Globant (GLOB, Financial), a Luxembourg-based software development and cybersecurity company, delivered solid Q2 results despite a challenging IT spending environment. The company posted a small EPS beat and an 18% revenue growth. Although GLOB's guidance for Q3 and FY24 was mixed, the rising momentum behind its AI products has investors optimistic about its growth prospects. In 1H24, AI-related revenue soared by 130% year-over-year to $150 million, with the pipeline hitting a record high.
- Over the past decade, GLOB has invested in its AI platforms, including Augoor, MagnifAI, Navigate, and GeneXus. On June 27, the company announced the integration of its proprietary AI Agents into the software development cycle.
- These AI agents, supervised by humans, are expected to accelerate the software development process, including product definition, back-end prototyping, design, and code testing.
- GLOB increased its data science and AI engineering specialists by 70% over the past year. This investment is paying off as demand for Gen AI capabilities rises, reflected by strong performance across GLOB's geographies and verticals.
- Europe was the best-performing region in Q2, with revenue growing nearly 45%. GLOB also landed its largest deal in history in this region. Latin America saw a 23% increase, while North America experienced a 10% rise.
- In terms of end markets, Travel & Hospitality was the standout with nearly 60% year-over-year revenue growth, followed by Consumer, Retail, and Manufacturing at 20% growth.
- GLOB's strong performance in large accounts is another bullish indicator. The company ended Q2 with 19 clients contributing over $20 million in annualized revenue and 329 clients with more than $1 million in annualized revenue, up 16% year-over-year. Additionally, its largest customer, Walt Disney (DIS, Financial), increased spending on its platform by 11% year-over-year.
The main takeaway is that GLOB's better-than-expected Q2 results and positive earnings call commentary have positioned it as an emerging AI play, as reflected in the stock's significant gains today.
