GLOB

• Strategic Transition to AI-Native Services

  • Launched the Glob AI platform, an AI-native delivery model built around AI pods: outcome-focused, consumption/output-priced service units that run on AI agent workflows, supervised by in-house domain experts, eliminating long procurement and ramp-up cycles. This model is described as "service as software", similar to how cloud transformed infrastructure. The new model is already live, repeatable, and scaling.
  • As of Q2 2026, Glob AI annual recurring revenue (ARR) reached $52.8 million, up ~60% from $32.8 million in Q1 2026. The pipeline for Glob AI stands at $436.8 million, up from $352 million in Q1, and 45% of the company's top 20 accounts have already adopted AI pods. The new model delivers 30% higher productivity than traditional engineer + AI approaches.
  • Glob AI serves three core high-demand areas: core modernization (delivering technical debt projects faster as outcomes vs. hourly work), experience debt rebuilding (turning multi-month AI-first front-end rebuilds into same-week releases), and agentic process transformation (the largest opportunity, where outcome-based pricing fits naturally for agent-powered business process redesign).

• Platform and Partnership Highlights

  • Glob AI codifies 20+ years of enterprise engineering and domain knowledge into reusable, modular agentic workflows, enabling cross-industry reuse and reduced redundant work. The platform supports routing across 140+ LLMs for full model independence, with dedicated client token vaults that guarantee client data sovereignty (no client data is used to train third-party models) and automated quality gates to reduce token waste and hallucinations.
  • Announced new strategic partnerships: a multi-year alliance with Anthropic (Globant is a preferred services partner in the Claude Partner Network, with multiple Claude-powered AI pods already in production and a joint pipeline of large enterprise clients), and selected partner status in OpenAI's new partner network. Launched Vercel-powered AI pods for native AI application development on Next.js, with partnerships also in place with Nvidia Omniverse, Salesforce, MuleSoft, AWS, Azure, Google, and Meta.
  • Hired Saurabh Narang, previously of ServiceNow and AWS, as CEO of Glob AI to lead scaling of the new business.

• Operational and Client Milestones

  • Key client wins and milestones include: FIFA using Glob AI AI pods to scale its personalized digital fan ecosystem; British Airways launched its new AI-powered mobile app (a multi-year partnership milestone), with the partnership extended to add new AI pod-powered features; a large Gulf region financial institution is building its first agentic bank powered by Globant AI pods; the company's creative network GUT won 22 Cannes Lions, including a third consecutive Grand Prix for long-term client Mercado Libre, the first agency-client partnership to achieve this milestone.
  • 96% of Q2 revenue came from repeat customers. Revenue per head on a run-rate basis hit $95,800, up 9.7% year-over-year, reflecting productivity gains from the new delivery model.
  • Implemented a Q2 2026 business optimization initiative to align cost structure and talent with AI-focused strategic priorities, including workforce resizing/reshuffling, office footprint consolidation, and delivery center prioritization. Recorded a one-time $32.3 million charge for the initiative in Q2, with additional costs expected in Q3, with savings reinvested into Glob AI development.
  • Balance sheet remains strong: $168.8 million in cash and short-term investments, $253.1 million in net debt. The $125 million share repurchase program authorized in May 2026 remains active, with management viewing repurchases as a high-return investment at current valuations.

• Full year 2026 guidance was revised downward, from a previous range of $2,462 million to $2,508 million to a new range of $2,428 million to $2,462 million.
• Adjusted full year 2026 operating margin is now expected to be between 13.5% and 14.5%, impacted by ongoing US dollar weakness that increases costs for the company's Latin American delivery centers.
• Full year 2026 adjusted diluted EPS is guided to a range of $5.75 to $6.15, with an expected average of 43.6 million diluted shares outstanding. The IFRS effective income tax rate is expected to be between 21% and 23%.
• For Q3 2026, revenue is expected to be between $607 million and $615 million, adjusted operating margin between 13.5% and 14.5%, and adjusted diluted EPS between $1.43 and $1.53.
• Management reaffirmed that Glob AI ARR will reach at least $110 million by the end of 2026, up from the prior guidance range of $60 million to $100 million. By year-end 2026, AI pods are expected to represent close to 4% of total company revenue on a run-rate basis.
• Management expects strong free cash flow generation in the second half of 2026, consistent with historical seasonality, with capital allocation priorities unchanged (share repurchases and continued investment in Glob AI/AI pods scaling). The business optimization initiative is expected to leave the company with a leaner cost base entering 2027.

