Globant Reports Fourth-Quarter Earnings Beat, but Falls Short on Guidance
Global technology services provider, Globant (GLOB), exceeded analyst expectations in its fourth-quarter earnings report. The company reported an adjusted EPS of $1.62, slightly surpassing the consensus estimate of $1.61. Revenue for the quarter also saw a slight increase to $580.7 million compared to the consensus estimate of $579.45 million.
Despite the positive performance, Globant's shares fell by 4.9% following the release of its guidance for the first quarter and full fiscal year of 2024. The company's projections fell short of analyst expectations, causing investor concern.
Globant experienced significant growth in the fourth quarter, with revenue increasing by 18.3% year-over-year, indicating strong momentum for the company. However, the guidance provided for the first quarter of 2024 predicts an adjusted EPS of $1.53, which is lower than the consensus estimate of $1.54. Additionally, the projected revenue for Q1 is expected to be at least $570 million, falling behind the expected $574.5 million. The full fiscal year guidance for 2024 also fell short, with Globant anticipating an adjusted EPS of at least $6.50 and revenue of at least $2.435 billion, both below the consensus estimates.
CEO Martín Migoya highlighted the company's achievements over the past year, including market expansion and new client relationships. He emphasized Globant's focus on artificial intelligence (AI) and generative AI capabilities, positioning the company for future growth. However, the market's reaction to the forward-looking guidance tempered Migoya's optimism for 2024 and the potential of the total addressable market.
Investors have expressed caution about Globant's projections for the upcoming periods, which is reflected in the decline of the company's share price. Although the fourth-quarter earnings beat expectations, market sentiment remains wary as the company's financial forecasts do not align with Wall Street's expectations.
Globant's strategic acquisitions and global presence indicate a commitment to expanding its service offerings. However, the immediate investor sentiment remains cautious due to the company's guidance falling short.
According to Jefferies, who has a Buy rating and $275 price target on the stock, Globant's revenue and earnings were in line with their expectations. They noted that the 2024 guidance appears to be conservative but also mentioned uncertainty in the second half of 2024. They have adjusted their EPS estimate to $6.55 to account for potential headwinds in the first half of 2024.
In summary, while Globant's fourth-quarter earnings beat estimates, the company's guidance for the first quarter and full fiscal year of 2024 fell short of analyst expectations. This has led to a decline in share price as investors remain cautious about the company's projections. Globant's strategic initiatives and global presence indicate long-term growth potential, but immediate market sentiment remains skeptical.
Analyst comment
Neutral news.
As an analyst, I expect the market to have a cautious reaction to Globant’s financial forecasts falling short of expectations. Despite the positive fourth-quarter earnings, the lower guidance for the first quarter and full fiscal year of 2024 might lead to a decline in the company’s share price. However, the strategic acquisitions and focus on expanding service offerings indicate potential future growth.
