of the we're a little bit tough. More after after we reported earnings with all the tariff things and things that happened that was absolutely unexpected. But in any case, That is very helpful. Thank you. Thank you, Divya.

1h 7m 12s

Thank you. Thank you, Divya.

1h 7m 15s

Thank you very much, Divya. Our next question comes from the line of Arvind Ramani. From Piper Sandler. Arvind, please go ahead.

1h 7m 21s

Hi, Kate. Thanks for taking my question.

1h 7m 26s

Appreciate it. Appreciate it. Just a couple of questions. You know, when you think about kind of the updated guidance, I'm really trying to understand you know, kind of what's gonna drive some upside or downside So in a sense, like, you know, if you're if you're looking at this, like, eight months from now and you come in sort of below below sort of your updated guidance, What would have need to happen? And if you were to come back kind of closer to kind of the prior guidance, you basically kind of gave, three months ago. You know, what what would drive that? And, you know, what I'm really trying to figure out is, you know, things are moving fairly quickly. Both both on the Taro side and the macro side. [indiscernible] you know and I don't necessarily wanna be overly optimistic or pessimistic, but I'm trying to figure out the factors that can get us to a different range than what you've guided to.

1h 8m 19s

The way you know the numbers are built, if you think about our prior guidance, it was we were expecting to do $623,000,000 at the midpoint. And then Q2, Q3 and Q4, have embedded sequential growth rates there. Right?

1h 8m 36s

Yeah.

1h 8m 36s

What ended up happening was that right after we reported, we saw a deteriorate it's frozen. I know. People are here. Are hearing okay?

1h 8m 45s

I'm hearing you perfectly. Your video is frozen, but I can hear you perfectly.

1h 8m 48s

Okay.

1h 8m 49s

So what happened, you know, when we reported was that things got a lot worse and and, you know, we were not able to to to offset those challenges already in q one. So we ended up a notch below what we expected And looking into q two, we are seeing that we're gonna be you know, just a little bit up relative to q one, right, sequentially. We are seeing stabilization in other regions. So somehow we said, okay, let's assume that this uncertainty will continue. We cannot assume a meaningful recovery in the second half of the year because at least we want to be able to see if things get better. We want to see we want to be able to to to achieve that. But we cannot put that into the guidance for the year as we did last time. So that's how we've been the guidance. So I think that as you said, things are moving a lot very, very quick. And and what we believe is that the vast majority of what we are seeing was due to all the changes and uncertainty that is happening impacting our customers. Hence, you know, if those things go away, the pipeline is there, the opportunities are there, the The guys on the field are bringing the opportunities.

1h 10m 2s

We need to close more, and we need to close faster.

1h 10m 5s

If that happens because things get better, there might be some upside And then on the opposite, as you said, you know, if things go the other way, you know, we at least what we try to do with this guidance is put out a number that we feel is as safe as possible with the current scenario.

1h 10m 25s

Perfect. No. That that's certainly helpful. And I guess, know, there's obviously some level of, number of, working days and everything seasonality. That naturally impacts, you know, [indiscernible] growth. Yes.

1h 10m 37s

Yeah.

1h 10m 37s

I understand that. With that said, like, you know, when I look at your q one, right, it was negative 5%. And then q two is, like, flat, which you know, just mathematically implies, like, a 500 bps turnaround in, in terms of, like, sequential growth. Right? Like, I mean, basically, between between four and q q four of last and q one, you you you your revenue declined. Yeah. But now you see it's gonna be flat. [indiscernible] Q q q also is about, like, flattish about 1% in order number. So That's correct. Optimism and that's getting you from, like, hey. You you declined of in q one, but now in q two, you're gonna start seeing, a flat Yeah. But, again, we wouldn't we we we tried to put out a guidance that contemplates the uncertainty that we have in front of us. We see the second quarter stabilizing very clearly relative to Q1. [indiscernible] So the numbers that we are putting to the extent possible include all that uncertainty and hopefully, you know, allow us to to to at least meet those targets.