Total company Q2 2026 revenue was $614.4 million, up 1.2% sequentially and slightly up year-over-year, with an 80 basis point FX tailwind. By geography: Europe grew 6.8% year-over-year, Latin America grew 5.9% year-over-year, North America contracted 2.4% year-over-year, and new markets decreased 17.7% year-over-year (new markets contributed a 115 basis point drag to overall year-over-year growth). By client cohort: Top 50 clients grew 6.9% year-over-year, top 20 clients grew 6.6% year-over-year, and top 10 clients grew 4.4% year-over-year, all above company average, with 16 of the top 20 clients posting positive year-over-year growth. The Data and AI Studio is the company's second largest studio by revenue, contributing ~11% of total sales and growing ~35% year-over-year. AI pod (Glob AI) revenue was 2% of total Q2 revenue, with the company targeting 4% of total revenue by the end of 2026. Adjusted gross margin for the company was 36.5%, adjusted SG&A was 18.6% of sales, and adjusted operating margin was 13.2%. AI pods carry gross margins approximately 10 percentage points above the company's traditional delivery model. Adjusted net income was $60.3 million (9.8% adjusted net margin), with adjusted diluted EPS of $1.40. Free cash flow for Q2 was $12.6 million, and first half 2026 free cash flow hit a company record of $48.7 million.

• Geopolitical instability and project delays in new markets (particularly the Middle East) have materialized, leading to a 17.7% year-over-year revenue contraction in the segment, and the revised guidance assumes this weak short-term environment persists.
• High and volatile oil prices are pressuring the travel and hospitality vertical, leading some clients to slow transformation program spending to protect their P&Ls; management views this as a temporary deferral of revenue rather than permanent loss.
• Protracted, longer discretionary decision-making cycles in North America have created headwinds for near-term revenue growth.
• US dollar weakness against Latin American currencies (most notably the Colombian peso) has created significant margin pressure, with a cumulative 4 percentage point FX impact on margins over the past 1.5 to 2 years.
• The deliberate transition to the AI pod model may create short-term headwinds for reported top-line growth as the company scales the new higher-productivity, output-priced model alongside the traditional hourly/headcount model.

Q: How long will the current transition period last before AI pods drive overall company reacceleration, and how much of the downward 2026 guidance revision is from macro headwinds vs. intentional transition impacts? / A: Management is executing the transition deliberately quarter over quarter, and expects the strongest growth impact from the new model to emerge by the end of 2027. The vast majority of the guidance revision is from macro/geopolitical headwinds: the unexpected slowdown in new markets (connected to regional budget cuts and oil price impacts on travel clients) explains almost all of the downward change, with only a small portion from transition-related assumptions. AI pods are already scaling faster than prior guidance, with 45% of top 20 clients already adopting, so management remains confident in hitting the new $110+ million year-end ARR target.

Q: What is Glob AI's unique value proposition relative to standalone AI model providers, and how does workload split across model partners? / A: Glob AI is model-agnostic, supporting all major frontier models (Anthropic, OpenAI) as well as open-weight models per client preference, with client choice of model provider. The core unique value is accountability and repeatability, which raw frontier models do not provide. Globant codifies 20+ years of enterprise delivery knowledge into structured, step-by-step workflows with automated quality gates and human supervision, eliminating the brute-force trial-and-error of generic LLM use, cutting token waste, and delivering consistent, enterprise-grade outcomes with transparent pricing. This structure reduces delivery timelines dramatically (for example, an ERP architecture project that would take 2-3 weeks traditionally can be completed in 48 hours).

Q: How should management think about potential future deflationary pricing pressure as clients demand a share of AI pod productivity gains, and what structural defenses exist? / A: Management notes that negotiation happens across all delivery models, not just AI pods. In most cases, clients use productivity gains from AI pods to take on more work rather than cutting budgets, so total client spending typically grows rather than shrinks. Even if clients do demand price cuts for the same scope, AI pods have structurally higher margins than traditional services, so there is existing margin buffer to absorb cuts while accelerating migration and growing share of wallet. As the market shifts from AI-focused cost cutting to AI-driven revenue generation, demand for higher-value AI pod work will grow further, offsetting any potential pricing pressure.

Q: What macro assumptions are built into the revised 2026 guidance, and how much cushion is on the low end of the range? / A: The midpoint of the revised guidance already prices in the full observed impact from Middle East geopolitical headwinds and travel client spending slowdowns, which are the primary factors behind the revision. Approximately 90% of full-year 2026 revenue is already contracted, so the range is fairly anchored. If macro conditions improve in North America, results could come in above the midpoint, but the low end of the range provides cushion for any further deterioration, which management does not currently expect.