Q3 2025 Globant SA Earnings Call
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Speaker #1: Please note that we follow IFRS accounting statements. During our call today, we will report non-IFRS or adjusted measures, which is how we track performance internally, and the easiest way to compare Globant to our peers in the industry.
Speaker #1: You will find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published on our investor relations website. Announcing this quarter's to Martin
Speaker #1: results, I will now turn the call over Migoya.
Speaker #2: Hello, everyone, and welcome
Speaker #2: appreciate your continued interest as we navigate the ever-evolving technology 2025. We landscape. Our commitment to innovation and reinvention remains at the core of who we are: the speed of change is only accelerating.
Speaker #2: appreciate your continued interest as we navigate the ever-evolving technology 2025. We landscape. Our commitment to innovation and reinvention remains at the core of who we are: the speed of change is earnings for Q3 quarter, we're excited to share how we are back as Globant presents its shaping the future of our not only adapting to market trends, sustainable growth and industry.
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Speaker #2: continues to drive our efforts as we look ahead. Our business fundamentals remain strong, putting innovation first. and we continue to perform by Our AI studios bring delivering exceptional value Our focus on together our talent to provide a industry.
Speaker #2: transform how consumers interact with brands and how our They new kind of AI-based clients run their offering designed to deliver agentic AI-based services that businesses.
Speaker #2: Our AI bots are All our agentic AI-based solutions from our industry-specific AI studios to our AI bots are orchestrated through Globant Enterprise AI. Our central intelligence platform that acts as the golden path for enterprise-wide AI adoption and impact.
Speaker #2: combine the speed and autonomy of AI with the creativity and oversight of our measurable outcomes. They experts, enabling customers to access continuous outcome-driven transformation at scale.
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Speaker #2: Delivered through a transparent, consumption-based model, it transforms AI from isolated experiments to interpredictable, scalable, and measurable sources of enterprise value. Together, these elements form the backbone of Globant's growth to provide value for our customers and shareholder returns.
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Good afternoon, and welcome to <unk> third quarter 2025 earnings Conference call.
I am Arturo Langa Investor Relations officer at Goldman All participants on this call will be in listen only mode.
Speaker #2: During Q3, we generated 617.1 million dollars in recent guidance. We also revenue, 2 million above our most launched a share buyback program reflecting how bullish we are on our long-term another all-time high, currently at 3.7 billion dollars, prospects.
After todays presentation, there will be an opportunity to ask questions.
Please note. This event is being recorded and stream live on Youtube by now you should have received a copy of the earnings release. If you have not a copy is available on our website investors Dot global Dot Com, we will begin with remarks by our Chief Executive Officer, Marty <unk>, Our Chief Financial Officer, One <unk> and our Chief Technology Officer vehicles out there that this will be followed by a Q&A section.
Speaker #2: growth. It marks the solid demand we see for our services, and it grew this quarter despite very strong bookings. AI continues to emerge as the world's dominant technology, with an expected market of 4.8 trillion by 2033.
Before we begin I would like to remind you that some of the comments on our call today may be deemed forward looking statements.
This includes our business and financial outlook and the answers to your questions such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Please note that we follow <unk> accounting rules in our financial statements.
Speaker #2: There has been a shift beyond hype towards tangible and effective adoption. We see a tremendous today. While software as a service has played a crucial role in corporate technology by providing The pipeline has hit efficient and scalable solutions, our new AI bot subscription model represents a significant evolution in how potential in AI transformation organizations can leverage technology with our AI bots.
During our call today, we will report non <unk> or adjusted measures, which is how we track performance internally and the easiest way to compare globally to our peers in the industry you will find a reconciliation of <unk> and non <unk> measures at the end of the press release, we published on our Investor Relations website announcing this quarter's results I will now turn the call over to <unk>.
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Hello, everyone and welcome back at below 1% its earnings for Q3 2025.
Speaker #2: We empower leaders to develop tailored solutions that effectively address their unique and ever-changing needs. Our AI studios are having these core studios conversations with our clients to transform build versus buy and cost optimizations that are top of mind for corporate leaders today.
So I appreciate your continued interest as we navigate the ever evolving technology landscape.
Our commitment to innovation and reinvention remains at the core of who we are the speed of change is only accelerating this quarter. We're excited to share how we're not only adapting to market trends, but also proactively shaping the future of our industry.
Speaker #2: Since doubling provide clarity in AI strategy this year, we have seen the execution being shown in bookings and revenue. Our top five clients grew sequentially by 2.1%, exceeding the this period.
Our focus on sustainable growth and delivering exceptional value continues to drive our efforts as we look ahead.
Our business fundamentals remain strong and we continued to perform by putting innovation first our AI studios, bringing together our talent to provide a new kind of AI based solutions specific for each industry.
Speaker #2: The share of clients we have identified as 100 square potential as part company's average growth over currently down on our 100-square 56.7%, up from 50% last year.
Speaker #2: Today, we have over 1,000 engagements related to Gen AI, Core AI, or data currently running, representing a third of our overall projects. We have over 900 in our pipeline.
Transform how consumers interact with brands and how our clients run their businesses.
Our AI bots are our next generation offering designed to deliver Identic AI based services that scaled faster operate more transparently and focus on measurable outcomes. They combine the speed and autonomy of AI with creativity and oversight of our experts enabled.
Speaker #2: The new projects related to AI readiness, offering AI bots at the departure from traditional consulting engagement models, have nearly doubled in their share of our pipeline.
Speaker #2: This growth significantly outpaced the overall pipeline expansion. Clients access these solutions via the which serves as a Globant Enterprise AI platform, multi-purpose hub. First, as connecting seamlessly with more than 140 an AI hub, LLMs that are best for their needs, without being locked into a single LLMs.
<unk> customers to access continues.
<unk> driven transformation at scale, all our attentive AI based solutions from our industry specific AI studios to our AI bots are orchestrated through global enterprise AI.
Our central intelligence platform that acts as the Golden path for enterprise wide AI adoption and impact delivered to a transparent consumption based model. It transform AI from isolated experiments into predictable scalable immeasurable source of enterprise value.
Speaker #2: is a corporate hub, that connects with all major corporate information systems and SAP, Salesforce, Databricks, and many others. And provider. third, an agent hub that agentic workflows to Second, it automate corporate processes.
Together these elements formed the backbone of <unk> growth to provide value for our customers and shareholder returns. During Q3, we generated $617 $1 million in revenue 2 million above our most recent guidance also launch a share buyback program reflecting.
Speaker #2: Acquired on a subscription basis, this shift to our subscription revenue model is not just a client interaction with the theoretical goal. It actively allows clients to create value underway in our most valuable client base.
How bullish we are on our long term prospects. The pipeline has hit another all time high currently at $3 $7 billion, representing 30% year over year growth. It marks the solid demand, we see for our services and it grew this quarter, despite very strong bookings AI.
Speaker #2: Within our top 20 customers, a Globant Enterprise AI group represents close to 40% of our total revenue. We are currently embedding our subscription model with 17 of them in meaningful ways.
Speaker #2: This is a huge milestone, specifically considering we officially launched this methodology in this new model. For example, at YPF, the largest shale oil operator in the world see how our clients are incorporating into full execution with optimize sourcing, inventory, contract, and supplier June of this year.
Speaker #2: This is a huge milestone, specifically considering we officially launched this methodology in this new model. For example, at YPF, the largest shale oil operator in the world see how our clients are incorporating into full execution with optimize sourcing, inventory, contract, and supplier June of this year. management, bringing clarity and interacts with its complex supply chain.
Continues to emerge as the world's dominant technology with unexpected market of $4 eight trillion by 2033. It would have made a 25 X increase in one decade over the past few months, we have seen a healthy dose of realism in the AI space.
There has been ashish beyond hype towards tangible unaffected adoption, we see tremendous potential in AI transformation today was software as a service play a crucial role incorporate technology by providing efficient and scalable solutions, our new AI bought subscription model represents a <unk>.
Speaker #2: talent for applying AI to We're encouraged to 46 agents to As you know, Globant has a entertainment, which is why we are particularly proud of our new reinvent the human experience in engagement to bring agentic processes to La Liga, one of the world's top sports later.
And if he can evolution in how organizations can leverage technology.
Our AI parts, we empower leaders to develop tailored solutions that effectively address their unique and ever changing needs. Our AI Studios and core studios are having these conversations with our clients to provide clarity in AI transformation build versus buy.
Speaker #2: growing partnership is our work with A great example of our leagues. Natura, the Brazilian multinational Diego will expand on this cosmetics company. This quarter, we announced that Globant will lead their S/4HANA migration choosing for our ability to seamlessly integrate innovation and AI into SAP methodology, development, and testing, while enhancing traditional implementation efficiency.
And cost optimizations that are top of mind for corporate dealers today since doubling down on our hundred square strategy. This year, we have seen the execution being shown in bookings and revenue our top five clients grew sequentially by two 1% exceeding the company's average growth over this period.
Speaker #2: Together with SAP's SHUL, our AI agents and platforms will accelerate delivery, reduce time to market, and support the clean core strategy by anticipating deviations and suggesting real-time corrections.
The share of clients, we have identified as hungry square potential as part of our total bookings is currently 56, 7% up from 50% last year today, we have over a thousand engagements related to Gen AI core AI or data current.
Speaker #2: Governed by our AI agents, this project brings a new vision from how technology can transform SAP implementations and drive business performance. This month, we also announced an important partnership with Riot Games, the company behind Global Esports Phenomena, League of Legends, and Valorant.
The running representing a third of our overall project, we have over 900 prospects related to AI readiness in our pipeline the new offering of AI bots and departure from traditional consulting engagement models.
Speaker #2: Globant will support its advancements in artificial intelligence, new game development, esports experiences, and software engineering capabilities. Over the next several years, both companies will push the boundaries of technology to deliver richer, more personalized experiences for millions of players and fans globally.
Nearly double its share of our pipeline.
This growth significantly outpaced the overall pipeline expansion clients access these solutions be it the global entered by say I platform, which serves as a multipurpose hub first.
Speaker #2: This partnership is one of the largest agreements in the history of our games business. We are proud to work with companies that continue to shape global esports culture and inspire millions of players.
As an AI hub connecting seamlessly with more than 100 M 40, llm's clients can interact with the Llm's that is best for their needs without being locked into a single provider.
Speaker #2: We're making decisions to unlock the full power in our core studios as well. We recently announced that all of Globant's marketing and advertising efforts were consolidated under the GATT brand umbrella.
Arturo Langa: Good afternoon, and welcome to Globant's Q3 2025 earnings conference call. I am Arturo Langa, Investor Relations Officer at Globant. All participants on this call will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded and streamed live on YouTube. By now, you should have received a copy of the earnings release. If you have not, a copy is available on our website, investors.globant.com. We will begin with remarks by our Chief Executive Officer, Martin Migoya, our Chief Financial Officer, Juan Urthiague, and our Chief Technology Officer, Diego Tartara. This will be followed by a Q&A section. Before we begin, I would like to remind you that some of the comments on our call today may be deemed forward-looking statements. This includes our business and financial outlook, and the answers to some of your questions.
Second it is incorporate hub.
That connects with all major corporate information systems and data lakes like S. E B Salesforce data breaks and many others.
Speaker #2: Today, Globant and GATT bring a uniquely consistent and complete value proposition to the entire C-suite empowering CTOs and CEOs to transform their business through technology while helping CMOs push creativity and marketing performance better than ever.
Third an agent hub that allow clients to create agenda workflows to automate corporate processes Global Interbody say I come got acquired on a subscription basis. This shift to our subscription revenue model is not just a theoretical goal. It is actively underway in our most.
Speaker #2: Just as Amazon transformed the technology landscape by removing friction from how business access and scale computing infrastructure effectively, inventing the modern cloud industry, we aim to do the same for technology and professional services through our AI pods and subscription models.
But our client base within our top 20 customers a group that connectivity represents close to 40% of our total revenue. We're currently embedding our subscription model with 17 of them in meaningful ways. This is a huge milestone specifically considering we officially.
Arturo Langa: Such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Please note that we follow IFRS accounting rules in our financial statements. During our call today, we will report non-IFRS or adjusted measures, which is how we track performance internally, and the easiest way to compare Globant to our peers in the industry. You will find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published on our Investor Relations website, announcing this quarter's results. I will now turn the call over to Martin Migoya.
Speaker #2: Traditional consulting engagements are filled with friction, lengthy planning cycles, detailed scope definition, change requests, and constant budget negotiations that slow down execution and dilute impact.
We launched this methodology in June this year were encouraged to see how our clients are incorporating these new Marvel for example at White P. F. The largest shale oil operator in the world outside the United States, we're moving into full execution with 46 agents to optimize sourcing inventory.
Speaker #2: Our AI pods eliminate those barriers, by combining agentic AI with expert human oversight in a transparent token-based subscription model that focuses on outcomes rather than hours.
Contract and supplier management, bringing clarity and efficiency to how the company interacts with its complex supply chain as you know global talent for applying AI to remain the human experience in entertainment, which is why we're particularly proud of our new engagement to bring a gentle process.
Speaker #2: We define supervised token capacity and continuous monitoring, execution becomes faster; auditable and adaptive, allowing our clients to focus on delivering value instead of managing project logistics.
Martin Migoya: Hello everyone, and welcome back as Globant presents its earnings for Q3 2025. We appreciate your continued interest as we navigate the ever-evolving technology landscape. Our commitment to innovation and reinvention remains at the core of who we are. The speed of change is only accelerating. This quarter, we are excited to share how we are not only adapting to market trends, but also proactively shaping the future of our industry. Our focus on sustainable growth and delivering exceptional value continues to drive our efforts as we look ahead. Our business fundamentals remain strong, and we continue to perform by putting innovation first. Our AI studios bring together our talent to provide a new kind of AI-based solutions specific for each industry. They transform how consumers interact with brands, and how our clients run their businesses.
Speaker #2: We are not just redefining consulting; we're leading a revolution in how businesses access technology and professional services. Thank you for joining us on this exciting journey.
To La Liga one of the worlds top Sports League Diego will expand on this later a great example of our growing partnership is our war with not too that the Brazilian multinational cosmetics company.
This quarter, we announced that global will lead the R. S for Hana migration, just them for our ability to seamlessly integrate innovation and AI into S&P methodology development and testing, while enhancing traditional implementation efficiency together with Sap's Shaw our.