1h 11m 46s

Great. And just one last follow-up here is know, I mean, one could argue that, you know, you had, like, a good macro in January and February. And March when things started to shake. April was kind of the worst month April sits sits more in q two. So given that, you know, the last six weeks are probably the most volatile. How the last six weeks gone for you guys?

1h 12m 8s

I think, look, going the the second quarter numbers [indiscernible] in a way are part of that. We are not seeing deterioration. That's what I can tell you. Okay. That's why the number shows stable number throughout the year. We are not assuming any major or any significant improvement in the numbers that we put out. And, you know, we did take some I mean, we tried to put a number again that at least we can meet.

1h 12m 39s

Got it.

1h 12m 40s

That's so powerful. Thank you so much.

1h 12m 42s

Thank you, Arvind.

1h 12m 43s

Thank you. Thank you, Arvind.

1h 12m 46s

Thank you very much, Armin. Unfortunately, that's all the time that we have for the q and a session today. With that, I would like to turn the call over to Martin. For some closing remarks.

1h 12m 55s

Martin, please go ahead.

1h 12m 57s

Yeah. Thank you very much, everyone, for participating today. Really looking forward to see you on our next quarters. Ernie. Thank you so much.

1h 13m 6s

Bye bye. Bye bye.

1h 13m 7s

Bye.

Key Insights

Q1 revenues reached $611.1M, representing 8.6% year-over-year growth in constant currency, but came in below initial expectations; revised annual guidance now aligns more closely with industry trends.
Full-year 2025 revenue guidance is set at at least $2.464B (2% YoY growth), with Q2 2025 revenue guidance of at least $612M (4.2% YoY growth); adjusted operating margin targeted at a minimum of 15% for both Q2 and the full year.
Macroeconomic headwinds, including increased recession risk in the US, softened consumer spending, and trade tariff uncertainty, have led to slower pipeline conversion, especially in LatAm (down ~9% YoY), while Europe (+13.4% YoY) and New Markets (+84.4% YoY) showed strong growth.
The company is focused on long-term value creation through three pillars: deepening relationships with strategic clients, expanding industry-specific AI studios, and rolling out a new AI-powered subscription model (AI pods), which is gaining early traction but not yet material to revenue.
Management is taking measures to protect margins and cash flow, including optimizing utilization (78.2% in Q1), disciplined pricing, prioritizing AI-related CapEx, and being selective on M&A; no restructuring is planned, and the pipeline is up 20% YoY, indicating robust future opportunity despite near-term uncertainty.

Recent Transcripts

Q1 revenue grew 8.6% in constant currency, but annual guidance was revised lower amid macro headwinds.

Globant delivered record 2024 revenue, up 15.3%, with strong AI-driven growth and margin expansion.

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$814M	$1.3B	$1.8B	$2.1B	$2.4B
Cost of Revenue	$510M	$802M	$1.1B	$1.3B	$1.6B
Gross Profit	$304M	$495M	$669M	$756M	$863M
Gross Profit %	37%	38%	38%	36%	36%
R&D Expenses	$0	$0	$0	$0	$0

2020

2021

2022

2023

2024

Revenue

$814M

$1.3B

$1.8B

$2.1B

$2.4B

Cost of Revenue

$510M

$802M

$1.1B

$1.3B

$1.6B

Gross Profit

$304M

$495M

$669M

$756M

$863M

Gross Profit %

37%

38%

36%

R&D Expenses

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$54M	$96M	$149M	$159M	$166M
Dep. & Amort.	$48M	$80M	$108M	$140M	$163M
Def. Tax	$22M	$28M	$43M	-$35M	$0
Stock Comp.	$22M	$37M	$60M	$73M	$82M
Chg. in WC	-$30M	-$41M	-$125M	-$58M	-$151M

2020

2021

2022

2023

2024

Net Income

$54M

$96M

$149M

$159M

$166M

Dep. & Amort.

$48M

$80M

$108M

$140M

$163M

Def. Tax

$22M

$28M

$43M

-$35M

Stock Comp.

