Globant's Q2 Results Disappoint, Guidance Shows Slow Growth Ahead

Globant reported Q2 2025 revenue of $614.2 million, up 5% YoY, and adjusted EPS of $1.53, up 1% YoY. However, the company's guidance for Q3 2025 projects only 0.1% YoY growth, and its FY 2025 projections indicate just 1.2% YoY growth. The stock was trading down 7% after the report, and investors seem unconvinced that Globant is on track to capitalize on generative AI trends.

Title: Globant's Q2 2025 Earnings: Revenue Growth Amidst Uncertainty

Globant SA (NYSE: GLOB) reported its Q2 2025 earnings, showing a revenue of $614.2 million, up 4.5% year-over-year (YoY). The company's adjusted earnings per share (EPS) stood at $1.53, marking a 1% increase from the previous year. However, the company's guidance for the third quarter (Q3) 2025 projects only 0.1% YoY growth, and its full-year (FY) 2025 projections indicate just 1.2% YoY growth. Despite these projections, the stock traded down by 7% after the report, reflecting investor uncertainty.

The company's pipeline reached an all-time high of $3.7 billion, up 25% from the previous year, driven largely by the adoption of its AI subscription model. This model, which involves generating code and development through Agentic AI, has been well-received by 18 clients. Globant's AI Pods subscription model has been a significant contributor to pipeline growth, with the company forming strategic partnerships with major players like OpenAI and Amazon Web Services (AWS) to enhance AI adoption.

However, the macroeconomic environment has led to extended sales cycles, impacting the conversion of the pipeline into signed work. Globant's free cash flow for the quarter was negative $2.9 million, although it showed improvement from the previous year. The company executed a business optimization plan, resulting in a reduction of approximately 1,000 employees or 3% of its workforce. This optimization plan is expected to generate annualized savings of $80 million.

North America, Globant's largest market, experienced a sequential revenue decline of 2%, primarily due to challenges in the professional services sector. The company expects better-than-expected conversion rates in the second half of the year but remains cautious about the overall market environment.

The company's guidance for Q3 2025 revenue is at least $615 million, with a full-year 2025 revenue forecast of at least $2.445 billion. The non-IFRS adjusted operating margin is projected to remain at least 15%, with diluted EPS of at least $6.12. The tax rate is expected to range between 20% and 22%.

Globant's stock performance has been mixed, with a 5.27% month-to-date decline, reflecting investor uncertainty around the earnings results and forward guidance. Despite the company's long-term AI focus, investors appear hesitant to act on post-earnings momentum.

References

[1] https://finance.yahoo.com/news/globant-sa-glob-q2-2025-072337556.html
[2] https://www.ainvest.com/news/globant-2025-q2-earnings-sharp-net-loss-revenue-growth-2508/