Speaker #2: Hello, world. As we look at the third quarter, one thing has remained constant: the urgency for enterprises to deliver measurable results through AI. We have tirelessly enhanced our portfolio of services and products around that very premise.
Speaker #2: To enable our clients to apply AI faster and effectively to unlock business value at scale. What we are doing with La Liga is a great example.
AI agents and platforms will accelerate delivery reduce time to market and support the clean core strategy by anticipating deviations in suggesting real time corrections governed by our AI agents. These brushy brings a new vision from how technology can transform S. A being blamed.
Speaker #2: The world's most successful football league is becoming the first global sports organization to adopt agentic models to reinvent its business end-to-end, from talent development, performance analysis, workflow automation, to personalized content creation.
Martin Migoya: Our AI bots are our next-generation offering designed to deliver agentic AI-based services that scale faster, operate more transparently, and focus on measurable outcomes. They combine the speed and autonomy of AI with the creativity and oversight of our experts, enabling customers to access continuous, outcome-driven transformation at scale. All our agentic AI-based solutions, from our industry-specific AI studios to our AI bots, are orchestrated through Globant Enterprise AI, our central intelligence platform that acts as the golden path for enterprise-wide AI adoption and impact. Delivered through a transparent, consumption-based model, it transforms AI from isolated experiments into a predictable, scalable, and measurable source of enterprise value. Together, these elements form the backbone of Globant's growth to provide value for our customers and shareholder returns. During Q3, we generated $617.1 million in revenue, $2 million above our most recent guidance.
Speaker #2: This quarter, we are also expanding our footprint in immersive high-impact experiences. Through our strategic collaboration with Adobe and Red Sea Global, Saudi Arabia vertically integrated real estate developer; together, we're building a connected visitor experience platform.
Patients and drive business performance. This month, we also announced an important partnership with riot games the company behind Global Esports phenomena League of legends imbalance.
Along with supporting the advancement in artificial intelligence, new game development esports experiences and software engineering capabilities over the next several years both companies will push the boundaries of technology to deliver richer more personalized experiences for millions of players.
Speaker #2: From trip planning to arrival and stay, the platform unites content, data, and AI agents to deliver personalized context-aware journeys at scale. Globant Enterprise AI is at the core of our AI-centric solutioning and keeps delivering on our commitment to make it the best common gateway for clients to navigate the complex forest of AI.
Some funds globally. This partnership is one of the largest agreement in the history of our games business. We're proud to work with companies that continue to shape global esports culture and inspire millions of players, we're making decisions to unlock the full power in our core studios as well where we.
Speaker #2: Less than a week after OpenAI launched the agentic commerce protocol in late September, we're releasing a new version of Globant Enterprise AI, including ACP and enabling our clients to create AI agents capable of executing commercial transactions safely and intelligently.
Speaker #2: Our partner ecosystem remains critical to scaling our AI vision. As we see that our clients' biggest challenge is not the lack of technology, but the complexity of integrating it for real business outcomes, or how to make their long-standing core systems agile, intelligent, and cloud-native without disrupting the business.
Recently announced that all of global marketing and advertising efforts were consolidated under the got brand umbrella today growing in gods Green, a uniquely consistent and complete value proposition to the entire C suite empowering C T OS and seals to transfer.
Martin Migoya: We also launched a share buyback program, reflecting how bullish we are on our long-term prospects. The pipeline has hit another all-time high, currently at $3.7 billion, representing 30% year-over-year growth. It marks the solid demand we see for our services, and it grew this quarter despite very strong bookings. AI continues to emerge as the world's dominant technology. With an expected market of $4.8 trillion by 2033, it will have made a 25x increase in one decade. Over the past few months, we have seen a healthy dose of realism in the AI space. There has been a shift beyond hype towards tangible and effective adoption. We see a tremendous potential in AI transformation today.
Speaker #2: With Unity, the world's leading platform to create interactive experiences, we join a service partner program combining Globant's global footprint with Unity's real-time 3D capabilities to power new immersive and interactive experiences in industries such as automotive, healthcare, and manufacturing.
Their business through technology, while helping Cmo's, postgrad, TVT and marketing performance better than ever Justice All Muslim transform the technology landscape by removing friction from how business axis and scale computing infrastructure effectively.
In benzene the modern cloud industry, we aim to do the same for technology and professional services through our AI bots and subscription model traditional consulting engagements are field with friction lengthy planning cycles detailed scope definition change request and constant.
Speaker #2: With AWS, we achieved the MSP partner program designation, recognizing our ability to deliver end-to-end cloud transformation and manage mission-critical operations at scale. A fundamental layer for AI adoption.
Speaker #2: While other providers basic cloud migration, Globant differentiates by focusing on cloud-native development and optimization. We leverage the full stack of AWS services from serverless computing to their Bedrock AI platform to build resilient, scalable, and cost-efficient solutions.
The negotiations that slowdown execution and dilute impact our AI ports eliminate those barriers by combining adjourn teekay I with experts human oversight in a transparent token based subscription model that focuses on outcomes rather than ours with it.
Martin Migoya: While software as a service has played a crucial role in corporate technology by providing efficient and scalable solutions, our new AI bot subscription model represents a significant evolution in how organizations can leverage technology. With our AI bots, we empower leaders to develop tailored solutions that effectively address their unique and ever-changing needs. Our AI studios and core studios are having these conversations with our clients to provide clarity in AI transformation, build versus buy, and cost optimizations that are top of mind for corporate leaders today. Since doubling down on our hundred square strategy this year, we have seen the execution being shown in bookings and revenue. Our top five clients grew sequentially by 2.1%, exceeding the company's average growth over this period. The share of clients we have identified as hundred square potential as part of our total bookings is currently 56.7%, up from 50% last year.
Speaker #2: With Microsoft, we have been appointed as finalists of the 2025 Microsoft Media and Telco Partner of the Year award. Globant was honored among more than 4,000 600 entries from more than 100 countries.
Fine supervised stoking capacity and continuous monitoring execution becomes faster auditable and adapt to allowing our clients to focus on delivering value instead of managing project logistics, where not just redefining consulting where lean a revolution in how business.
Speaker #2: For demonstrating outstanding Microsoft cloud application services, devices, and AI innovation during the past year, and by joining the IBM Quantum Network, we are preparing our clients to embrace quantum computing and unlock the next computing paradigm, ensuring they remain ahead of the curve as the future of intelligent systems unfolds.
Access technology and professional services.
Thank you for joining us on this exciting journey.
So as we look at the third quarter, one thing has remained constant.
Speaker #2: GATT now powered by Globant's global creative and marketing capabilities keeps accelerating cross-selling and elevating leading brands including AB InBev, P&G, Mercado Libre, Easting, Kraft Heinz, Verizon, and Havaianas also Brazil's team created the first fully AI-generated campaign for Mercado Libre, Latin America's largest e-commerce platform, in partnership with Samsung.
Say for enterprises to the labor measurable results through AI, we have tirelessly enhance our portfolio of services and products our own that very premise to enable our clients to apply a foster and effectively to look business value at scale. What we were doing with La Liga is a great example, the worst most successful football League.
Is becoming the first global sportswear organization to adopt agenda mottos to reinvent its business into it from the tunnel development performance analysis workflow automation to personalize content creation. This quarter. We also expanded our footprint in the mercy with high impact experiences through our strategic collaboration with <unk>.
Martin Migoya: Today, we have over 1,000 engagements related to GenAI, CoreAI, or data currently running, representing 1/3 of our overall projects. We have over 900 projects related to AI readiness in our pipeline. The new offering of AI bots, a departure from traditional consulting engaging models, has nearly doubled in its share of our pipeline. This growth significantly outpaces the overall pipeline expansion. Clients access these solutions via the Globant Enterprise AI platform, which serves as a multi-purpose hub. First, as an AI hub connecting seamlessly with more than 140 LLMs, clients can interact with the LLMs that are best for their needs without being locked into a single provider. Second, it is a corporate hub that connects with all major corporate information systems and data lakes like SAP, Salesforce, Databricks, and many others. Third, an agent hub allows clients to create agentic workflows to automate corporate processes.
Speaker #2: Additionally, the official Khan Leon's report was published, listing GATT as the number nine global agency network at Khan's Leons 2025. Across sectors and geographies, our team continues to execute with passion and creativity.
Speaker #2: Our AI pods are gaining traction. Our AI platform continues to improve, and new industries are embracing our approach to reinvention. We believe the winners will be those who act decisively today, positioning Globant to help them accelerate that journey as we continue shaping the future of enterprise transformation.
The Ob and the Red Sea Global Saudi Arabia vertically integrated real estate developer together, we're building a connected visitor experience platform from trip planning to arrive on the say the platform unites content data on a patient to deliver personally context aware journeys at scale going into <unk>.
Speaker #2: Thank you very much.
<unk> is at the core of our AI centric solution and keeps delivering on our commitment to make it the best common gateway for clients to navigate the complex forest there'll be less than a week. After opening a launch the agenda Commerce protocol in late September we released a new version of Loopnet integration, including.
Speaker #1: Hello, and good afternoon, everyone. I am pleased to discuss our third quarter results. During this period, we increased our top-line expanded profitability and generated strong free cash flow.
Speaker #1: All while maintaining a prudent and healthy balance sheet. Our revenues reached 617.1 million dollars up 0.4% year over year, and 0.5% sequentially. Exceeding our previous guidance expectations.
C P. I mean, enabling our clients to create a aviation's capable of executing commercial transexual safely and intelligently our partner ecosystem remains critical to scaling our mission and that's what we see that our clients' biggest challenge is not the lack of technology, but the complexity of integrating it for real business outcomes.
Speaker #1: Excluding the positive impact of foreign currency, revenue was flat year over year. Turning to profitability, we closed Q3 with an adjusted gross profit margin of 38.1%.
Martin Migoya: Globant Enterprise AI can be acquired on a subscription basis. This shift to our subscription revenue model is not just a theoretical goal. It is actively underway in our most valuable client base. Within our top 20 customers, a group that collectively represents close to 40% of our total revenue, we're currently embedding our subscription model with 17 of them in meaningful ways. This is a huge milestone, specifically considering we officially launched this methodology in June of this year. We're encouraged to see how our clients are incorporating this new model. For example, at YPF, the largest shale oil operator in the world outside the United States, we're moving into full execution with 46 agents to optimize sourcing, inventory, contract, and supplier management, bringing clarity and efficiency to how the company interacts with its complex supply chain.
Or how to make their long standing core systems, as Joe intelligent and cloud native without disrupting the business with unity the worst leading platform to create interactive experiences. We joined the service part of the program combining global its global footprint with unit. This real time three D capabilities to power.
Speaker #1: Flat relative to our previous quarter, despite significant FX headwinds coming from LATAM currencies. Our adjusted operating margin reached 15.5%, an increase of 50 basis points sequentially.
Our new immersive and interactive experiences in industries, such as automotive health care and manufacturing with AWS, we achieved the MSP partner program designation, recognizing our ability to deliver end to end cloud transformation and manage mission critical operation of scale a fundamental layer four.
Speaker #1: In addition, this quarter we managed to dilute adjusted CNA by 20 basis points sequentially. The effective tax rate for the quarter stood at 29.4%, increasing significantly due to the acceleration of the Argentine peso depreciation during the quarter, which resulted in higher taxes than anticipated.
Yeah their option, while other provides basic cloud migration Logan differentiates by focusing on cloud native development and optimization, we leverage the full stack of AWS services from a server list computing to their best work a lot for them to build resilience scalable and cost efficient solutions.
Speaker #1: We were able to partially offset this impact with FX hedges. Despite the mentioned tax effect, we achieved an adjusted net income of 69.7 million dollars with an 11.3% adjusted net profit margin.
Martin Migoya: As you know, Globant has a talent for applying AI to reinvent the human experience in entertainment, which is why we are particularly proud of our new engagement to bring agentic process to La Liga, one of the world's top sports leagues. Diego will expand on this later. A great example of our growing partnership is our work with Natura, the Brazilian multinational cosmetics company. This quarter, we announced that Globant will lead their S/4HANA migration, choosing us for our ability to seamlessly integrate innovation and AI into SAP methodology, development, and testing, while enhancing traditional implementation efficiency. Together with SAP's S/4HANA, our AI agents and platforms will accelerate delivery, reduce time to market, and support the clean core strategy by anticipating deviations and suggesting real-time corrections. Governed by our AI agents, this project brings a new vision for how technology can transform SAP implementations and drive business performance.
Microsoft we have been appointed as finalist of the 2025, Microsoft Media and telco partner over the year Awards lumen was honored among more than 4600 entries from more than 100 countries for demonstrating outstanding Microsoft Cloud application services devices and AI innovation.
Speaker #1: Flat relative to our previous quarter. Adjusted duty DPS for the quarter was $1.53, based on 45.6 million average duty shares, in line with our guidance.
Speaker #1: Our balance sheet remains strong. Ending this quarter with 167 million dollars in cash and short-term investments, or 205.3 million dollars in net debt. We repaid 56.7 million of our debt during the quarter, reducing our total leverage.
During the past year and been shortening D. I B M. Quanta network, we are preparing our clients to embrace quantum computing and I loved the next computing paradigm, ensuring they remain ahead of the curve as a future lean to make sure the system sort of unfolds.
Now powered by <unk> global creative and marketing capabilities keeps accelerating cross selling and elevating leading brands, including a b Mab P&G Mercado Livre. There is thing Kraft Heinz Verizon and how are you on us.
Speaker #1: During the third quarter, we generated $67.5 million of free cash flow, achieving a free cash flow to adjusted net income ratio exceeding 96%. This strong performance is consistent with our historical pattern, where free cash flow generation is much stronger in the second half of the year.
Also Brazil's team created the first fully AOS generated campaign for America I will leave it at Latin Americas largest ecommerce platform in partnership with Samsung. Additionally, the officials can Liam's report was published listing got as number nine Global agency network our guns Leos.
Speaker #1: Lastly, as mentioned by Martin, we have authorized a 125 million share repurchase program, which reflects our belief in our long-term strategic position and our commitment to enhancing shareholder value.
Martin Migoya: This month, we also announced an important partnership with Riot Games, the company behind global esports phenomena, League of Legends, and Valorant. Globant will support its advancements in artificial intelligence, new game development, esports experiences, and software engineering capabilities. Over the next several years, both companies will push the boundaries of technology to deliver richer, more personalized experiences for millions of players and fans globally. This partnership is one of the largest agreements in the history of our games business. We are proud to work with companies that continue to shape global esports culture and inspire millions of players. We're making decisions to unlock the full power in our core studios as well. We recently announced that all of Globant's marketing and advertising efforts were consolidated under the GATT brand umbrella.