$22M

$37M

$60M

$73M

$82M

Chg. in WC

-$30M

-$41M

-$125M

-$58M

-$151M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$279M	$428M	$292M	$307M	$142M
ST Investments	$21M	$35M	$55M	$19M	$16M
Cash & ST Inv.	$300M	$462M	$347M	$325M	$156M
Receivables	$219M	$308M	$440M	$531M	$625M
Inventory	-$19M	-$28M	-$47M	$0	$0

2020

2021

2022

2023

2024

Cash

$279M

$428M

$292M

$307M

$142M

ST Investments

$21M

$35M

$55M

$19M

$16M

Cash & ST Inv.

$300M

$462M

$347M

$325M

$156M

Receivables

$219M

$308M

$440M

$531M

$625M

Inventory

-$19M

-$28M

-$47M

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. Reported revenue and EPS data from Earnings powered by FinChat.io. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice.

Market Cap: $4.4B
IPO Date: 7/18/14
CEO: Mr. Martin Migoya
Fulltime Employees: 31K
Sector: Technology
Industry: Information Technology Services
Country: LU
Exchange: New York Stock Exchange

Peers

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CNXC

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$182.00

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Watchlist

Earnings

Report Date

May 15, 2025

Reported Revenue

611.1M

Miss -4.75%

Avg 1d Change

16.91%

Report Period

Q1 2025

Reported EPS

1.5

Miss -5.06%

Implied Move 1d

8.83%

Transcript

10m 27s

10m 57s

12m 37s

14m 13s

15m 23s

17m 12s

18m 48s

20m 25s

21m 21s

23m 7s

24m 51s

26m 34s

While focusing at the same time on protecting our margins and cash flow.

26m 39s

28m 23s

This balanced approach is of utmost importance to us. Thank you for your continued support, See you shortly at the q and a session.

28m 45s

29m 45s

Starting with LATAM and any other areas that we're a little Thank you.

29m 49s

31m 29s

32m 17s

33m 37s

33m 49s

34m 44s

35m 15s

36m 23s

Yeah. High priority initiatives, all of them. Alright. Thank you.

36m 29s

Thank you, Dicin. Thank you.

36m 32s

Thank you, Tien Tsin. The next question comes from the line of Jim Schneider from Goldman Sachs. Jim, please go ahead. Your line is open.

36m 39s

37m 8s

38m 2s

38m 24s

39m 25s

40m 17s

Thank you.

40m 19s

Thank you, Tim. Thank you, Jim.

40m 21s

Thank you, Jim. Our next question comes from the line of Ryan Bergen from TD Cowen. Ryan, your line is open.

40m 27s

41m 48s

At least during the second quarter.

41m 50s

Okay. Okay.

41m 52s

And how are you managing kind of the, you know, the employee base here and the resourcing plans? As you go forward? Can you talk about your intentions here as you move through the balance of year?

42m 1s

43m 15s

Right. Right. Okay. Thank you.

43m 17s

Thank you, Brian.

43m 18s

Thank you, Brian.

43m 21s

44m 10s

44m 52s

45m 23s

46m 43s

47m 16s

48m 44s

49m 38s

Perfect. Thank you so much.

49m 40s

Thank you very much.

49m 41s

Thank you.

49m 43s

Thank you, Jamie. Our next question comes from the line of Maggie Nolan from William Blair. Maggie, please go ahead.

49m 50s

Hi, thank you.

49m 52s

50m 12s

51m 24s

51m 47s

So I don't know if that answer your question.

51m 51s

52m 9s

53m 26s

54m 52s

56m 16s

And truth to be told is that we don't like those type of contracts. But but let me tell you why. Those have an end.

56m 24s

57m 14s

Very interesting. Thank you all.

57m 17s

You, Maggie. Thank you, Maggie. The next comes from the line of Jonathan Lee from Guggenheim. Jonathan, please go ahead.

57m 27s

Great. Thanks for taking my question.

57m 29s

How should we be thinking about the revised growth outlook as it relates to composition between ongoing ramps versus hunting versus farming? And how does that compare to composition from prior years?

