What happened
Globant (GLOB 0.93%) stock posted big gains Friday following the company's first-quarter earnings release. Globant's share price ended the day up 11.1%, according to data from S&P Global Market Intelligence.
Globant recorded sales and earnings in Q1 that came in ahead of Wall Street's targets. The software specialist posted non-GAAP (adjusted) earnings per share of $1.28 on revenue of $472.42 million, beating the average analyst estimate for per-share earnings of $1.27 and sales of $471.07 million.
So what
Globant's revenue grew 17.7% year over year in the first quarter, which came in ahead of the market's expectations. Earnings for the period also topped Wall Street's target, but the company's adjusted gross margin of 38.2% was down from 39.5% in the prior-year period, and its adjusted operating income fell to 15.1% from the margin of 16.8% that it posted in Q1 last year.
In addition to better-than-expected first-quarter results, Globant also issued encouraging second-quarter and full-year guidance. Yet despite the Q1 performance beat, promising outlook, and recent stock rally, the company's share price remains roughly flat on the year.
Now what
For the second quarter, Globant expects sales to be at least $496 million, which would represent 15.5% growth year over year. In the period, the company expects to post an adjusted operating margin between 15% and 16%, and record adjusted earnings per share of at least $1.33 -- suggesting growth of 9% compared to last year's quarter.
For the full-year period, management is targeting revenue of at least $2.074 billion -- suggesting growth of 16.5% annually. On the year, the company expects to post an adjusted operating margin between 15% and 17%, and record adjusted earnings of at least $5.71 per share, which would work out to earnings growth of at least 12.4%.
Globant stock still trades down roughly 53% from its lifetime high. The company trades at approximately 29.5 times this year's expected earnings, but it could be worth a look for risk-tolerant investors looking to benefit from digital transformation and outsourcing trends.