2025 across sectors and geographies our team continued to execute with passion and creativity are a a parts that are gaining traction our AIA platform and continues to improve our new industries are embracing our approach to reinvention. We believe the winners will be those who are decisively today.
Speaker #1: Now, let's turn to our guidance. Demand trends across our client base have started to stabilize, though the macro environment remains fluid. For the fourth quarter of 2025, we expect revenue to be at least 605 million dollars, reaffirming the implied guidance provided in our prior earnings call.
We are positioning <unk> to help them accelerate that journey as we continue shaping the future of enterprise transformation. Thank you very much.
Speaker #1: This Q4 guidance implies a minus 5.8% year over year growth and includes a positive FX impact of 150 basis points. We expect a non-IFRS adjusted operating margin to be at least 15%, and the IFRS effective income tax rate is expected to be in the 22 to 24% range.
Hello, and good afternoon, everyone I am pleased to discuss our third quarter results.
During this period, we increased our top line expanded profitability and generated strong free cash flow, all while maintaining a prudent and healthy balance sheet.
Our revenues reached $617 $1 million up <unk>, 4% year over year on the <unk>, 5% sequentially exceeding our previous guidance expectations.
Speaker #1: Non-IFRS adjusted duty DPS is expected to be at least $1.53 per share, assuming an average of 45.2 million diluted shares outstanding during the fourth quarter.
Martin Migoya: Today, Globant and GATT bring a uniquely consistent and complete value proposition to the entire C-suite, empowering CTOs and CEOs to transform their business through technology, while helping CMOs push creativity and marketing performance better than ever. Just as Amazon transformed the technology landscape by removing friction from how business access and scale computing infrastructure effectively, inventing the modern cloud industry, we aim to do the same for technology and professional services through our AI bots and subscription model. Traditional consulting engagements are filled with friction, lengthy planning cycles, detailed scope definition, change requests, and constant budget negotiations that slow down execution and dilute impact. Our AI bots eliminate those barriers by combining agentic AI with experts' human oversight in a transparent, token-based subscription model that focuses on outcomes rather than hours.
Excluding the positive impact of foreign currency revenue was flat year over year, turning to profitability. We closed Q3 with an adjusted gross profit margin.
Speaker #1: For the full year 2025, we now expect revenue to be at least 2 billion 447.4 million dollars, representing 1.3% year over year growth. This expected growth includes a positive FX impact of 30 basis points.
One, 1% flat relative to the previous quarter, despite significant FX headwinds coming from Latam currencies.
Speaker #1: We now expect our non-IFRS adjusted operating margin to be at least 15%, and the IFRS effective income tax rate is expected to be in the 23 to 25% range.
Our adjusted operating margin reached 15, 5%.
An increase of 50 basis points sequentially. In addition, this quarter, we managed to dilute adjusted SG&A by 20 basis points sequentially. The effective tax rate for the quarter stood at 29, 4% increasing significantly due to acceleration of the Argentine peso that.
Speaker #1: Our full year non-IFRS adjusted duty DPS is expected to be at least $6.12 per share, assuming a full year average of 45.2 million diluted shares outstanding.
<unk> during the quarter, which resulted in higher taxes and anticipated we were able to partially offset this impact with FX hedges.
Speaker #1: To conclude, while much of the uncertainty persists, we are confident in our market position and ability to adapt. Our DNA is built on constant reinvention and industry-leading growth, based on our operational discipline, we will continue investing in our AI studios, our subscription model, and top-notch talent to deliver differentiated value to our customers.
Right the management tax effect, we achieved an adjusted net income of $69 $7 million with an 11, 3% adjusted net profit margin flat relative to previous quarter or Jeff. If he does is he be is for the quarter was $1.53 based on $45 six.
Martin Migoya: With defined supervised token capacity and continuous monitoring, execution becomes faster, auditable, and adaptive, allowing our clients to focus on delivering value instead of managing project logistics. We are not just redefining consulting. We're leading a revolution in how business access technology and professional services. Thank you for joining us on this exciting journey.
Speaker #1: Thank you for your continued support, and we look forward to sharing more updates on our growth and achievements in the coming.
William average diluted shares in line, we don't want a guidance our balance sheet remains strong.
Speaker #1: months. Thank you, Juan, and hi
And in this quarter with $167 million in cash and short term investments of $205 $3 million in net debt, we repaid $56 7 million of our debt during the quarter, reducing our total leverage during the third quarter we.
Diego Tartara: Hello all. As we look at the third quarter, one thing has remained constant: the urgency for enterprises to deliver measurable results through AI. We have tirelessly enhanced our portfolio of services and products around that very premise to enable our clients to apply AI faster and effectively to unlock business value at scale. What we are doing with La Liga is a great example. The world's most successful football league is becoming the first global sports organization to adopt agentic models to reinvent its business end-to-end, from talent development, performance analysis, workflow automation, to personalized content creation. This quarter, we also expanded our footprint in immersive, high-impact experiences. Through our strategic collaboration with Adobe and Red Sea Global, Saudi Arabia's vertically integrated real estate developer, together we're building a connected visitor experience platform.
Speaker #2: everybody. So, as we go through the Q&A section of this call, I will first announce your name, at that point please unmute your line, and ask your question.
Speaker #2: Please mute your line after your question is done, and I would also ask you to please limit yourself to one question and one follow-up.
<unk> $67 5 million of free cash flow.
Speaker #2: So, thank you very much. And with that in mind, we take the first question today from the line of JP Morgan. Please go ahead.
Achieving our free cash flow to adjusted net income ratio exceeding 96%.
This strong performance is consistent with our historical pattern, where free cash flow generation is much stronger in the second half of the year Lastly, as mentioned by Martin we have authorized a 125 million share repurchase program, which reflects our belief in our long term.
Speaker #3: Hey, thanks for taking my question. So, I wanted to ask about AI use cases, like are you seeing clients looking for AI use cases in globant gut area, like AI-powered form factors for customers to do retailing or banking through new form factors?
<unk> position and our commitment to enhancing shareholder value now, let's turn to our guidance demand trends across our client base has started to stabilize though the macro environment remains fluid for the fourth quarter of 2025, we expect revenue to be at least six.
Speaker #4: So new, thank you, Puneet, for the question. You
Diego Tartara: From trip planning to arrival and stay, the platform unites content, data, and AI agents to deliver personalized, context-aware journeys at scale. Globant Enterprise AI is at the core of our AI-centric solutioning and keeps delivering on our commitment to make it the best common gateway for clients to navigate the complex forest of AI. Less than a week after OpenAI launched the Agentic Commerce Protocol in late September, we released a new version of Globant Enterprise AI, including ACP, and enabling our clients to create AI agents capable of executing commercial transactions safely and intelligently. Our partner ecosystem remains critical to scaling our AI vision, as we see that our clients' biggest challenge is not the lack of technology, but the complexity of integrating it for real business outcomes, or how to make their long-standing core systems agile, intelligent, and cloud-native without disrupting the business.
Speaker #4: said new what? For the
Speaker #3: new platforms, like the new way, like in which consumers can buy stuff or do banking, like the which is powered by AI.
Turning it on $5 million reaffirming the implied guidance provided in our prior earnings call.
Speaker #4: Yeah, I think the whole consumer experience is being transformed, and there's a lot of active projects that are going into the direction of changing that interface from a navigational interface towards a transactional or a, I would say, a conversational interface.
This Q4 guidance implies a minus five 8% year over year growth and includes a positive FX impact of 150 basis points.
We expect.
Operating margin to be at least 15%.
Are you far as effective income tax rate is expected to be in the 22% to 24% range No wonder if our as adjusted diluted EPS is expected to be at least $1 53 per share assuming an average of $45 2 million diluted shares outstanding.
Speaker #4: And in that direction, we have been doing several projects on those areas in many different customers, but it's not just connected to financial services.
Speaker #4: I would say that this kind of conversational interface is being seen in many different areas and in many different types of industries. I would love Diego to take it over.
During the fourth quarter for the full year of 2025, we now expect revenue to be at least 2 million 447 $4 million.
Diego Tartara: With Unity, the world's leading platform to create interactive experiences, we join a service partner program combining Globant's global footprint with Unity's real-time 3D capabilities to power new immersive, and interactive experiences in industries such as automotive, healthcare, and manufacturing. With AWS, we achieved the MSP Partner Program designation, recognizing our ability to deliver end-to-end cloud transformation and manage mission-critical operations at scale, a fundamental layer for AI adoption. While other providers provide basic cloud migration, Globant differentiates by focusing on cloud-native development and optimization. We leverage the full stack of AWS services, from serverless computing to their Bedrock AI platform, to build resilient, scalable, and cost-efficient solutions. With Microsoft, we have been appointed as finalist of the 2025 Microsoft Media and Telco Partner of the Year Award.
Speaker #2: Sure. So, Puneet, here's an overview of how what we are seeing and how it's working. Many large companies, especially the ones that are heavily regulated, what they're doing is they're building their platform for AI transformation and development.
Same thing one 3% year over year growth.
These expected growth includes a positive FX impact of 30 basis points, we now expect our not only as far as adjusted operating margin to be at least 15% under your forest effective income tax rate is expected to be in the 23% to 25% range our full year non.
Speaker #2: But while doing that, they're already doing AI projects. You mentioned, as an example, financial services. Fraud detection is one of the examples. Hyper-customization for client management is another one.
As far as our adjusted diluted EPS is expected to be at least $6 12 per share assuming a full year average of $45 2 million diluted shares outstanding to include while much of the uncertainty persists, we are confident in our market position and I really.
Speaker #2: With regards to operation, internal operation, portfolio management is being also handled by Acentic Systems. These days, so that is how it looks now, even the most regulated sectors are jumping into AI, doing AI projects.
To adopt our DNA is built on constant reinvention.
Leading growth.
Based on our operational discipline, we will continue investing in our studios or subscription model and top notch talent to deliver differentiated value to our customers. Thank you for your continued support and we look forward to sharing more updates on our growth and achievements in the coming months.
Diego Tartara: Globant was honored among more than 4,600 entries from more than 100 countries for demonstrating outstanding Microsoft Cloud application services, devices, and AI innovation during the past year. By joining the IBM Quantum Network, we are preparing our clients to embrace quantum computing and unlock the next computing paradigm, ensuring they remain ahead of the curve as the future of intelligent systems unfolds. GATT, now powered by Globant's global creative and marketing capabilities, keeps accelerating cross-selling and elevating leading brands, including AB InBev, P&G, Mercado Libre, Estée Lauder, Kraft Heinz, Verizon, and Havaianas. Also, Brazil's team created the first fully AI-generated campaign for Mercado Libre, Latin America's largest e-commerce platform, in partnership with Samsung. Additionally, the official Cannes Lions report was published, listing GATT as number nine global agency network at Cannes Lions 2025. Across sectors and geographies, our team continues to execute with passion and creativity.
Speaker #2: There's I have to say that more than half of our projects are heavily related to EI these days.
Speaker #2: AI, sorry. No,
Speaker #3: that makes sense. Like the reason I asked, like it seems like there's like a lot of demand, like the underlying demand for AI, but like that's not reflecting in overall results.
[music].
Speaker #3: So, do you think that the clients are at a point where all those AI use cases and AI projects are ready to move them into mainstream or into production?
Thank you and hi, everybody.
So as we go through the Q&A section of this call I will first announced her name at that point. Please <unk> your line and ask your question. Please submit your last question is done and I would also ask you to please limit yourself to one question and one follow up.
Speaker #3: So, that can overcome like the weak macro or other headwinds that you've faced. Basically, can like should we expect like much better growth rates next year?
So thank you very much and with that in mind, we take the first question today from the line of J P. Morgan.
Please go ahead.
Speaker #3: Based on the pipeline, based on what your clients are saying compared to current trends?
Okay.
Hey, Thanks for taking my question.
So I wanted to ask about E. I used cases are you seeing flying.
Speaker #4: Yeah, I you know mentioned in my part of the speech, I was saying, Puneet, that the pipeline grew to something that was 30% higher than at the same period last year.
Looking for AI use cases, and <unk> got it.
Yeah.
The EIA bogwood.
Diego Tartara: Our AI bots are gaining traction. Our AI platform continues to improve, and new industries are embracing our approach to reinvention. We believe the winners will be those who act decisively today, and we are positioning Globant to help them accelerate that journey as we continue shaping the future of enterprise transformation. Thank you very much.
Form factors for customers Djibouti dealing with banking.
Speaker #4: And about you know 900 projects are currently being inside that pipeline that are based on this kind of AI transformation projects. So, I see you know a clear evolution from the beginning of the year in which projects were more exploratory and now they are more kind of transformational efforts going across the different parts of the company.
New form factors.
With new.
Thank you will need for the question you said mute.
So the new platforms like the new ways in which consumers can buy stuff or do banking.
Hum, which is powered by AI.
Juan Urthiague: Hello, and good afternoon, everyone. I am pleased to discuss our third quarter results. During this period, we increased our top line, expanded profitability, and generated strong free cash flow, all while maintaining a prudent and healthy balance sheet. Our revenues reached $617.1 million, up 0.4% year over year and 0.5% sequentially, exceeding our previous guidance expectations. Excluding the positive impact of foreign currency, revenue was flat year over year. Turning to profitability, we closed Q3 with an adjusted gross profit margin of 38.1%, flat relative to our previous quarter, despite significant FX headwinds coming from LATAM currencies. Our adjusted operating margin reached 15.5%, an increase of 50 basis points sequentially. In addition, this quarter, we managed to dilute adjusted CNA by 20 basis points sequentially.
Yeah, I think the whole.
The whole consumer experience is being transformed and.
Speaker #4: And this is not just on what we were talking before, which is you know consumer interaction, but also on how to run processes. And specifically on that case, we announced a case with YPF, but also the one with Riot Games, with the one with Natura, in which AI kind of takes a central you know role and I think that this is something that will keep on evolving as we move forward.
There's a lot of.
Active projects that are going into the direction of changing that interface.
From a.
Navigational Interfaced awards.
Are the transactional or it or I would say for a session of interface and in that direction, we have been doing.
Several other projects on those on those areas in many different in many different customers.
But it's not just connected to financial services I would say that this kind of conversational interface is being seen in many different in many different areas and in many different type of industries I would love to be able to take it over so.
