Here's our initial take on Globant's (GLOB -14.40%) fiscal 2025 second-quarter financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $587.5 million | $614.2 million | +5% | Beat |
| Adjusted earnings per share | $1.51 | $1.53 | +1% | Beat |
| Adjusted gross profit margin | 38.1% | 38.1% | unchanged | n/a |
| Adjusted operating margin | 15.1% | 15% | -0.1 pp | n/a |
Still Waiting for the Promise of AI
Globant's latest report included plenty of aspirations about how the company is looking to the future. But the immediate takeaway from the numbers was that Globant isn't quite there yet. Revenue growth came in at just 4.5% compared to year-ago numbers. Adjusted earnings topped investor expectations by a penny per share, but the $1.53-per-share figure was just 1% higher than in the year-ago period. Margin performance also didn't deliver, with figures flat to lower year over year.
Nevertheless, Globant's executives tried to play up what the future is likely to bring. Co-founder/CEO Martin Migoya pointed to ongoing generative artificial intelligence (AI) adoption and Globant's strategy to embrace its AI Pods, AI Studios, and Enterprise AI platform as part of what he called the "golden path" toward taking advantage of AI. Yet it was clear from Migoya's words that he understands there's a lot more work to do, and it'll take more time for the full impact of generative AI to make it into Globant's financials.
To be clear, that opportunity is massive. Globant said its pipeline is at all-time highs at $3.7 billion. That's roughly a year and a half's worth of sales at current run rates, and Migoya seems to believe that number is only going to grow as more customers turn to AI-powered solutions.
Immediate Market Reaction
Nevertheless, investors didn't react favorably to the news. Globant stock was trading down 7% in the first half hour after the quarterly report came out. It was apparent that shareholders didn't really seem too impressed with the sales and earnings numbers and had wanted to see a truly colossal quarter that showed Globant's ability to fully capitalize on gen AI trends.
In addition, Globant's guidance for the third quarter didn't show that growth is right around the corner. Projections for $615 million in sales would represent just 0.1% growth year over year. For fiscal 2025, Globant now expects at least $2.445 billion, but that too would be just 1.2% higher than 2024's final figures.
What to Watch
What's more important for the long run is that after Globant's most recent quarterly results, investors still seem unconvinced that the company is getting itself back on the growth trajectory it seemed to have back in 2021 when the stock was hitting all-time highs. In particular, 2025 has been a tough year for shareholders, with investors getting an unexpected negative surprise after the company's 2024 fourth-quarter financial report back in February.
We still see a possibility that Globant will be able to capture more of the boom from generative AI and digital transformation than it has so far. However, it's clear that many shareholders are losing patience with the company. Globant needs to step up its game even more -- and soon -- in order to prove itself.
