20-F 1 tm209501-1_20f.htm FORM 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)
¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
¨ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from to .

Commission file number: 001-36535

GLOBANT S.A.

(Exact name of Registrant as specified in its charter)

Not applicable

(Translation of Registrant's name into English)

Grand Duchy of Luxembourg

(Jurisdiction of incorporation or organization)

37A Avenue J.F. Kennedy

L-1855, Luxembourg

Tel: + 352 20 30 15 96

(Address of principal executive offices)

Sol Mariel Noello

37A Avenue J.F. Kennedy

L-1855, Luxembourg

E-Mail: sol.noello@globant.com

Tel: + 352 20 30 15 96

(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common shares value $ 1.20 per share | GLOB | NYSE

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 37,101,771 common shares of which 138,152 are treasury shares held by us.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes ¨ No

If this report is an annual or transaction report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Emerging growth company ¨

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board x

Other ¨

If "Other" has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. ¨ Item 17 ¨ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

TABLE OF CONTENTS

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS | 1
CURRENCY PRESENTATION AND DEFINITIONS | 2
PRESENTATION OF FINANCIAL INFORMATION | 2
PRESENTATION OF INDUSTRY AND MARKET DATA | 2
PART I | 3
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 3
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE | 3
ITEM 3. KEY INFORMATION | 3
A. Selected Financial Data | 3
B. Capitalization and Indebtedness | 8
C. Reasons for the Offer and Use of Proceeds | 8
D. Risk Factors | 9
ITEM 4. INFORMATION ON THE COMPANY | 43
A. History and Development of the Company | 43
B. Business overview | 43
C. Organizational Structure | 46
D. Property, Plant and Equipment | 90
ITEM 4A. UNRESOLVED STAFF COMMENTS | 90
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 90
A. Operating Results | 90
B. Liquidity and Capital Resources | 105
C. Research and Development, Patents and Licenses, etc. | 120
D. Trend Information | 120
E. Off-Balance Sheet Arrangements | 121
F. Tabular Disclosure of Contractual Obligations | 121
G. Safe harbor | 121
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 121
A. Directors and Senior Management | 121
B. Compensation | 126
C. Board Practices | 129
D. Employees | 132
E. Share Ownership | 135
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 136
A. Major Shareholders | 136
B. Related Party Transactions | 139
C. Interests of Experts and Counsel | 141
ITEM 8. FINANCIAL INFORMATION | 141
A. Consolidated statements and other financial information | 141
B. Significant Changes | 142
ITEM 9. THE OFFER AND LISTING | 142
A. Offering and listing details | 142
B. Plan of Distribution | 142
C. Markets | 143
D. Selling Shareholders | 143
E. Dilution | 143
F. Expenses of the Issue | 143
ITEM 10. ADDITIONAL INFORMATION | 143
A. Share capital | 143
B. Memorandum and Articles of Association | 143
C. Material Contracts | 151
D. Exchange Controls | 151
E. Taxation | 151
F. Dividends and Paying Agents | 159
G. Statement by Experts | 159
H. Documents on Display | 159
I. Subsidiaries Information | 160
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 160
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 162
A. Debt Securities | 162
B. Warrants and Rights | 162
C. Other Securities | 162
D. American Depositary Shares | 162
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 163
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 163
ITEM 15. CONTROLS AND PROCEDURES | 163
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT | 165
ITEM 16B. CODE OF ETHICS | 166
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 166
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 166
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 166
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 167
ITEM 16G. CORPORATE GOVERNANCE | 167
ITEM 16H. MINE SAFETY DISCLOSURE | 169
PART III | 170
ITEM 17. FINANCIAL STATEMENTS | 170
ITEM 18. FINANCIAL STATEMENTS | 170
ITEM 19. EXHIBITS | 170

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This annual report includes forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this annual report, including, without limitation, those regarding our future financial position and results of operations, strategy, plans, objectives, goals and targets, future developments in the markets in which we operate or are seeking to operate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward-looking statements by terminology such as "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "guidance", "intend", "may", "plan", "potential", "predict", "projected", "should" or "will" or the negative of such terms or other comparable terminology.