Speaker #4: Also, our AI part offering is also gaining a lot of momentum as kind of you know the pipeline more than doubled from what we had on the last quarter just in two and a half months that we launched the initiative.
Speaker #4: Bookings are also high. The number of customers got increased substantially too. So, we are seeing that AI is taking like a central role. Of course, the digital transformation projects, the enterprise projects, you know like SAP migrations, now all of them are including this kind of AI initiatives inside of them.
So when he.
Bahir.
But no worry of what.
What we are seeing and how it's working many large companies, especially the ones that are heavily regulated.
What they're doing is they're building.
Juan Urthiague: The effective tax rate for the quarter stood at 29.4%, increasing significantly due to the acceleration of the Argentine peso depreciation during the quarter, which resulted in higher taxes than anticipated. We were able to partially offset this impact with FX hedges. Despite the mentioned tax effect, we achieved an adjusted net income of $69.7 million, with an 11.3% adjusted net profit margin, flat relative to our previous quarter. Adjusted diluted EPS for the quarter was $1.53, based on 45.6 million average diluted shares, in line with our guidance. Our balance sheet remains strong, ending this quarter with $167 million in cash and short-term investments, or $205.3 million in net debt. We repaid $56.7 million of our debt during the quarter, reducing our total leverage. During the third quarter, we generated $67.5 million of free cash flow, achieving a free cash flow-to-adjusted net income ratio exceeding 96%.
Their platform.
Our it transformation and development, but while doing that they're already doing a project you mentioned as an example.
Speaker #4: So, it's difficult to split them, but it's very clear that these new technologies are making an impact. And again, it's not that it's easy to implement one of these things and make it productive and make it into production for large corporations.
So services fraud detection is went over the over the examples.
Hydro Customisation for claim management is another one with regards to operation internal operation.
Speaker #4: We're talking about you know probabilistic systems that need to be that need to be managed in a slightly different way from the traditional systems.
Portfolio management is being also handled by ascent exist embodies these days so as that is.
Speaker #4: And that will require a lot of our help to our customers moving forward. And I see you know pretty much all the industries now growing you know as you know opposed to the last few quarters.
That is how it looks now even the most.
Regulated sectors are jump.
Jumping into it how are you doing a project.
But I have to say that more than half of our projects are heavily related to these days.
Speaker #4: All of the industries are moving forward in terms of revenue. So, that is helping and as you have seen on the news, we have announced many deals with many different big companies and large deals in many different sectors.
Sorry.
No that makes sense like the reason I asked like it seems.
Like Lotto.
Demand the underlying demand for AI, but that's not reflecting an overall results. So do you think like the clients are at a point back like autos AI.
Speaker #4: So, I hope that will propel the revenue for 2026 and we will see good growth next
I used cases and.
AI projects that they are ready to move them into mainstream or into production. So that can overcome the weak macro.
Speaker #4: year.
Speaker #3: Thank
Speaker #3: you.
Juan Urthiague: This strong performance is consistent with our historical pattern, where free cash flow generation is much stronger in the second half of the year. Lastly, as mentioned by Martin, we have authorized a $125 million share repurchase program, which reflects our belief in our long-term strategic position, and our commitment to enhancing shareholder value. Now, let's turn to our guidance. Demand trends across our client base have started to stabilize, though the macro environment remains fluid. For the fourth quarter of 2025, we expect revenue to be at least $605 million, reaffirming the implied guidance provided in our prior earnings call. This Q4 guidance implies a minus 5.8% year-over-year growth, and includes a positive FX impact of 150 basis points. We expect a non-IFRS adjusted operating margin to be at least 15%, and the IFRS effective income tax rate is expected to be in the 22% to 24% range.
Speaker #1: Thank you, Puneet. The next question comes from the line of T.D. Cohen. Brian, please go ahead.
<unk> had been spectrum fees basically can like should we expect like much better quote rates next year.
Speaker #5: Hey guys, good afternoon. Thanks for taking the question. I was hoping you could help us connect the strong pipeline commentary with the operational headcount dynamics, just sequentially, understanding we're going through a transition here.
Based on the pipeline based on what your clients are saying compared to current trends.
Yeah.
I.
Speaker #5: But can you give us a sense of just early 2026 client budgeting conversations? I think we're just trying to determine when a growth trough may form for you.
Mentioned in my in my in my part of the speech I will say that.
The pipeline grew too.
So something that was 30% higher than the same period last year.
Speaker #5: And just any early commentary you're willing to share here on next year's top line
Speaker #5: Potential. Yeah, I would think the pipeline.
About.
Speaker #2: thing. The pipeline, as I said, is much higher. The conversion speed as opposed to what we see in the first half of the year has also increased in the last few months.
900 projects.
<unk> are currently being inside the pipeline that are based on these kind of AI transformation projects. So I see.
Speaker #2: So, that makes us happy. And I would say that we see a clear evolution towards the end of the year with all the deals we have.
Clear evolution from the beginning of the year in which projects were more exploratory and now they are more kind of transformational efforts going across the different parts of the of the company.
Speaker #2: In terms of the headcount, I would like to take a Juan to answer it.
And this is not just on what we were talking before which is consumer interaction, but also on how to run processes and.
Speaker #3: If Brian, how are you? I would look in terms of headcount, as you know, last quarter we announced plan. You know to a business optimization align our company, our headcount to the needs of the business, given the changes that we put in place in terms of industry studios, in terms of the subscription model, and also looking at the level of growth.
Specifically on that case, where now is the case with a Y D F. But also the the one with <unk>.
Juan Urthiague: Non-IFRS adjusted diluted EPS is expected to be at least $1.53 per share, assuming an average of 45.2 million diluted shares outstanding during the fourth quarter. For the full year 2025, we now expect revenue to be at least $2,447.4 million, representing 1.3% year-over-year growth. This expected growth includes a positive FX impact of 30 basis points. We now expect our non-IFRS adjusted operating margin to be at least 15%, and the IFRS effective income tax rate is expected to be in the 23% to 25% range. Our full year non-IFRS adjusted diluted EPS is expected to be at least $6.12 per share, assuming a full year average of 45.2 million diluted shares outstanding. To conclude, while much of the uncertainty persists, we are confident in our market position and ability to adapt. Our DNA is built on constant reinvention, and industry-leading growth.
And with that tool in which AI can.
Takes a central a central.
Hum.
Road and I think that this is something that will keep on evolving as we move forward.
Speaker #3: You have to keep in mind that we started the year you know with expectations of much higher growth. Now all that is aligned and we are seeing you know flattish type of numbers for fourth quarter.
Also our AI offering.
It is also gaining a lot of momentum.
No the pipeline more than doubled from what we had on the last quarter adjusting to.
Speaker #3: And when we look into 2026, you know when we look at how the new AI studios, the new AI tractioning combined with the traction on the pipeline and also on industry studios are our top customers with related to the subscription model, I think that that puts us in a much better place to start thinking about 2026.
Two five months that we launched the initiative.
Bookings are also Ah hi, the number of customers are good.
Increased substantially too so we're seeing that AI is taking like the central role of course, the digital transformation projects. The enterprise projects you know like SAP migrations now all of them are including these kind of initiatives inside of them. So it's difficult to split them, but it's but it's.
Speaker #3: The conversations with customers are ongoing. Everybody's finalizing budgets. When we look at all our internal than what we have now for seeing more growth in 2026 the rest of the year in numbers, initial numbers, we are 2025.
Very clear that digital technology is making an impact and again.
Speaker #3: So, we are optimistic. I think that you know the situation is improving. You start to close deals like the one we recently announced with Riot, with Riot Games, or the one or some other deals that where they are growth oriented.
So that is easy to implement one of these things and make them productive.
It into production for large corporations, we're talking about probabilistic systems that needs to be.
Juan Urthiague: Based on our operational discipline, we will continue investing in our AI studios, our subscription model, and top-notch talent to deliver differentiated value to our customers. Thank you for your continued support, and we look forward to sharing more updates on our growth and achievements in the coming months.
That needs to be managed in a slightly different way from their traditional systems.
And that will require a lot of our help solar customers moving forward and I see you know.
Speaker #3: And for us, that's always great news, right? When we start to are being worked right now or with MercadoLibre a lot of those deals are growth oriented.
Pretty much all day.
All the industries.
Now grow in.
Speaker #3: And when that happens, we tend to do better, we tend to gain market share, and that puts us in a much more optimistic position relative to 2026 than what we were before.
As opposed to the last few quarters all of the indices are moving forward in terms of revenue so that is helping.
Operator: Thank you, Juan, and hi, everybody. As we go through the Q&A section of this call, I will first announce your name. At that point, please unmute your line and ask your question. Please mute your line after your question is done, and I would also ask you to please limit yourself to one question and one follow-up. Thank you very much, and with that in mind, we take the first question today from the line of J.P. Morgan. Puni, please go ahead.
Speaker #3: And as you can see, you know we I mean after a difficult year in terms of guidance and everything, this quarter we were able to maintain the implied fourth quarter.
As you have seen on the news.
Announced many deals.
With many different big companies large deals in many different sectors. So I hope that will propel the revenue for 2026 and and we'll see.
Speaker #3: We were able to raise a little bit the full year number based on see or the deals we are doing with YPF the 2 million that we exceeded the number in Q3.
Speaker #3: So, in general, we are optimistic about 2026.
Good growth next year.
Thank you.
Speaker #5: Okay, that's helpful. Thanks for that detail. And maybe just one on the margin front. So,
Puneet Jain: Hey, thanks for taking my question. I wanted to ask about AI use cases. Are you seeing clients looking for AI use cases in Globant's GATT area, like AI-powered form factors for customers to do retailing or banking through new form factors?
Thank you Bonnie the next question comes from the line of TD Cohen, Brian. Please go ahead.
Speaker #5: obviously that's a bigger focus for you going forward. Talk about the early efforts around efficiencies and how you're feeling about those efforts.
Hey, guys. Good afternoon, Thanks for taking my question.
I was hoping if you could just help us connect the strong pipeline commentary with with the operational head count dynamic just sequentially I understand you were going through a transition here, but can you give us a sense of just early 2026 clients budgeting conversations I think of it as just trying to determine when a growth trough may form for you.
Speaker #3: quarter in terms of operating income. You know it's a much better quarter. it increased about 50 basis points And sequentially. During Yeah, Q3, you know together with accelerating growth, we have mentioned over the last two, three calls and so this quarter we had a good we continue to mention that there is a much bigger focus also on maintaining or improving cash generation.
Martin Migoya: Thank you, Puni, for the question. You said new what?
And just any early commentary you're willing to share here on next years top line potential.
Puneet Jain: The new platforms, like the new way in which consumers can buy stuff or do banking, which is powered by AI.
I would think that pipeline if oakland.
The pipeline as I said, it's much higher the conversion speed as opposed to what we see in the first half of the year has also increased in the last few a few months.
Speaker #3: You know it's a moment that you know until the margins, also on our free level of growth becomes much higher, we need to pay attention at the same time to all those variables together, right?
Martin Migoya: Yeah, I think the whole consumer experience is being transformed, and there's a lot of active projects that are going in the direction of changing that interface from a navigational interface towards a transactional or, I would say, a conversational interface. In that direction, we have been doing several projects on those areas in many different customers. It's not just connected to financial services. I would say that this kind of conversational interface is being seen in many different areas and in many different types of industries. I would love Diego to take it over.
So that makes us happy and I would say that.
Speaker #3: And that's what we are doing. We will be executing on that. You know when you look at, for example, the CapEx levels going forward, they are going to be a little bit more aligned to the current levels of growth.
We see a clear evolution.
Towards the end of the year with all the deals we have.
In terms of the head count I would like to take this.
One two observations.
Brian Howard.
Speaker #3: So, we are paying revenue or to the top line, but also to the attention not just to the gross margin and you can look at the numbers.
In terms of head count as you know.
Last quarter, we announced our original optimization plan.
Speaker #3: There has been a lot of peers taking margins significantly down. We have been very cautious on not doing that. You look at our margin gross margin was stable, operating margin quarter, operating margin is improved.
To align.
Our our company or headcount to the needs of the business given the changes that we put in place in terms of industry Studios in terms of the subscription model and also looking at the level of growth.
Speaker #3: And when you look at the fourth
Keep in mind that we started.
With expectations of much higher growth now all that is aligned.
We are seeing.
Operator: Sure. Puni, here's an overview of what we are seeing and how it's working. Many large companies, especially the ones that are heavily regulated, what they're doing is they're building their platform for AI transformation and development. While doing that, they're already doing AI projects. You mentioned, as an example, financial services. Fraud detection is one of the examples. Hypercustomization for client management is another one. With regards to operation, internal operation, portfolio management is being also handled by Agentic Systems these days. That is how it looks now. Even the most regulated sectors are jumping into AI, doing AI projects. I have to say that more than half of our projects are heavily related to AI these days. AI, sorry.
Yes.
Flattish type of numbers for fourth quarter.
Speaker #1: Brian, please go ahead. Your line is
We look into 2026, when we look at how the new.
Speaker #1: open.
Speaker #4: guys. Yeah, hi Just want to ask about the pricing environment in general. know there's some concern just with You through contracts and contract pricing as cost saves get passed GenAI that there's pricing pressure on to clients.
Studios.
CSR traction in combined with the traction on the pipeline and also on our top customers with related related to the subscription model.
Speaker #4: How do you guys think about the whole pricing environment through as GenAI gets put into all these contracts? And what do you think about pricing as you head into next
I think that that puts us in a much better place to start thinking about 2026, the conversations with customers are ongoing everybody is finalized March it's when we look at all our internal numbers initial numbers.
Speaker #4: year? Thank you, Brian, for the
Speaker #2: Look, major pressure question. On the pricing, we don't environment. I believe that the deals that we are putting together have a lot of value added, and that helps us to position the pricing in the place we want.
We have seen more growth in 26, so we have.
Now for the rest of the year and 25. So we are optimistic I think that the.
The.
The situation is improving you start to close deals like the one we recently announced we'd rather.
Speaker #2: Indeed, the revenue per head is doing okay. So, it's not changing or going down. So, that's a good sign of us being able to maintain that pricing efficiently.
Riot games or the one.
Or some other news about being worked right now whether they are growth oriented and for US. That's always gave US right. When we started to see.
Speaker #2: important comment I would say is there's a very strong connection But the most between what you offer and how much you can charge for that.
The things, we're doing with my peers or wood Mackenzie.
