Globant S.A. Q3 FY2025 earnings call

Key Points

• Generated $617.1 million in revenue, $2 million above guidance, with pipeline at $3.7 billion (30% y-o-y growth).
• AI initiatives are central, with over a thousand GenAI, CoreAI, or data-related engagements, and 900 AI readiness projects in the pipeline. The AI pod subscription model is evolving, with 17 out of top 20 clients embedding the subscription model.
• Partnerships include YPF, Riot Games, LaLiga, Adobe, Red Sea Global, Unity, AWS, Microsoft, IBM. For example, LaLiga is adopting agentic models end-to-end, and the GAT brand was listed as number nine global agency network at Cannes Lions 2025.
• Adjusted operating margin increased 50 basis points sequentially, with diluted SG&A reduced by 20 basis points, despite tax impact from Argentine peso depreciation.

During Q3 2025, Globant generated $617.1 million in revenue, which was $2 million above the most recent guidance. Revenue was up 0.4% year over year and 0.5% sequentially, excluding the positive impact of foreign currency. Adjusted gross profit margin was 38.1%, adjusted operating margin was 15.5%, adjusted net income was $69.7 million with an 11.3% adjusted net profit margin, and adjusted diluted EPS was $1.53. The balance sheet ended with $167 million in cash and short-term investments, $205.3 million in net debt, and $67.5 million of free cash flow was generated. Revenue contribution from different segments wasn't explicitly broken down beyond overall figures.

Guidance

• For 2025, expects revenue at least $6.5 billion, with Q4 guidance implying minus 5.8% y-o-y growth (including 150 basis points positive FX impact).
• Non-IFRS adjusted operating margin expected at least 15%, IFRS effective income tax rate in 22-24% range.
• Full-year 2025 non-IFRS adjusted diluted EPS expected at least $6.12 per share, assuming average diluted shares outstanding of 45.2 million.

Risks

• Acceleration of Argentine peso depreciation during Q3 led to higher than anticipated taxes, though partially offset by FX hedges.
• Macro environment uncertainties could impact revenue growth and conversion rates of pipeline projects.

Q: About helping companies prepare for AI in terms of data and cloud before AI pods implementation?

A: Juan Ignacio Urthiague said there are 900 projects in the pipeline related to data readiness, machine learning, and AI-related initiatives, with many companies still needing to get prepared for better AI use.