Globant (NYSE:GLOB) shares are trading lower on Friday. On Thursday, the company reported mixed second quarter results on Thursday.
Today, Needham analyst Mayank Tandon lowered the price forecast on the company from $50 to $45, while maintaining a Buy rating.
Analyst View
The analyst stated that Globant’s quarterly revenue modestly exceeded expectations, while EPS was pressured by forex headwinds.
The third quarter guidance and full year outlook cut, reflects weakness in New Markets, softer travel demand and longer decision cycles.
Offsetting this, Glob.AI ARR accelerated to a $52.8 million exit rate, up about 60% QoQ, with 2026 guidance raised to at least $110 million from $60-$100 million.
Revenue per head rose 9.7% YoY to $95,800, while a business optimization program is expected to create a leaner cost base entering the fiscal year 2027.
The analyst says that Globant is facing near-term pressure from uneven demand and its shift toward outcome-based pricing.
However, Glob.AI ARR is growing faster than initially expected and carries margins about 10 percentage points above traditional delivery, while cost-saving measures should support margins toward year-end, adds the analyst.
Earnings Snapshot
Adjusted EPS of $1.40, missed the $1.50 analyst estimate. Meanwhile, sales of $614.417 million beat the $613.06 million estimate.
Revenue was split across North America at 52.8%, Latin America at 20.8%, Europe at 20.9% and New Markets at 5.5%. The top customer accounted for 8.9% of revenue, while the top five and top 10 customers represented 21.6% and 30.6%, respectively.
Glob.AI ARR rose 61% sequentially to $52.8 million in the quarter. Globant also opened Glob.AI to the broader market, allowing enterprises to deploy AI Pods and pay based on output or usage rather than hours worked.
The platform is supported by partnerships with Anthropic, Vercel and OpenAI and is aimed at transforming how Globant delivers and prices its services.
Over the past 12 months, Globant served 904 customers generating more than $100,000 in revenue, including 331 customers contributing over $1 million annually, versus 339 a year earlier. Additionally, 63.0% of Q2 2026 revenue was denominated in U.S. dollars.
Non-IFRS adjusted gross margin contracted to 36.5% from 38.1% in year ago quarter. Adjusted operating margin declined to 13.2% from 15.0% in the quarter.
Free cash flow improved to $12.6 million from negative $2.9 million a year earlier, marking the company’s strongest first-half cash generation on record.
Globant ended the quarter with $168.8 million in cash and short-term investments.
For the third quarter, the company expects adjusted EPS of $1.43-$1.53 versus the $1.59 estimate and revenue of $607 million-$615 million, compared with the $625.791 million consensus estimate.
Globant lowered its fiscal year 2026 adjusted EPS outlook to $5.75-$6.15 from $6.10-$6.50, below the $6.21 analyst estimate. The company also cut its fiscal year 2026 revenue guidance to $2.428 billion-$2.462 billion from $2.462 billion-$2.508 billion, versus the $2.473 billion consensus estimate.
The company now targets Glob.AI ARR of at least $110 million by the end of 2026.
GLOB Price Action: Globant shares were down 11.64% at $36.22 during premarket trading on Friday, according to Benzinga Pro data.
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