Puneet Jain: No, that makes sense. The reason I asked, it seems like there's a lot of demand, like the underlying demand for AI, but that's not reflecting in overall results. Do you think the clients are at a point that all those AI use cases and AI projects, that they are ready to move them into mainstream or into production so that can overcome the weak macro or other headwinds that you've faced? Basically, should we expect much better growth rates next year based on the pipeline, based on what your clients are saying, compared to current trends?
A lot of those deals are growth oriented and when that happens we tend to weather, we've been to win market share and that puts us in a much more.
Speaker #2: And which is the value that you're creating for your customer. And at Globant, we have always paid a lot of attention to that value creation and to that specialization and now with our AI studios that are capable of delivering like a very you know substantial know-how for each of the industries in which we specialize.
Optimistic position relative to 26, and then we'll do more before.
As you can see you know we don't have it.
After a difficult year in terms of guidance and everything this quarter they were able to do one thing.
<unk> for the quarter, we were able to raise a little bit the full year number based on the 2 million that we exceeded the number in Q3, so in general we're seeing it.
Speaker #2: Plus, our core studios are bringing solutions that can go across pretty much all the industries and I think that value proposition is resonating quite well.
Southern Florida.
We are optimistic on 2006.
Speaker #2: And if you add on top of that, we are you know accelerating the offering and now we are discussing with 17 out of the 20 top customers the next generation model on how to engage you know with us with our AI pods and with the subscription model.
Okay. That's helpful. Thanks for that detail and maybe just one on the margin front. So obviously, that's a bigger focus for you going forward talk about the early efforts around efficiencies and how you're feeling about those efforts.
Martin Migoya: Yeah. I mentioned in my part of the speech, I was saying, Puni, that the pipeline grew to something that was 30% higher than in the same period last year. About 900 projects are currently being inside that pipeline that are based on this kind of AI transformation projects. I see a clear evolution from the beginning of the year in which projects were more exploratory, and now there are more kind of transformational efforts going across the different parts of the company. This is not just on what we were talking before, which is consumer interaction, but also on how to run processes. Specifically on that case, we announced a case with YPF, but also the one with Riot Games, with the one with Natura, in which AI kind of takes a central role.
So this quarter, we had a good quarter in terms of operating income to increase about 50 basis points sequentially.
Speaker #2: And enterprise AI, which is our platform, also is gaining a lot of traction as you know each time we sell an AI pod, it has to do with our enterprise AI platform.
During Q3.
Together with accelerating growth.
We have mentioned over the last two because and we continue to mention that they saw a much bigger focus also on maintaining or improving margins also on our free cash generation you know.
Speaker #2: So, I believe that this is being accepted and this is being like you know we are able to reflect that on the price that we put on the proposals, hence maintaining our margin and maintaining our revenue per head.
It's a moment.
Until the level of growth becomes much higher we need to pay attention at the same time towards those variables together right.
Speaker #2: I don't know
Speaker #2: Juan or Diego if you want to comment. No, I
Speaker #3: I think that pretty much summarized it. If you think about the individuals, like on a profile basis, and you tell me how that price probably compares to what it used to be four years back, yes, there’s pressure there.
We will be executing on that you know when you look at.
For example, the Capex levels going forward is there going to be a little bit more align to the current levels of growth. So we are paying attention not just the revenue.
Speaker #3: But the mindset today is about efficiency. The mindset is about business impact. And when you talk about that and that's one of our main strategies, with the AI studios, when you talk about that conversation changed completely.
Blind, but also to the gross margin or you can look at the numbers.
Has been a lot of peers, taking margin significantly down we have been very cautious on not doing that you look at our margin gross margin stable operating margins improved when you look at the fourth quarter operating margin.
Martin Migoya: I think that this is something that will keep on evolving as we move forward. Also, our AI Pods offering is also gaining a lot of momentum. It's kind of, the pipeline more than doubled from what we had on the last quarter, just in two and a half months that we launched the initiative. Bookings are also high. The number of customers got increased substantially, too. We are seeing that AI is taking a central role. Of course, the digital transformation projects, the enterprise projects, like SAP migrations, now all of them are including these kinds of AI initiatives inside of them. It's difficult to split them, but it's very clear that this new technology is making an impact. Again, it's not that it's easy to implement one of these things and make it productive and make it into production for large corporations.
Speaker #3: So, that’s why we’ve been able to maintain our revenue per head.
Oh, 15%, so we're trying to do.
Speaker #4: Got it. And then that's helpful. And then just Juan, just thinking about the third quarter being roughly flat in revenue growth and then it drops to about 7% organic, ex-currency.
Balance all the different things that are helping us sometimes.
Thank you.
Thank you Brian.
Our next question comes from the line of Citi. Brian. Please go ahead. Your line is open.
Speaker #4: Can you just help us to step down in revenue growth? What's causing that? And then I'm guessing this might be the trough in revenue growth in the fourth quarter and then what does the first quarter look like sequentially?
Speaker #4: Can you just help us to step down in revenue growth? What's causing that? And then I'm guessing this might be the trough in revenue growth in the fourth quarter and then what does the first quarter look like
Yeah, Hi, guys just wanted to ask about the pricing environment in general.
There's some concern just with Jin AI that there's pricing pressure through contracts and contract pricing as cost saves get passed on to clients. How do you guys think about the whole pricing environment through our SG&A I guess put into all these contraction and what do you think about pricing as you head into next year.
Speaker #3: On On the fourth quarter, you know the main impact that we have over there are the furloughs, mostly in professional services. That's impacting you know pretty much, that's explaining pretty much the decrease on a sequential basis.
Thank you Brian for the question.
We don't look at it.
Measure pressure on the price the pricing environment.
Martin Migoya: We're talking about probabilistic systems that need to be managed in a slightly different way from traditional systems, and that will require a lot of our help to our customers moving forward. I see pretty much all the industries now growing as opposed to the last few quarters. All of the industries are moving forward in terms of revenue, and that is helping. As you have seen on the news, we have announced many deals with many different big companies and large deals in many different sectors. I hope that will propel the revenue for 2026, and we will see good growth next year.
Speaker #3: When we look at, and I'll just give you some color on Q1, but when we look at the Q1 right now in all the initial numbers that we are seeing, we don't see any scenario similar to what we had in the last few years.
I believe that the deals that we are putting together.
No.
A lot of value added and that help us to position.
The pricing in the place we want we want.
Speaker #3: You know for example, 2025 Q1 was sequentially down 4.7%. And we don't see anything similar to that at this point. Anything at all. And that puts us in a much better place to get the year.
The revenue per head is doing is doing okay. So is that is all.
Changing or going down so that's a good sign of us being able to maintain that pricing efficiently.
But the most important comment I would say is.
Speaker #3: That gives us also you know some when we look at you know okay, how the year is building up, how are the conversations with the customers, watch each AI studio is bringing to the table, what are the, we just signed a very large deal with a gaming company as we discussed.
There is a very strong connection between what you offer and how might you can charge for that.
Which is the value that you're creating for your customer and a global and we have always paid a lot of attention to that value creation and so thats the Sally Sally station.
Speaker #3: You know when we accumulate all that, the Q1 number you know is definitely a lot better than you know what we have seen in prior years, right?
Now with our AI studios are capable of delivering like a very substantial know how for each of the industries in which we specialize glass. Our core students are bringing solutions that can go across pretty much all of the industry and I think that value proposition is resonating quite well.
Puneet Jain: Thank you.
Speaker #3: And I think that puts us in a much better place getting into 2026.
Operator: Thank you, Puni. The next question comes from the line of TD Cowen. Brian, please go ahead.
Speaker #4: Great. Thank you.
Martin Migoya: Hey, guys. Good afternoon. Thanks for taking the question. I was hoping if you could just help us connect the strong pipeline commentary with the operational headcount dynamics, just sequentially understanding we're going through a transition here. Can you give us a sense of just early 2026 client budgeting conversations? I think everybody's just trying to determine when a growth trough may form for you. Any early commentary you're willing to share here on next year's top-line potential.
Speaker #3: You're
Speaker #3: welcome.
Speaker #1: Thank you, Brian. The
Speaker #1: next question comes from the line of Willem Blair. Maggie, please go ahead.
And if you add on top of that.
Accelerating the offering and now we are discussing.
Speaker #5: Thank you. Hi. I wanted to put a finer point on the margin question particularly as it relates to SG&A. Can you drive more SG&A dilution from here and are you planning to or is this a reasonable level for SG&A to settle as a percentage of revenue?
Speaker #5: Thank you. Hi. I wanted to put a finer point on the margin question particularly as it relates to SG&A. Can you drive more SG&A dilution from here and are you planning to or is this a reasonable level for SG&A to settle as a percentage of revenue?
17 out of the 20 top customers.
Next generation model on how to engage.
With us and with our AI Bolton with a subscription model and enterprise say I would just I would pass on also is gaining a lot of traction.
Martin Migoya: Yeah, I would take the pipeline thing. The pipeline, as I said, is much higher. The conversion speed, as opposed to what we see in the first half of the year, has also increased in the last few months. That makes us happy. I would say that we see a clear evolution towards the end of the year with all the deals we have. In terms of the headcount, I would like to take it to Juan to answer.
Each time, we sell in a board has to do with our enterprise AI platform. So I believe that.
Speaker #3: Yeah. You know we closed a quarter at 17.7%. You know almost 1. Below Q4 last year, for example. There is, of course, there is always room to keep on diluting over time.
This is being accepted.
I accepted and it has been like.
We are able to reflect that on the price that we put a proposal, hence maintaining our margin and maintaining our revenue per head I don't know 100 vehicles.
Speaker #3: But we also need to balance you know the growth that we expect to recover. You know we need to balance all the changes that we are making in terms of our offering and all the changes we are making about our business units.
So I think I think that pretty much summarize it if you think about the individuals like on a profile basis and you tell me how the.
Puneet Jain: This is Brian. How are you? In terms of headcount, as you know, last quarter, we announced a business optimization plan to align our company, our headcount, to the needs of the business, given the changes that we put in place in terms of industry studios, in terms of the subscription model, and also looking at the level of growth. You have to keep in mind that we started the year with expectations of much higher growth. Now, all that is aligned. We are seeing flattish type of numbers for the fourth quarter. When we look into 2026, when we look at how the new AI studios, the new AI industry studios are tractioning, combined with the traction on the pipeline and also on our top customers related to the subscription model, I think that that puts us in a much better place to start thinking about 2026.
Broadly that price compared to what it used to be four years Buck yes, there are <unk> there, but the money is it today is about efficiency the mindset is about.
Speaker #3: You know with all the AI industry studios. So, there is more room, but I mean as always, you need to keep looking at you know 10 to 20, even 30 basis points of dilution every year, not more than that.
Business impact and when you talk about done and that's.
Speaker #3: But definitely you know as a business, this is a business that has the potential to run at you know about 15% SG&A over time.
One of our remaining strategies with the EA Studios when you talk about that.
<unk> changed completely.
So and that's why we've been able to maintain.
Speaker #3: But it's something that you have to achieve as you scale, right? When you look at which are the companies that are running at those levels, those are the ones that are already at a very large scale.
Our revenue breakdown.
Got it and then that's helpful. And then just one just thinking about the third quarter being roughly flat and in revenue growth and then it drops to about 7% organic.
Speaker #3: I think that 17.9%, 17.8%, , 0.7%, it's a good number for the size that we have right now. Given all the different things that we are doing these days, right?
X X currency. He has helped us to step down in revenue growth, what what causing that and then I'm guessing this might be the trough in revenue growth in the fourth quarter and then what does the first quarter looked like sequentially.
Speaker #3: So, I think that’s how we see SG&A, Maggie.
Puneet Jain: The conversations with customers are ongoing. Everybody's finalizing budgets. When we look at all our internal numbers, initial numbers, we are seeing more growth in 2026 than what we have now for the rest of the year in 2025. We are optimistic. I think that the situation is improving. You start to close deals like the one we recently announced with Riot Games or some other deals that are being worked right now, they are growth-oriented. For us, that's always great news, right? When we start to see all the deals we are doing with YPF or with Mercado Libre, a lot of those deals are growth-oriented. When that happens, we tend to do better. We tend to gain market share, and that puts us in a much more optimistic position relative to 2026 than what we were before.
On the fourth quarter.
The main impact now we have over there and out of the four logs.
In mostly in professional services.
That's impacting.
The demand for such extending pretty much the decrease on a sequential basis.
When we look at.
I'll just give you some some color on Q1, but.
When we look at the Q1 right now and all the different numbers and we are seeing.
We don't see any scenario similar to what we saw in the last few years. For example, 2025 Q1 was sequentially down four 7% and we don't see anything similar to that at this point anything at all.
And that puts us in a much wider place to redeem that gives us also.
Puneet Jain: As you can see, I mean, after a difficult year in terms of guidance and everything, this quarter, we were able to maintain the implied fourth quarter. We were able to raise a little bit the full year number based on the $2 million that we exceeded the number in Q3. In general, we think it's a much better quarter, and we are optimistic about 2026.
Some when we look at.
Now there is building up a lot of the <unk>.
Conversations with the customer which each.
<unk> is bringing to the table.
Just sign a very large deal we are gaming company and as we discussed when we accumulate a lot the Q1 numbers.
Currently.
Better than me.
What we have seen in prior years right.
Martin Migoya: Okay, that's helpful. Thanks for that detail. Maybe just, Juan, on the margin front. Obviously, that's a bigger focus for you going forward. Talk about the early efforts around efficiencies and how you're feeling about those efforts.
I think that puts us in a much better place giving.
Getting into into 2026.
Great. Thank you.
Youre welcome.
Puneet Jain: Yeah. This quarter, we had a good quarter in terms of operating income. It increased about 50 basis points sequentially during Q3. Together with accelerating growth, we have mentioned over the last two, three calls, and we continue to mention that there is a much bigger focus also on maintaining or improving margins, also on our free cash generation. It's a moment that until the level of growth becomes much higher, we need to pay attention at the same time to all those variables together, right? That's what we are doing. We will be executing on that. When you look at, for example, the CapEx levels going forward, they are going to be a little bit more aligned to the current levels of growth. We are paying attention not just to the revenue or to the top line, but also to the gross margin.
Thank you Brian. The next question comes from the line of William Blair. Maggie. Please go ahead.
Yeah.
Thank you hi.
I wanted to put a finer point on the margin question, particularly as it relates to SG&A can you drive more SG&A dilution from here and are you planning to or is this a reasonable level.
And all of that percentage right.