57m 40s

58m 56s

59m 19s

59m 33s

1h 16s

Understood. Thank you.

1h 19s

Thank you, Jonathan. We cannot hear you, Arturo.

1h 26s

Sorry. Excuse me. The next question comes from the line of Sean Kennedy from Mitsuko. Sean, please go ahead.

1h 32s

1h 49s

1h 1m 28s

1h 1m 48s

1h 2m 24s

Great. Thank you. Appreciate the color.

1h 2m 26s

Thank you.

1h 2m 27s

Thank you.

1h 2m 30s

Thank you, Sean. The next question comes from the line of Devi Agoyal from Scotiabank. Diviya, please go ahead.

1h 2m 38s

1h 3m 2s

1h 3m 20s

1h 4m 36s

1h 5m 12s

1h 5m 39s

That's helpful. Just to just to complete the discussion here, are you undertaking or anticipate undertaking any specific restructuring efforts in any of the global geographies you operate in?

1h 5m 52s

No.

1h 5m 53s

No, Divya, that's not in the plan. We see a lot of, as Martin described, the pipeline is there. The need for technology is there.

1h 6m 3s

I think uncertainty will have to go away at some point and and companies will continue investing in growth and they as they have been doing in the last twenty years.

1h 6m 11s

1h 6m 49s

1h 7m 12s

Thank you. Thank you, Divya.

1h 7m 15s

Thank you very much, Divya. Our next question comes from the line of Arvind Ramani. From Piper Sandler. Arvind, please go ahead.

1h 7m 21s

Hi, Kate. Thanks for taking my question.

1h 7m 26s

1h 8m 19s

1h 8m 36s

Yeah.

1h 8m 36s

What ended up happening was that right after we reported, we saw a deteriorate it's frozen. I know. People are here. Are hearing okay?

1h 8m 45s

I'm hearing you perfectly. Your video is frozen, but I can hear you perfectly.

1h 8m 48s

Okay.

1h 8m 49s

1h 10m 2s

We need to close more, and we need to close faster.

1h 10m 5s

1h 10m 25s

1h 10m 37s

Yeah.

1h 10m 37s

1h 11m 46s

1h 12m 8s

1h 12m 39s

Got it.

1h 12m 40s

That's so powerful. Thank you so much.

1h 12m 42s

Thank you, Arvind.

1h 12m 43s

Thank you. Thank you, Arvind.

1h 12m 46s

Thank you very much, Armin. Unfortunately, that's all the time that we have for the q and a session today. With that, I would like to turn the call over to Martin. For some closing remarks.

1h 12m 55s

Martin, please go ahead.

1h 12m 57s

Yeah. Thank you very much, everyone, for participating today. Really looking forward to see you on our next quarters. Ernie. Thank you so much.

1h 13m 6s

Bye bye. Bye bye.

1h 13m 7s

Bye.

Key Insights

Q1 revenues reached $611.1M, representing 8.6% year-over-year growth in constant currency, but came in below initial expectations; revised annual guidance now aligns more closely with industry trends.
Full-year 2025 revenue guidance is set at at least $2.464B (2% YoY growth), with Q2 2025 revenue guidance of at least $612M (4.2% YoY growth); adjusted operating margin targeted at a minimum of 15% for both Q2 and the full year.
Macroeconomic headwinds, including increased recession risk in the US, softened consumer spending, and trade tariff uncertainty, have led to slower pipeline conversion, especially in LatAm (down ~9% YoY), while Europe (+13.4% YoY) and New Markets (+84.4% YoY) showed strong growth.
The company is focused on long-term value creation through three pillars: deepening relationships with strategic clients, expanding industry-specific AI studios, and rolling out a new AI-powered subscription model (AI pods), which is gaining early traction but not yet material to revenue.
Management is taking measures to protect margins and cash flow, including optimizing utilization (78.2% in Q1), disciplined pricing, prioritizing AI-related CapEx, and being selective on M&A; no restructuring is planned, and the pipeline is up 20% YoY, indicating robust future opportunity despite near-term uncertainty.

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