Latin American Software Giant Globant Debuts on the NYSE

It isn’t very often that one hears of a Latin American company listing on the NYSE. Last month, Argentina-based Globant went public on the NYSE, becoming the first Latin American Software Services company to list on the exchange. Initial stock price movement suggests that the listing has been received positively by the market.

Globant’s Offerings
Globant calls itself a “new-breed” of technology services provider as it helps build innovative software solutions keeping emerging technologies and market trends in mind. The company’s software development process successfully integrates the creativity of digital agencies with the rigor of traditional IT service providers. Their solutions focus on technologies such as mobility, cloud computing, SaaS, digital gaming, social media, Internet of Things and Big Data. They realize the need for an organization to quickly adapt their offerings and internal systems to be able to meet the growing challenges and opportunities provided by these tech trends. Globant offers their solutions to help these organizations cater to these dynamic needs.

Globant uses three key principles for their growth. First, studios are focused technology practices within their organization. Unlike most of the industry which is classified by industry verticals that they provide services to, Globant is focused on technology skills. They currently have 12 key studios and believe that their organization structure helps them deliver more expertise in emerging technologies to clients across industries. Second, they are focused on creating an entrepreneurial culture that is flexible and promotes creativity. Finally, they nurture innovation through several internal idea sessions and events. Their model has helped them achieve several awards and recognitions including the Top 10 Innovative Companies in South America by FastCompany and a leading 2010 Cool Vendor in Business Process Services Report by Gartner.

IDC estimates that the IT services market will grow 4.4% annually over the period 2012 through 2017 to be worth $1,087.3 billion in 2017. The growth in the market will be driven by the continued adoption of new technologies. For instance, IDC estimates that the professional spend on implementation of cloud services will grow 25% over the same period to $22.6 billion. Similarly, mobile enterprise application platform market is projected to grow 39% to $4.8 billion. Globant targets these high-growth market segments as their business.

Globant’s Financials
Since its inception in 2003, Globant has seen strong revenue growth. Revenues have grown from $90.1 million in 2011 to $128.8 million in 2012 and $158.3 million in 2013, representing a CAGR of 33% over the three-year period. They also reported a profit of $13.8 million in 2013 compared with a loss of $1.3 million in 2012.

For the quarter ended March this year, revenues grew 25% to $43.1 million and profit was $3.4 million compared with a profit of $2.4 million a year ago. The company operates with over 3,320 employees spread across 25 delivery centers in Argentina, Uruguay, Colombia, Brazil, Mexico, and the United States. Their client list includes names like Google, Electronic Arts, JWT, Sabre, LinkedIn, Orbitz, and Disney Resorts. More than 90% of their clients are based in the US and they are expanding their efforts in other regions as well.

Competition
Globant competes with Indian outsourcing players like TCS and Wipro. Since in terms of cost structure, Indian players have an advantage, CEO Martin Migoya claims new, innovative technologies and time zone advantages are their primary competitive advantages.

Last month, Globant listed on the NYSE under the ticker GLOB by selling 5.85 million shares at $10 each. Globant plans to use these funds to pay off their debts, fund corporate expenses and acquisitions for growth. The stock has done well so far and touched a high of $13.25 soon after listing. It is currently trading at $12.30 with a market capitalization of $410 million.