Closed the quarter at 17, 7%.
Almost.
Almost one one point.
Below Q4 last year for example.
There is of course, there's always room to keep on diluting overtime, but we also need to balance the growth that we expect to to recover two islands.
All the changes that we're making in terms of our offering.
And who are making alone.
Puneet Jain: You can look at the numbers. There have been a lot of peers taking margin significantly down. We have been very cautious on not doing that. You look at our margin, gross margin was stable, operating margin improved. When you look at the fourth quarter, operating margin is again above 15%. We are trying to balance all the different things that are happening at the same time.
Our business units.
Studios.
So there is more room, but as always we need to keep looking at.
220, even 30 basis points of dilution every year no more than that on differently.
<unk>. This is a business that has the potential to run.
About 15% SG&A over time, but it's something that you hope to achieve as you scale right. When you look at which are the companies that are running at those levels. Those are the ones that are already at a very large scale I think that 79%.
Martin Migoya: Thank you.
Operator: Thank you, Brian. The next question comes from the line of C.D. Brian, please go ahead. Your line is open.
Juan Urthiague: Yeah. Hi, guys. Just want to ask about the pricing environment in general. There's some concern just with GenAI that there's pricing pressure through contracts and contract pricing as cost savings get passed on to clients. How do you guys think about the whole pricing environment as GenAI gets put into all these contracts? What do you think about pricing as you head into next year?
But answering it is a good number.
Thank you, that's helpful and then it it does sound like there's some momentum building across the business. I was wondering if you could comment on Professional Services in particular, maybe if you back out the impact of The Furs that you already commented on, do you feel like that vertical is showing signs of stabilizing? Yeah, definitely. I mean, when when you, when you look at and I think that when we are looking into q1, for example, it's 1 area of recovery, right? I mean, after the full looks in Q4, uh, we have started to see stabilization in in in 1. Large customer, that was impacting, that group. Uh, plus we are seeing growth in in in
Besides that we have right now given all the different things that we are doing these days right.
So I think that that's how we see SG&A.
Thank you that's helpful. And then it does sound like there's some momentum building across the business I was wondering if you could comment on professional services and in particular, maybe if you back out the impact at the far left that you've already commented on either like that vertical is showing signs of steel.
In 2 or 3, others, that we help us to offset. Uh, what is what has happened to to that customer that I mentioned before, but even in that large customer now it's, it has stabilized in, in a new level.
Martin Migoya: Thank you, Brian, for the question. We don't look at major pressure on the pricing environment. I believe that the deals that we are putting together have kind of a lot of value added, and that helps us to position the pricing in the place we want. Indeed, the revenue per head is doing okay. It's not changing or going down. That's a good sign of us being able to maintain that pricing efficiently. The most important comment I would say is there's a very strong connection between what you offer and how much you can charge for that, which is the value that you're creating for your customer. At Globant, we have always paid a lot of attention to that value creation and to that specialization.
Yes definitely.
But we see opportunities to recover from this new level upwards. So we are, I think, on Professional Services. Once we go through the full logs, that's the bottom of that sector for us, and we should start to see better numbers going forward starting in Q1.
When you look at.
Great. Thank you.
And I think when we're looking into Q1 for example is one area of recovery right. After the follow ups in Q4.
You're welcome. Thank you. Bye.
Thank you very much Maggie.
We are starting to see some realization in one large customer that most impact in that group.
The next question comes from the line of Goldman Sachs, Jim. Your line is open.
As we are seeing growth in two or three others.
We cannot hear you, Jim.
Yeah.
Phil.
To offset.
What is what has happened to that.
Customer that I mentioned before but even in that large customer now it has stabilized in a new level, but we see opportunities to recover from this new level.
As Jim tries to get his um line back. We will go on to the next uh participant. The next question comes from the line of Guggenheim. Uh Jonathan please go ahead.
Martin Migoya: Now, with our AI studios that are capable of delivering a very substantial know-how for each of the industries in which we specialize, plus our core studios are bringing solutions that can go across pretty much all the industries. I think that value proposition is resonating quite well. If you add on top of that, we are accelerating the offering. Now we are discussing with 17 out of the 20 top customers the next-generation model on how to engage with us, with our AI Pods, and with the subscription model. Enterprise AI, which is our platform, also is gaining a lot of traction. Each time we sell an AI Pod, it has to do with our Enterprise AI platform.
So we are I think on professional services. Once we go through the full loss that's the bottom of that sector for us and we should start to see with our numbers moving forward starting in Q1.
Great, thanks for taking our questions. Can you have 1 pack from the vertical and Geographic assumptions around that 4 q Outlook? And maybe the level of conservatism that you're receiving
Yeah. Um,
As mentioned, you know the the the 1 uh sector that that will come down, further down is a Professional Services.
Alright, thank you.
Thank you Mike.
Thank you very much.
The next question comes from the line of Goldman Sachs', Jim Your line is open.
Uh, because of the for logs that it's going to be impacting that sector and, and, and pretty much for almost all other sectors. We are going to see, stay on numbers. Uh,
Okay.
So, I think that's something that again. I think that
We cannot hear you Jim.
Okay.
As Jim tried to gets his landmark we will go on to the next participant. The next question comes from the line of Guggenheim.
Martin Migoya: I believe that this is being accepted, and this is being like we are able to reflect that on the price that we put on proposals, hence maintaining our margin and maintaining our revenue per head. I don't know, Juan or Diego, if you want to comment.
After a few quarters of of you know, moving pieces. We are we are definitely seeing stabilization in the business with some green shots that are putting us in a more positive way. Looking into 26, you know, this like some of the ones that we announced today have been
<unk>. Please go ahead.
Great. Thanks for taking my questions tantalum packs in the vertical and geographic assumptions around that <unk> outlook and maybe the level of conservatism that you are assuming.
Yeah.
On the cook for several months, and you start to see them closing. Some of them, and companies are again becoming more aggressive in terms of growth. And I think this is always a positive sign for Globant.
<unk>.
As mentioned.
The one.
<unk> total debt will come down further down is professional services.
Martin Migoya: No, I think that pretty much summarizes it. If you think about the individuals on a profile basis and you tell me how does probably that price compare to what it used to be four years back, yes, there's pressure there. The mindset today is about efficiency, the mindset is about business impact. When you talk about that, and that's one of our main strategies with the AI studios, when you talk about that, conversation changes completely. That's why we've been able to maintain our revenue per head.
Because the formula is going to be impact in that sector.
I'm pretty much almost all other sectors. They are willing to see stable numbers are so I think that's something that.
Um, conversations are a much better place than where they were 6 months ago. So, uh, we are more confident about 26. Uh, and and and and we think that, you know, that, that that's something that
I think that.
After a few quarters of.
Moving pieces, where we are this is it seems the realizations in the business with some green shoots that are putting us in a more positive way looking into 'twenty. Six you know these like some of the ones that we announced today have been.
On the hook for several months.
You start to see them closing some of them and companies are they becoming more aggressive in terms of growth and I think this is always a positive sign for a loan.
Uh, will be very positive for the business. Yeah. And and also, um, I think it's it's quite clear how, uh, you know, the difference in terms of a conversion, uh, that we have seen in the, at the very beginning of the year. Um, I mean, at the very beginning of their, everything kind of um get Frozen, right? And and now and now the things start to move, um, not at the speed, we saw in 2021, but you know, much faster than before and, uh, that is quite remarkable because
Juan Urthiague: Got it. That's helpful. Juan, just thinking about the third quarter being roughly flat in revenue growth, and then it drops to about 7% organic ex-currency. Can you just help us to step down in revenue growth? What's causing that? I'm guessing this might be the trough in revenue growth in the fourth quarter. What does the first quarter look like sequentially?
Compensation.
The other place where they were six months ago. So we are more confident on 26.
And we think that we know about that.
Some cannot.
We will be very positive for the media and also I think it's likely at health.
Puneet Jain: On the fourth quarter, the main impact that we have over there are the furloughs, mostly in professional services. That's impacting pretty much, that's explaining pretty much the decrease on a sequential basis. When we look at, and I'll just give you some color on Q1, when we look at Q1 right now, in all the different numbers that we are seeing, we don't see any scenario similar to what we had in the last few years. For example, 2025, Q1 was sequentially down 4.7%. We don't see anything similar to that at this point, anything at all. That puts us in a much better place to get the years.
The difference in terms of conversion.
But we have seen in the at the very beginning of the year.
AI Studios being able to articulate that value, proposition much better. I think that that evolution of global, and that evolution of the market are 2, positive things, uh, to consider moving forward and into 2026.
I mean are there.
I think kind of.
Get frozen right.
Now I know the things start to move.
Not at the speed, we saw in 2021, but much faster than before and.
Appreciate that color guys. You know, as you think about your confidence around 2026, what gives you incremental confidence that these client conversions or these pipeline conversion should continue into the middle of next year?
That is quite remarkable because.
And also the pipeline generation has been quite strong because we closed like large deals and even closing those largely as the pipeline grew a lot. So I think that dynamic is very different from what we have seen in the first half of the year and thats. The most remarkable part that conversion coming back.
Our AI studios being able to articulate that value proposition much better I think that that evolution of global and that evolution of the market had two positive things.
Puneet Jain: That gives us also some, when we look at, okay, how the year is building up, how are the conversations with the customers, what each AI studio is bringing to the table, what are the, we had to just sign a very large deal with a gaming company, as we discussed. When we accumulate all that, the Q1 number is definitely a lot better than what we have seen in prior years, right? I think that puts us in a much better place getting into 2026.
You can see that moving forward into 2026.
I appreciate that color guys here as you think about your confidence around 2026.
Well, we start, we saw in the, in the last few months. Uh, a lot of activity in the space. Um, I would say abnormal supposed to 1 year ago or something like that. Uh, so, uh, I believe that this momentum will continue moving into Q4 and the, and q1 next year, that would generate increasing opportunities and incremental opportunities. And as I as Juan said, we don't see, you know, uh, something happening on the first quarter like happen, you know? The first quarter or 2025, I mean, 20 first quarter of 2026 will be much more close to, to, to Q4, uh, than it was before. So, uh, I think that that's a positive sign of of what we are seeing and how the momentum is coming. Jonathan, I think that, uh,
What gives you incremental confidence that these client conversions of these pipeline conversion should continue into the middle of next year.
When we start we saw in the in the last few months.
A lot of activity in the space.
I would say abnormal as opposed to one year ago or something like that.
Juan Urthiague: Great. Thank you.
Puneet Jain: You're welcome.
Operator: Thank you, Brian. The next question comes from the line of Willie Mair. Maggie, please go ahead.
I believe that this momentum will continue moving into Q4, and the Q1 next year that would generate increasing opportunities and incremental opportunity and as I.
Diego Tartara: Thank you. Hi. I wanted to put a finer point on the margin question, particularly as it relates to SG&A. Can you drive more SG&A dilution from here, and are you planning to, or is this a reasonable level for SG&A to settle as a percentage of revenue?
John said and we don't see.
Something happening on the first quarter of like cabin in the first quarter 2025, I mean first quarter receipts will be much more close to Q4 than it was before so I think that thats a positive sign of what we're seeing and how the momentum is coming and Jonathan I think that.
What we are seeing is is mostly shared by the industry today. So I think that everybody is being more positive about. Yeah. Uh, the market, the Royal Market condition about 2026. So, uh, I think that we are after, you know, a few quarters of, uh, us or a few quarters, or even a few years. If you look at some of our peers of a very negative sentiment in terms of the market, in terms of the opportunities, I think that, uh, everybody is becoming a little bit more constructive and, and we are on that same boat,
Puneet Jain: Yeah. We closed the quarter at 17.7%, almost 1 point below Q4 last year, for example. Of course, there is always room to keep on diluting over time, but we also need to balance the growth that we expect to recover. We need to balance all the changes that we are making in terms of our offering, all the changes we are making about our business units with all the AI industry studios. There is more room, but I mean, as always, you need to keep looking at 10 to 20, even 30 basis points of dilution every year, not more than that. Definitely, as a business, this is a business that has the potential to run at about 15% SG&A over time, but it's something that you have to achieve as you scale, right?
Although we are seeing.
Most of them by.
By the industry today.
So I think that everybody has been more positive.
The market the overall market condition.
<unk> 26, so I think that we are after you know a few quarters of.
On a few quarters or even a few years if you look at some of our peers.
Of a very negative sentiment in terms of the market in terms of the opportunities I think that.
Everybody is becoming a little bit more constructive.
Yeah, and everybody is realizing that, you know, creating this project takes a lot of energy and takes a lot of knowledge and takes, you know, really, you know, uh, deep knowledge on how to navigate the AI landscape. That is exponentially growing and exponentially becoming more complex so. So I think that discussion is coming coming to an end. And, uh, people are starting to realize that, uh, yeah, they want to adopt AI. They need someone to help them adopt AI, uh, hundreds of new projects that didn't exist before. Now, are happening and are possible to happen. And then the traditional projects will need to keep on going. Now, accelerated with the new AI technology. So the opportunity keeps on building keeps on being very large for the whole industry and I'm more convinced than ever that you know. Um once we pass this,
We are on the same boat.
And everybody is realizing that creating these projects takes a lot of energy and takes a lot of knowledge and takes you know really.
No, kind of uh difficult situation during the first half of the year, the opportunity is moving forward. Will multiply and expand our opportunities for 2026.
Deep knowledge on how to navigate the AI landscape that is exponentially growing and exponentially becoming more complex. So so I think that discussion is coming coming to an end and people are starting to realize that.
Puneet Jain: When you look at which are the companies that are running at those levels, those are the ones that are already at a very large scale. I think that 17.9%, 17.8%, 0.7%, it's a good number for the size that we have right now, given all the different things that we are doing these days, right? I think that that's how we see SG&A, Maggie.
Thank you for the question, Jonathan. The next question comes from the line of, please go ahead. Your line is open
Yes, they want to adopt AI, they need someone to help them adopt AI.
Hundreds of new projects that didn't exist before now are happening and our policy will do happen and then the traditional projects we need to keep them all now accelerated with a new AI technology. So the opportunity keeps on building keeps on being very large for the whole industry and I'm more convinced than ever that.
Diego Tartara: Thank you. That's helpful. It does sound like there's some momentum building across the business. I was wondering if you could comment on professional services in particular, maybe if you back out the impact of the furloughs that you already commented on. Do you feel like that vertical is showing signs of stabilizing?
