Posted on Wednesday, Oct 5th 2016
According to IDC, the proportion of digital related consulting engagements are expected to grow from nearly 50% for the period 2013-2015 to 80% by the year 2019, driving the total market for Digital Strategy services to more than $97 billion globally by 2019. Billion Dollar Unicorn player Globant (NYSE:GLOB), the first Latin American Software Services company to list on the NYSE exchange, is making its presence felt in the industry.
Globant was founded in 2003 by four friends Martin Migoya, Martín Umaran, Guibert Englebienne, and Néstor Nocetti. The idea for Globant was formed when the four friends met at an Irish pub after they had lost their jobs in the 2001 crash. Globant started as a shop to design software products and today is among the leading providers of innovative digital solutions to organizations. It provides its customers with access to emerging technologies such as mobility, cloud computing, SaaS, digital gaming, social media, Internet of Things, and Big Data. Besides building software products, Globant helps its customers build intellectual property.
Globant was venture funded till 2014, when it finally went public. It recently announced impressive second quarter results. Revenues of $79.9 million grew 32% over the year and were higher than the market’s expectations of $76.81 million. EPS of $0.29 was also ahead of the Street’s forecast of $0.28 for the quarter.
For the current quarter, Globant expects revenues of $80 million-$82 million compared with the Street’s estimate of $79.77 million. EPS of $0.27-$0.31 was short of the market’s projected earnings of $0.32 per share. Globant expects to end the current year with revenues of $318 million-$322 million, surpassing market projections of $313.54 million. EPS of $1.14-$1.20 was in line with the Street’s view of $1.16.
Globant’s Growth Plan
Globant’s three key pillars to maintaining high growth include Stay Relevant, Discover, and Build. It has focused its efforts and organization around these three key objectives. Within the Stay Relevant side, it ensures that the products delivered are innovative by understanding and analyzing the technology and customer environment, competitors, and consumer behavior. As part of this initiative, it recently launched a new edition of the Sentinel Report that is focused on cross-industry strategies and best practice sharing to offer more value to customers.
Within its Discovery team, Globant has grown through acquisitions. Earlier in the year, it announced the acquisition of We Are Experience (WAE), an innovative service design consultancy with presence in London and New York City. WAE was founded in 2003, and at the time of acquisition, it was a team of 40 consultants focused on innovative consumer technology trends. Globant has integrated WAE’s team to deliver a service offering that is able to provide a more strategic approach towards digital strategies for organizations. Terms of the acquisition were not announced.
Finally, within the Build teams, Globant has introduced a new service offering called Design Thinking Workshops to help its customers think about challenges with a customer-centric approach and to help them come up with solutions from a user perspective. These solutions can then be developed as prototypes and tested as well. It also launched two new platforms: Acamica and Collokia. Acamica is an e-learning platform for global companies who can use the platform to run their own online and personalized academies to host online courses and training modules that focus on user experience in social interactions. Collokia is a collaborative platform that helps connect coworkers with client technology and machine learning algorithms.
Globant’s impressive performance is driven by its focus on emerging technologies. Additionally, it has also benefited from being rooted in the Latin American markets. Globant is able to operate closer to the customer’s time zone and since it originated in the region, it is able to attract talent in a market where bigger names like TCS may fail due to lack of local market knowledge.
Its stock is trading at $42.07 with a market capitalization of $1.46 billion. It touched a 52-week high of $44.81 in August this year, soon after its second quarter result announcement. It has recovered from the 52-week low of $22.50 it had fallen to as of February of this year. It has seen phenomenal growth since it listed at $10 in the summer of 2014.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
Photo Credit: Sebastian Bassi/Flickr.com
This segment is a part in the series : Billion Dollar Unicorns
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What is Okta's Inorganic Growth Narrative?