Globant S.A. (NYSE: GLOB) is a jack-of-all-trades focusing on enterprise digital transformation. It provides business and technology consulting and digital solutions encompassing buzzword trends like artificial intelligence (AI), cloud computing, data science, metaverse, analytics, and the Internet of Things (IoT). The company has been steadily investing in its AI platforms, transforming itself into an emerging AI play, as evidenced by the 130% YoY growth in its AI-related revenue.
Globant operates in the computer and technology sector, competing with Endava plc (NYSE: DAVA) and EPAM Systems Inc. (NYSE: EPAM).
Embracing AI Inside and Out
Globant has not only adopted AI but has embraced it in full force. The company has bulked up its human AI talent by 70%, hiring data scientists and AI engineers over the past year. AI is its growth engine. On June 27, 2024, the company announced that it had integrated its proprietary AI Agents into the software development cycle. The AI Agents are supervised by human talent. It's expected to accelerate every stage of the software development sequence, which includes product definition, back-end prototyping, design, and code testing.
Globant’s Portfolio of AI Platforms
Globant has four AI platforms that help clients with AI development, coding, software development, and streamlining business processes.
- Augoor is a code intelligence platform that focuses on code navigation and comprehension. It enables developers to grasp and work with complex codebases promptly. In an effort to increase efficiency and productivity, it provides features like code completion, auto document generation, semantic search, and code mapping.
- MagnifiAI is the quality assurance platform that enables software testing at each stage. It provides the infrastructure and tools to build, train, and deploy customer AI models for a diverse range of enterprise needs.
- Navigate is an intelligence processing platform for incident management and business operations. It utilizes AI to identify process bottlenecks and monitor and analyze business processes to predict possible issues. It enables enterprises to optimize their operations and proactively engage in incidents.
- GeneXus is its low-code development platform that accelerates private AI development to automate software creation and maintenance. It enables developers to code applications using visual models, natural language, and other high-level abstractions to reduce complexity and development time.
Globant’s Growth Regions
Europe is its largest growth region, with revenue expanding 45% YoY, as the company closed its largest deal in history there. Latin America is growing by 23% YoY, and North America is growing by 10% YoY. Travel & hospitality was its leading segment with 60% YoY growth, followed by consumer, retail and manufacturing growth of 20% YoY.
GLOB Stock Triggers a Bull Flag Breakout
The daily candlestick chart for GLOB illustrates a bull flag breakout pattern. The preceding flagpole peaked at around $203 before the parallel channel comprised lower highs and lower lows. The breakout triggered heading into its Q2 2024 earnings report and accelerated following its release. The daily relative strength index (RSI) peaked at the 70-band twice and is attempting to coil again at the 61-band. Pullback support levels are at $190.55, $183.19, $176.59, and $171.85.
Globant's Top and Bottom Line Beat
Globant reported Q2 2024 EPS of $1.51, beating consensus estimates by 2 cents. Revenue grew 18.1% YoY to $587.46 million, beating $486.72 million. The company continues to land large accounts, ending the quarter with 19 clients with $20 million in accounts. The company had 329 clients with $1 million accounts, up 16% YoY. Its largest customer, The Walt Disney Co. (NYSE: DIS), increased its spending by 11% YoY.
Globant's Mixed Guidance
Globant issued Q3 2024 EPS of $1.60 to $1.64 versus $1.61. Revenues are expected between $611 million to $617 million versus $618.37 million. Full-year 2024 EPS is expected between $6.40 to $6.50 versus $6.33. Full-year revenues are expected to be between $2.407 billion and $2.421 billion versus the consensus estimates of $2.42 billion.
Guidant CEO Martin Migoya commented, “Our AI-related revenues have significantly grown by nearly 130% in the first half of 2024, underscoring our pivotal role in the ongoing AI revolution. With the unveiling of our AI agents, which enhance the software development life cycle, and the introduction of the Globant GUT Network at the Cannes Lions International Festival of Creativity, we are poised to meet the growing demands for AI-based solutions across the global economy.”
Globant analyst ratings and price targets are at MarketBeat. Needham reiterated their Buy rating and raised its 12-month price target to $245. However, UBS cut its rating to Neutral from Buy while Deutsche Bank initiated its rating with a Hold and a $210 price target.