Hi everyone, thanks for the opportunity. I just wanted to explore more about how you can balance ahead, so your current account and utilization of levels. We believe that you need to hire new people to honor a potential acceleration of growth in 2026, or maybe your employees are becoming more productive with AI. So.
Once we pass this kind of dipping.
Difficult situation during the first half of the year the opportunities moving forward.
You are fine with your current head. Thank you. Yeah, uh, thank you. So there's going to be a combination of...
Puneet Jain: Yeah, yeah, definitely. I mean, when you look at, and I think when we are looking into Q1, for example, it's one area of recovery, right? I mean, after the furloughs in Q4, we have started to see stabilization in one large customer that was impacting that group. Plus, we are seeing growth in two or three others that will help us to offset what has happened to that customer that I mentioned before. Even in that large customer, now it has stabilized in a new level, but we see opportunities to recover from this new level upwards. I think on professional services, once we go through the furloughs, that's the bottom of that sector for us, and we should start to see better numbers going forward, starting in Q1.
Fly and expand our opportunities for 2026.
Yeah.
Thank you for the question Jonathan The next question comes from the line of Ito Monoclonal. Please go ahead. Your line is open.
Hi, everyone. Thanks, R&D effort, maybe I just wanted to check to learn more about how you can then inflate and grow in my head. So even the current head count and utilization I'm glad because they believed that you need to hire new people or hotter potential exploration work growing anything.
Slightly higher utilization and higher. We are we're not going to be able to to get back to, you know, higher levels of growth without implementing a little bit, our head count going forward. Uh, we have made all the the the, you know, the equalization or or or the balancing of uh the level that we need right now. But as we get into next year, and as we start to see those this materializing utilization, there is still room to go up. Because even though we increased
<unk> Army.
Okay.
A decade.
So you are right.
Okay.
Yeah.
Thank you Wendy so.
There's going to be a combination of <unk>.
Slightly higher utilization on <unk>.
50 basis points were still below our Target of 80%. So there is some room there but also we see that head count is still part of the of the equation, of course, AI increases productivity of our developers, but you also will see head count growing as as we get, you know, higher levels of growth going forward.
Yes.
Diego Tartara: Great. Thank you.
We're not will not be able to to get back to higher levels of growth without.
Puneet Jain: You're welcome, Maggie.
Thank you.
Martin Migoya: Thank you, Maggie.
You're welcome.
Operator: Thank you very much, Maggie. The next question comes from the line of Jim. Your line is open.
Implementing a little bit our head count going forward.
Have made all the you know the equalization or rebalancing of.
Thank you, Mona. The next question comes from the line of UVS Leonardo. Please go ahead.
Disney.
Puneet Jain: We cannot hear you, Jim.
The level that we need right now, but as we get into next year, unless we start to see those.
Materializing.
Operator: As Jim tries to get his line back, we will go on to the next participant. The next question comes from the line of Guggenheim. Jonathan, please go ahead.
Utilization there is still room to go up because even though we increased 50 basis points, we're still below our target of 80%. So there is some room there, but also we see that head count. This is still a part of the equation of course AI increases productivity for developers.
Martin Migoya: Great. Thanks for taking our questions. Can you help unpack some of the vertical and geographic assumptions around that for Q outlook, and maybe the level of conservatism that you're assuming?
Puneet Jain: Yeah. As mentioned, the one sector that will come down further is professional services because of the furloughs that are going to be impacting that sector. Pretty much for almost all other sectors, you're going to see stable numbers. I think that, again, after a few quarters of moving pieces, we are definitely seeing stabilization in the business, with some green shoots that are putting us in a more positive way looking into 2026. Deals like some of the ones that we announced today have been on the hook for several months, and you start to see them closing. Some of them and companies are again becoming more aggressive in terms of growth. I think this is always a positive sign for Globant. Conversations are in a much better place than where they were six months ago.
But you also will see head count and growing.
So we get.
First of all, congrats on the huge, uh, leverage reduction, 20% quarter on quarter. I've been particularly critical about cash Generation Now, improved me wrong. So, congrats from the figure, my my question is about, uh, AI. Uh, I think you mentioned something about the embedded solution in 17, embedded AI pods in 17 out of the top 20 clients, right? You said you said uh, they embedded meaningful. I would like you to discuss that a little bit so we can try to access uh how could that eventually become? Uh ready.
Higher levels of growth going forward.
Thank you.
Yeah.
Thank you Michael later the next question comes from the line of UBS. Please go ahead.
Hi, everyone. Good evening.
First of all congrats on the huge leverage reduction and 3% quarter on quarter I would be particularly critical about cash generation now proved me wrong. So congrats for the future.
Let me first clarify. What I said, I said inside 17 of the top 20 accounts we are discussing about that. Not in all of them; we included already the AI Port, but in some of them, yes. The important thing is that those discussions are progressing quite healthily.
My question is about AI.
You mentioned something about the embedded solution in 17 embedded AI bot 70 out of it.
When the clients right.
You said.
They had a bad adding a meaningful way I would like you to discuss that a little bit. So we can try to SaaS.
That eventually become already.
And uh, I think the acceptation in general of the model uh around the consumption model, instead of a different kind of metrics uh while you have like variable scope uh and and and you need to have a methodology that don't punish you and it's more transparent than other methodologies that you have. In the past is the concept that has been extremely well, uh, well accepted by our customers. So what we foresee is that uh, many New Deals will will come and are coming.
Puneet Jain: We are more confident about 2026, and we think that that's something that will be very positive for the business.
Let me first clarify what I said I said insights 17 of the top 20 accounts, we're discussing about that not in all of them. We included already the AI bought but in some of them, yes, but the important thing is that those discussions are progressing quite healthy.
Martin Migoya: Yeah, I think it's quite clear how the difference in terms of conversion that we have seen at the very beginning of the year. I mean, at the very beginning of the year, everything kind of gets frozen, right?
And.
I think the acceptation in general of the model.
Around a consumption model instead of a different kind of metrics.
Puneet Jain: It does.
Martin Migoya: Now things start to move, not at the speed we saw in 2021, but much faster than before. That is quite remarkable because, and also the pipeline generation has been quite strong because we close large deals. Even closing those large deals, the pipeline grew a lot. I think that dynamic is very different from what we have seen in the first half of the year. That's the most remarkable part. That conversion coming back, our AI studios being able to articulate that value proposition much better, I think that evolution of Globant and that evolution of the market are two positive things to consider moving forward into 2026.
While you have like buyable scope.
And you need to have a methodology that don't ban issue and it's more transparent than other methodologies that you have in the past is the concept that has been extremely well accepted by our customers. So what we foresee is that.
With that offering inside the inside, uh, the proposal by default. Uh, so what we are seeing is a is a natural growth of the pipeline of this, the conversion of that is quite healthy. Um, it's almost, uh, doubling the pipeline doubling the conversion, and, uh, the amount of customers is almost, you know, double from the 18. And we announced last quarter into what we have now. So, um, I believe that those are the, the variables to, to have in mind. I don't know if you want any specific explanation on how we are, uh, you know, implementing those things, but please, uh, expand your question if you want.
You're, you're muted.
Many new deals will come and are coming with that offering inside the inside the proposal by default.
So what we're seeing is there is a natural growth of the pipeline of these the conversion of that is quite healthy.
Almost doubling the pipeline doubling the conversion and the amount of customers is almost doubled from the ATM that we announced last quarter into what we have now so I believe that those are the variables to have in mind I don't know if you want any specific explanation of how we are at.
Guess I didn't learn since 2020. Thanks for that. No, it's twice 2 year. Quite clear on that. Uh, I think just, uh, if if you could talk a little bit maybe uh, this is difficult to predict, but maybe a little bit ahead, 3, 5 years, how how, how much of Revenue could come from subscriptions more subscription model. And if AI costs will be the single driver of of, uh, outcome based out of time of materials, or are you thinking of something else?
Martin Migoya: Appreciate that, Kyle, guys. As you think about your confidence around 2026, what gives you incremental confidence that these client conversions or these pipeline conversions should continue into the middle of next year?
Implementing those things.
Martin Migoya: Well, we saw in the last few months a lot of activity in the space. I would say abnormal as opposed to one year ago or something like that. I believe that this momentum will continue moving into Q4 and Q1 next year. That would generate increasing opportunities and incremental opportunities. As Juan said, we don't see something happening on the first quarter like happened in the first quarter of 2025. I mean, first quarter of 2026 will be much more close to Q4 than it was before. I think that that's a positive sign of what we are seeing and how the momentum is coming.
Yes.
It's part of your question if you want.
Hey, you're muted.
Yes, I didn't learn these tiny tiny thanks for that.
So it might be doing that.
I think just.
If you could talk a little bit maybe this is difficult to predict and maybe a little bit ahead, three five years, how much of revenue could come from subscriptions more subscription model and if AI for us will be the single driver all of our outcome based out of time and materials or something else.
No look. I mean what? I, I don't have like like a prediction to share with you about how much of the revenue that will will will be. Uh, yes. What I can tell you is that the model is progressing, much faster than any other thing that we have, you know, proposed to our customers in the past, in terms of Next Generation, uh, proposals, uh, so that that's a clear sign that it will take over, you know, uh, I think by storm next year, uh, but I cannot predict specific number. I know you want to include it in the model, but the thing is, I don't have a number to provide to you at this moment, it's just 2 months and a half but the things are the signals that we're receiving from the customers are very uh, I would say positive
Sounds sounds promising. Thank you very much. Good evening. Thank you. Thank you.
No look I mean.
I don't have a like to like a prediction to share with you about how much of the revenue that will will will be yes. What I can tell you is that the model is progressing much faster than any other thing that we have proposed to our customers in the past in terms of our next generation.
Um, the next call. The next question comes from the line of Sean Kennedy from ISU. Sean, please go ahead.
Puneet Jain: Jonathan, I think that what we are seeing is mostly shared by the industry today. I think that everybody is being more positive about the market, the overall market condition about 2026. I think that we are after a few quarters or even a few years, if you look at some of our peers, of a very negative sentiment in terms of the market, in terms of the opportunities. I think that everybody is becoming a little bit more constructive, and we are on that same boat.
Proposals.
So thats a clear sign that it will take over.
Hi everyone. Thanks for taking my questions. So, I was wondering if you could discuss what factors could raise conversion rates for the pipeline? Because as you noted, the growth there is robust, is it just as simple as a better goal economy, or are there other factors like AI as in your customers are taking more time they think through their AI strategies before investing,
I think by storm next year, but I cannot predict a specific number I know you want to include it in the model, but the thing is I don't have a number to provide to you. At this moment is just two months anyhow, but the things are the signals that we're receiving from the customers are very I would say positive.
Martin Migoya: Yeah, everybody's realizing that creating these projects takes a lot of energy, takes a lot of knowledge, and takes really deep knowledge on how to navigate the AI landscape that is exponentially growing and exponentially becoming more complex. I think that discussion is coming to an end, and people are starting to realize that, yeah, they want to adopt AI, they need someone to help them adopt AI. Hundreds of new projects that did not exist before now are happening and are possible to happen. The traditional projects will need to keep on going, now accelerated with the new AI technology. The opportunity keeps on building, keeps on being very large for the whole industry.
Yeah, I think I think there are several factors that may help. Um of course, you know, as the as the global economy improves uh it makes more sense. Uh for people to make more more transformational projects. I know companies are I I think that
Sounds sounds promising thank you very much good evening. Thank you. Thank you.
But he got on.
The next call or the next question comes from the line of Sean Kennedy from it.
Shawn Please go ahead.
Hi, everyone. Thanks for taking my questions. So I was wondering if you could discuss what factors could raise conversion rates the pipeline because as you noted the growth there is robust because it just as simple as a better global economy or are there other factors like AI and your customers are taking more time, they think through their AI strategy.
He is before investing.
I think I think there are several factors that may help.
Of course.
As the global economy improves.
Martin Migoya: I'm more convinced than ever that once we pass this kind of difficult situation during the first half of the year, the opportunities moving forward will multiply and expand our opportunities for 2026.
It makes more sense.
For people to make more more transformational projects I know companies are I think that.
By the nature of understanding and going deeper into the benefits of that if.
Any company can get from this new technology I think I think companies are starting to understand that they.
Operator: Thank you for the question, Jonathan. The next question comes from the line of Itaú. Maria Clara, please go ahead. Your line is open.
They need to move out from from I would say trials.
Two into full programs and this always takes time.
Maria Clara: Hi, everyone. Thanks for the opportunity. I just wanted to explore more about how you can balance employees and growth ahead. Given the current headcount and utilization levels, do you believe that you need to hire new people to honor a potential acceleration of growth in 2026, or maybe your employees are becoming more productive with AI, so you are fine with your current headcount? Thank you.
In other.
Massive technology shift we have seen in the bus.
This took time.
Shift we have seen in the past, uh, this took time. Uh, so we expect now to, to, to, to, you know, to what that there will be needed some much some more time for the companies, to, to agree that they need to go in the full transformation. Multi-year, full transformation, AI program, where every single area. But the the the good news is that we are seeing that happening already. Uh, maybe not 100% of the cases but in in many more cases than, you know, 6 months ago. So that's a clear maturity of understanding, how these projects must be developed that will help in the transform. Sorry, that will help on the conversion of this of these deals. And then, you know, if if uh, interest rates go down if you know, um, uh, the the the economy, you know, in the in the US which is 1 of our main markets has has been quite
We expect now to two two.
Two there will be needed some some more time for the companies to us to agree that they need to go into full transformation multiyear full transformation AI program or every single area, but the good news is that we are seeing that happening already.
Puneet Jain: Thank you, Maria Clara. There's going to be a combination of slightly higher utilization and hires. We are not going to be able to get back to higher levels of growth without incrementing a little bit our headcount going forward. We have made all the equalization or the balancing of the level that we need right now, but as we get into next year and as we start to see those deals materializing, utilization, there is still room to go up because even though we increased 50 basis points, we are still below our target of 80%. There is some room there, but also we see that headcount is still part of the equation. Of course, AI increases productivity of our developers, but you also will see headcount growing as we get higher levels of growth going forward.
Maybe not on a 100% of the cases, but in many more cases than.
Six months ago. So that's a clear maturity of understanding how these projects must be developed that will help in the transform sorry, if that will help on the conversion of these of these deals and then ill.
Stable, if you take out the, the, the investments in AI, uh, so, um, I believe that this will come back to growth in some way as the as the whole economy improves, uh, and that will help a lot, right? Uh, but then on the internal side on the globe and side as we progress with our AI Studios and as we progress with our offering and as we progress with uh, our value proposition of new ideas, like the AI ports, and the Enterprise Ai, and the subscription models.
