Shares cratered 15.9% to $34.50 after Globant reported second-quarter results on August 13 that delivered a painful combination: a modest revenue beat paired with an earnings miss and a downward revision to full-year targets. For a stock already down 62% over the past year, the sell-off signals deepening investor doubt about whether this once-highflying IT services firm can execute its transformation from a labor-based billing model to an AI-driven one fast enough to matter.
• Revenue Beat the Bar, but Profits Fell Short Where It Counts. Q2 revenue reached $614.4 million , edging past consensus. But adjusted diluted EPS came in at roughly $1.40 versus the $1.50 Street estimate, as the adjusted operating margin slipped to 13.2%, down sharply from 15.0% a year ago . Revenue growth means little when profitability is eroding — every dollar of sales is producing fewer cents of earnings, a trend that directly hurts per-share returns.
• The Full-Year Forecast Got Smaller, Not Bigger. Globant now expects 2026 revenue of $2.428–$2.462 billion, implying a potential 1.1% year-over-year decline — a step down from the prior $2.462–$2.508 billion range issued after Q1. Q3 revenue guidance of $607–$615 million implies another year-over-year decline of up to 1.6% . For a company once growing at 20–30% annually, even flat is painful; negative growth raises existential questions about client demand.
• The AI Bet Is Growing Fast but Still Tiny. Globant's AI-services recurring revenue — the annualized subscription-style income from its AI-powered delivery teams — hit $52.8 million in Q2, up 61% quarter-over-quarter, with management targeting at least $110 million by year-end . That sounds impressive in isolation, but $110 million is barely 4.5% of projected annual revenue. The pivot to charging clients based on outcomes rather than billable hours hasn't yet replaced the revenue the old model is losing.
• A Collapsing Valuation Meets Lingering Legal Risk. A securities class action alleges Globant misrepresented stability in Latin America while facing declining demand and a ~1,000-employee restructuring in 2025 . Analysts still carry an average price target of $61.23 — roughly 77% above the current price — but several firms have already cut targets by $5 to $20, citing slower growth and AI execution risks . The gap between Street optimism and market pricing suggests another wave of downgrades is likely.