Globant (GLOB, Financial) experienced a significant decline of 9.5% in its share price today, despite reporting a strong Q3 performance and providing decent Q4 guidance. The stock had risen by 51% since early June and 9% since early November, setting high expectations for the report. Globant is a technology service provider focusing on digital transformation and AI technology.
- Non-IFRS EPS increased by 10% year-over-year to $1.63, aligning with the high end of its prior guidance of $1.60-1.64, slightly surpassing analyst expectations. Globant is known for small EPS beats and provides realistic guidance.
- Revenue rose by 12.7% year-over-year to a record $614.7 million, meeting analyst expectations and falling within prior guidance of $611-617 million. Q4 guidance was also in-line. Revenue from its largest client, Disney (DIS, Financial), grew by 17.5% year-over-year and 14% sequentially. North America contributed 55.7% of revenue, followed by Latin America (21.8%), Europe (17.6%), and the Middle East and APAC (4.9%).
- Globant anticipates strong demand and expects a 15% revenue increase in 2024, the highest among major IT service providers. Recent bookings have been among the largest in the company's history. For 2025, Globant forecasts double-digit revenue growth due to a robust pipeline and faster organic growth.
- Globant is optimistic about AI, calling it the biggest breakthrough since smartphones. Companies spent $15 billion on generative AI last year, with projections reaching $175-250 billion by 2027. In the first nine months of 2024, AI-related work generated over $250 million in revenue for Globant, a 120% year-over-year increase.
- Clients are taking a more active approach to AI in 2024, moving from exploratory work to more intentional projects, resulting in a larger pipeline for Globant.
- Globant sees no decline in clients' budgets for 2025 and notes stabilization in the industry after years of scarce growth.
Despite a strong quarter, Globant's stock decline may be attributed to muted upside and in-line guidance. The stock's significant rise since June may have prompted investors to lock in gains. Additionally, broader tech sector weakness could be impacting shares.
