Story Stocks®
Updated: 16-Aug-24 13:27 ET
Globant's solid Q2 results put it on the map as an emerging AI play (GLOB)
Globant (GLOB), a Luxembourg-based software development and cybersecurity company, bucked the challenging IT spending environment in Q2, delivering solid results that included a small EPS beat and healthy revenue growth of 18%. While GLOB's guidance for Q3 and FY24 was generally mixed, the rising momentum behind the company's AI products has investors feeling bullish about its growth prospects overall. On that note, GLOB stated that its AI-related revenue soared by 130% yr/yr to $150 mln in 1H24 and that its pipeline is at a record high.
- Over the past ten years, GLOB has steadily invested in its AI platforms -- including Augoor, MagnifAI, Navigate, and GeneXus -- which will now become the foundation of its own AI agents. On June 27, the company announced the integration of its proprietary AI Agents to the software development cycle.
- These AI agents, which will be supervised by humans, are expected to accelerate each stage of the software development process, including product definition, back-end prototyping, design, and code testing.
- GLOB's investments include a 70% increase in the number of data science and AI engineering specialists at the company over the past year. The investments are paying off as demand for Gen AI capabilities explodes, as reflected by the broad-based strength across GLOB's geographies and verticals.
- The best performing region in Q2 was Europe with revenue growing by nearly 45%. Last quarter, GLOB disclosed that it landed its largest deal in its history in that region. Meanwhile, Latin America was up a healthy 23%, while North America saw a 10% increase.
- Taking a look at GLOB's end markets, Travel & Hospitality was the standout as revenue surged by nearly 60% yr/yr, followed by Consumer, Retail, and Manufacturing at 20% growth.
- Another bullish data point is GLOB's strong performance in large accounts. The company ended Q2 with 19 clients contributing over $20 mln in annualized revenue, and 329 clients with more than $1.0 mln of annualized revenue, up 16% yr/yr. Additionally, GLOB's largest customer, Walt Disney (DIS), increased spending on its platform by 11% yr/yr.
The main takeaway is that GLOB's better-than-expected Q2 results and its upbeat commentary during the earnings call put it on more radar screens as an emerging AI play, as reflected in the stock's sizable gains today.