If interest rates goes down.
The economy in the in the U S, which is one of our main markets.
It has been quite stable if you take out the investments in AI.
So I believe that this will come back to growth in some way the whole economy improves.
That will help a lot right.
And then on the internal side on the global side.
Progress with our AI studios, and as we progress with our offering and as we progress.
Our value proposition of new ideas like the AI bots in the enterprise AI and the subscription model, although things will help customers say, okay, yeah, let's do it.
Maria Clara: Thank you.
Puneet Jain: You're welcome.
Operator: Thank you, Maria Clara. The next question comes from the line of UBS. Leonardo, please go ahead.
Although things will help you know, customers say. Okay. Yeah, let's do it. You know, Enterprise AI is the is a perfect spot for adoption of AI. Uh, it will isolate you from any, you know, uh, from any vendor dependent. Uh, you can connect with the 140 llms on 1 side, on the other side, with all the corporate Information Systems, then you can use those 2 things to create agents and to create workflow that, you know, automate processes. But but also that transformed how consumers interact with uh with your brand. So um as that value proposition gets stronger and deeper and goes deeper into our customers. I think conversion will accelerate too, so there are multiple factors that affecting in my perspective in the future but I don't know. No. I think uh just uh um to add a a little bit on on top of 1. Martin sir. Uh, I think there's something related, uh, to what you mentioned, Sean, that, uh, the market continues.
Enterprise say is there is a perfect part for adoption of AI.
Martin Migoya: Hi, everyone. Good evening. First of all, congrats on the huge leverage reduction, 20% quarter on quarter. I've been particularly critical about cash generation. Now, you prove me wrong, so congrats on the figure. My question is about AI. You mentioned something about the embedded solution in 17 embedded AI bots in 17 out of the top 20 clients, right? You said they are embedded in a meaningful way. I would like you to discuss that a little bit so we can try to assess how could that eventually become ready. Leandro, let me first clarify what I said. I said inside 17 of the top 20 accounts, we are discussing about that. Not in all of them we included already the AI bots, but in some of them, yes. The important thing is that those discussions are progressing quite healthy.
Isolate you from any.
From any vendor dependence you can connect with a 140 llm's on one side on the other side with all the corporate information systems. Then you can use those things to create agents and to gain workflow that automate processes, but also that transform how consumers interact with with your brand.
So.
To be in a more that is about efficiency and impact, right? Uh, and, uh, and, and this is very important because, uh, what we see is first of all, all the proposals, uh, that we send, they're being evaluated and, of course, they need to understand the impact that will have in the business and they're either a goal or know or or no. But um I think uh with regards to the time it takes to evaluate proposals close.
As that value proposition gets stronger and deeper and go deeper into our customers I think commercial will accelerate too. So there are multiple factors that are affecting us in my perspective in the future, but I don't know quantum deal.
No I think.
Yes.
Two other a little bit on top of one of them Murphy, who says Oh I see.
There's something related to what you mentioned Sean.
The market continues to be in a mood that is about efficiency and impact right.
And this is very important because what we see is first of all all the proposals that we send there being evaluated and of course, they need to understand the impact that it will have in the business in the either a go or no or no Budd.
Martin Migoya: I think the acceptation in general of the model around a consumption model instead of different kind of metrics, while you have variable scope and you need to have a methodology that does not punish you and is more transparent than other methodologies that you have in the past, is the concept that has been extremely well accepted by our customers. What we foresee is that many new deals will come and are coming with that offering inside the proposal by default. What we are seeing is a natural growth of the pipeline of this. The conversion of that is quite healthy. It's almost doubling the pipeline, doubling the conversion, and the amount of customers is almost doubled from the 18 that we announced last quarter into what we have now. I believe that those are the variables to have in mind.
Them up which has um, uh, certainly um, uh, their their larger period of times uh, lead times uh, and enclosure until closure. I think that it has a lot to do with the maturity, both of the, of the market and the technology as well. Evaluating a proposal, how to properly use new platforms. Uh, the proper models, the implementation, which is super complicated and you have 3 different offers. That might be totally different and you're not even, um, super mature with regards to that tends to take, uh, a lot more time. I think that will uh, only improve in time and uh, and hopefully, we will get back to the usual times of the industry.
I think with regards to the time it takes to evaluate proposals close them up with us.
Certainly.
There are there larger video of times.
Great good, good to hear. Uh thanks for that. And then as a as a quick follow-up, I was wondering if you were seeing demand from helping, you know, companies or companies prepare for AI in terms of data and cloud like before the AI pods implementation.
Lead times and didn't close until closure I think that it has a lot to do with the maturity both of us of the market and the technology as well evaluating a proposal how to appropriately use new platforms. The proper models the implementation, which is super complicated and you have three different offers that might.
Yeah, yeah. I think that that was an interesting data point mentioned in the script.
Uh, there are 900 projects or potential projects in the pipeline that are what we would call data readiness projects, which is either data.
Totally different and you're not even super mature with regards to that tends to take a lot more time I think that it will.
Only improve in time.
We will get back to the usual time, so the industry.
Martin Migoya: I don't know if you want any specific explanation on how we are implementing those things, but please expand your question if you want. You're muted. Guess I didn't learn since 2020. Thanks for that. No, it's quite clear on that. I think just if you could talk a little bit, maybe this is difficult to predict, but maybe a little bit ahead, three, five years, how much of revenue could come from subscription model, and if AI bots will be the single driver of outcome-based out-of-time of materials, or are you thinking of something else? No, look, I mean, I don't have a prediction to share with you about how much of the revenue that will be.
Great good to hear thanks for that and then as a quick follow up I was wondering if you were seeing demand from helping companies or companies prepare for AI in terms of data and cloud like before the AI pods implementation.
Either a generative AI either AI ports or or a mix of, of, of the above. So, um, there is plenty of, uh, projects that are happening. And, and, and plenty of projects that are in the pipeline that are AI related. We still see many companies that need to get prepared for making a better use of AI, right? And and that's going to continue for our, you know, you have some comments that are there, others are getting there.
Well, sorry but not not all the projects are generative. AI
I think there was an interesting data point dimension discrete.
There is 900 projects.
Pension projects in the pipeline.
What we would call beta readiness projects, which is either data.
There.
Jimmy I either airports are a mix of them also.
There is plenty of <unk>.
Projects that are company.
Plenty of projects that are in the pipeline.
Related we still see many companies that need to get prepared for making over their useful for yeah, you're right.
Martin Migoya: What I can tell you is that the model is progressing much faster than any other thing that we have proposed to our customers in the past in terms of next-generation proposals. That's a clear sign that it will take over, I think, by storm next year. I cannot predict a specific number. I know you want to include it in the model, but the thing is I don't have a number to provide to you at this moment. It's just two months and a half, but the signals that we're receiving from the customers are very, I would say, positive. Sounds promising. Thank you very much. Good evening. Thank you. Thank you.
That's going to continue for a while you have.
Some governments are there others, who are getting there.
Sorry.
Not all the projects are generic.
There's a lot of projects.
Traditional AI.
Machine learning projects in which a massive amount of information is being nimble and models are being trained or <unk> no. I mean, not all of the projects are about conversation on projects are interfaces.
Traditional AI machine learning projects in which massive amount of information is being involved and models are being trained or tuned. Or I mean not all the projects are about, you know, conversational projects or interfaces. Uh there's a lot of you know, AI projects that is the traditional AI. You know, projects of course, getting enhanced by the use of generative AI. Uh, but it's much more, the traditional data Gathering and then trying to train more based on that information to predict certain factors, or certain things that you cannot do only by using a a Jenner, a generic llm, right? So, um, it gets accelerated by using llms but is traditional AI or fine-tuning or doing machine learning on specific Industries on a specific sectors or specific areas of the company uh that are also fueling that Pipeline and that amount of projects that Juan was mentioning.
Great. Thank you. I appreciate all the caller.
Thank you.
Thank you for your question, Sean. Unfortunately, that's all the time we have for the Q&A section today,
A lot of AI project studies, the traditional AI project of course get enhanced by the use of generative AI.
I will. Now there was 1 that got missed on the line. I don't know if he's ready for the question. Jim Jim. Are you there on the line?
But it's much more the traditional data gathering and then trying to train models based on that information to predict certain factors of certain things that you cannot do only by using a generic or generic LLM right. So.
Operator: Leonardo, the next question comes from the line of Sean Kennedy from Mizuho. Sean, please go ahead.
if not, we can move uh, to 1 more question then, uh,
Martin Migoya: Hi everyone. Thanks for taking my questions. I was wondering if you could discuss what factors could raise conversion rates for the pipeline because, as you noted, the growth there is robust. Is it just as simple as a better global economy, or are there other factors like AI, as in your customers are taking more time to think through their AI strategies before investing?
Gets accelerated by using LMS body's traditional AI or fine tuning or doing my shuttered, earning on specific industries or specific sectors or in specific areas of the company.
I'm sorry. Unfortunately, that's all the time that we have, uh, today. Uh, I don't see you there. Uh, but with that, we will conclude the call today, and I would like to turn over the the line to Martin Martin, please, go ahead for some closing remarks.
That are also fueling that pipeline and the amount of projects that fund was mentioning.
Martin Migoya: Yeah, I think there are several factors that may help. Of course, as the global economy improves, it makes more sense for people to make more transformational projects. I know companies are—I think that by the nature of understanding and going deeper into the benefits that any company can get from this new technology, I think companies are starting to understand that they need to move out from, I would say, trials into full programs. This always takes time. In other massive technology shifts we have seen in the past, this took time. We expect now there will be needed some more time for the companies to agree that they need to go in the full transformation, multi-year full transformation AI program for every single area.
Thank you very much, guys, for supporting us and being here with us for another quarter of 12 months. We look forward to seeing you in the next one.
Great. Thank you I appreciate all the color. Thank.
Thank you.
Thank you for your question Shaun. Unfortunately, that's all the time, we have for the Q&A session today.
Arturo and hold on a second there was one that got missed on the line I don't know if he is very familiar with Jim Jim how are you.
They're on the line.
If not we can move to one more question then.
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I'm sorry.
Unfortunately, that's all the time that we have today I don't see there, but with that we will conclude the call today.
I would like to turn over the line to Martin Martin. Please go ahead for some closing remarks.
Thank you very much guys for supporting us for being here with us for another quarter of <unk> and looking forward to see you in the next one.
Yeah.
[music].
Martin Migoya: The good news is that we are seeing that happening already, maybe not in 100% of the cases, but in many more cases than six months ago. That's a clear maturity of understanding how these projects must be developed that will help in the transform—sorry, that will help on the conversion of these deals. If interest rates go down, if the economy in the US, which is one of our main markets, has been quite stable if you take out the investment in AI, I believe that this will come back to growth in some way as the whole economy improves. That will help a lot, right?
Martin Migoya: On the internal side, on the global side, as we progress with our AI studios and as we progress with our offering and as we progress with our value proposition of new ideas like the AI bots, the enterprise AI, and the subscription model, all those things will help customers say, okay, yeah, let's do it. Enterprise AI is the perfect path for adoption of AI. It will isolate you from any vendor dependence. You can connect with 140 LLMs on one side, on the other side with all the corporate information systems. You can use those two things to create agents and to create workflow that automate processes, but also that transform how consumers interact with your brand. As that value proposition gets stronger and deeper and goes deeper into our customers, I think conversion will accelerate too.
Martin Migoya: There are multiple factors there affecting, in my perspective, in the future. I don't know, Juan or Diego.
Puneet Jain: No, I think just to add a little bit on top of what Martin said, I think there's something related to what you mentioned, Sean, that the market continues to be in a mood that is about efficiency and impact, right? This is very important because what we see is, first of all, all the proposals that we send, they're being evaluated, and of course, they need to understand the impact that will have in the business. They're either a go or no. I think with regards to the time it takes to evaluate proposals, close them up, which has certainly their larger period of times, lead times until closure, I think that it has a lot to do with the maturity both of the market and the technology as well.
Puneet Jain: Evaluating a proposal, how to properly use new platforms, the proper models, the implementation, which is super complicated, and you have three different offers that might be totally different, and you're not even super mature with regards to that, tends to take a lot more time. I think that will only improve in time, and hopefully, we will get back to the usual times of the industry.
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Martin Migoya: Great. Good to hear. Thanks for that. As a quick follow-up, I was wondering if you were seeing demand from helping companies, your companies, prepare for AI in terms of data and cloud before the AI Pods implementation?
Puneet Jain: Yeah, I think that was an interesting data point mentioned in the script. There are 900 projects or potential projects in the pipeline that are what we would call data readiness projects, which is either data, either generative AI, either AI bots, or a mix of the above. There is plenty of projects that are happening, and plenty of projects that are in the pipeline that are AI-related. We still see many companies that need to get prepared for making a better use of AI, right? That's going to continue for a while. You have some companies that are there, others that are getting there.
Network.
Martin Migoya: Well, sorry, but not all the projects are generative AI. I mean, there's a lot of projects that is traditional AI, machine learning projects in which a massive amount of information is being involved, and models are being trained or tuned. I mean, not all the projects are about conversational projects or interfaces. There's a lot of AI projects that is the traditional AI projects, of course, get enhanced by the use of generative AI, but it's much more the traditional data gathering, and then trying to train models based on that information to predict certain factors or certain things that you cannot do only by using a generic LLM, right?
is the
Martin Migoya: It gets accelerated by using LLMs, but it's traditional AI or fine-tuning or doing machine learning on specific industries, on specific sectors, on specific areas of the company that are also fueling that pipeline and that amount of projects that Juan was mentioning.
yes.
Martin Migoya: Great. Thank you. Appreciate all the color.
Martin Migoya: Thank you.
Arturo Langa: Thank you for your question, Sean. Unfortunately, that's all the time we have for the Q&A section today. I will now.
Martin Migoya: Arturo, hold on a second. There was one that got missed on the line. I don't know if he's ready for the question.
Arturo Langa: Jim, are you there on the line? If not, we can move to one more question. I'm sorry. Unfortunately, that's all the time that we have today. I don't see Jim there. With that, we will conclude the call today. I would like to turn over the line to Martin. Martin, please go ahead for some closing remarks.
Martin Migoya: Thank you very much, guys, for supporting us, for being here with us for another quarter of Globant, and looking forward to see you on the next one.
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