You should carefully consider all the information in this annual report, including the information set forth under "Risk Factors." We believe our primary challenges are:

| · | If we are unable to maintain current resource utilization rates and productivity levels, our revenues, profit margins and results of operations may be adversely affected;

| · | If we are unable to manage attrition and attract and retain highly-skilled IT professionals, our operating efficiency and productivity may decrease, and we may not have the necessary resources to maintain client relationships and expand our business;

| · | If the pricing structures we use for our client contracts are based on inaccurate expectations and assumptions regarding the cost and complexity of performing our work, our contracts could be unprofitable, which could adversely affect our results of operations, financial condition and cash flows from operation;

| · | If we are unable to achieve anticipated growth, our revenues, results of operations, business and prospects may be adversely affected;

| · | If we are unable to effectively manage the rapid growth of our business, our management personnel, systems and resources could face significant strains, which could adversely affect our results of operations;

| · | If we were to lose the services of our senior management team or other key employees, our business operations, competitive position, client relationships, revenues and results of operation may be adversely affected;

| · | If we do not continue to innovate and remain at the forefront of emerging technologies and related market trends, we may lose clients and not remain competitive, which could cause our results of operations to suffer;

| · | If any of our largest clients terminates, decreases the scope of, or fails to renew its business relationship or short-term contract with us, our revenues, business and results of operations may be adversely affected;

| · | Global economic and political conditions could have a material adverse effect on our revenues, margins, results of operations and financial condition; and

| · | Uncertainty concerning the current economic, political and social environment in Latin America may have an adverse impact on capital flows or other relevant variables and could adversely affect our business, financial condition and results of operations.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and are based on numerous assumptions. Our actual results of operations, financial condition and the development of events may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements. Readers should read "Risk Factors" in this annual report and the description of our business under "Business Overview" in this annual report for a more complete discussion of the factors that could affect us.

Unless required by law, we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or developments or otherwise.

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CURRENCY PRESENTATION AND DEFINITIONS

In this annual report, all references to "U.S. dollars" and "$" are to the lawful currency of the United States, all references to "Argentine pesos" are to the lawful currency of the Republic of Argentina, all references to "Colombian pesos" are to the lawful currency of the Republic of Colombia, all references to "Uruguayan pesos" are to the lawful currency of the Republic of Uruguay, all references to "Mexican pesos" are to the lawful currency of Mexico, all references to "Chilean pesos" are to the lawful currency of Chile, all references to "Rupees" or "Indian rupees" are to the lawful currency of the Republic of India, all references to "Reais" or "Brazilian Real" are to the lawful currency of Brazil, all references to "Peruvian Sol" are to the lawful currency of Peru, all references to "Romanian Leu" are to the lawful currency of Romania, all references to "Belarusian ruble" are to the lawful currency of Belarus and all references to "euro" or "€" are to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. All references to the "pound," "British Sterling pound" or "£" are to the lawful currency of the United Kingdom. All references to "Canadian dollars" are to the lawful currency of Canada.

Unless otherwise specified or the context requires otherwise in this annual report:

| • | "IT" refers to information technology;

| • | "ISO" means the International Organization for Standardization, which develops and publishes international standards in a variety of technologies and in the IT services sector;

| • | "Agile development methodologies" means a group of software development methods based on iterative and incremental development, where requirements and solutions evolve through collaboration between self-organizing, cross-functional teams;

| • | "Attrition rate," during a specific period, refers to the ratio of IT professionals that left our company during the period to the number of IT professionals that were on our payroll on the last day of the period; and

| • | "Globers" refers to the employees that work for our company.

"GLOBANT" and its logo are our trademarks. Solely for convenience, we refer to our trademarks in this annual report without the TM and ® symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. Other service marks, trademarks and trade names referred to in this annual report are the property of their respective owners.

PRESENTATION OF FINANCIAL INFORMATION

Our consolidated financial statements are prepared under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and presented in U.S. dollars because the U.S. dollar is our functional currency. Our fiscal year ends on December 31 of each year. Accordingly, unless otherwise indicated, all references to a particular year are to the year ended December 31 of that year. Some percentages and amounts included in this annual report have been rounded for ease of presentation. Accordingly, figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures that precede them.

PRESENTATION OF INDUSTRY AND MARKET DATA

In this annual report, we rely on, and refer to, information regarding our business and the markets in which we operate and compete. The market data and certain economic and industry data and forecasts used in this annual report were obtained from International Data Corporation (“IDC”), Gartner, Inc. (“Gartner”), internal surveys, market research, governmental and other publicly available information, independent industry publications and reports prepared by industry consultants. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. We believe that these industry publications, surveys and forecasts are reliable, but we have not independently verified them and cannot guarantee their accuracy or completeness.

Certain market share information and other statements presented herein regarding our position relative to our competitors are not based on published statistical data or information obtained from independent third parties, but reflect our best estimates. We have based these estimates upon information obtained from our clients, trade and business organizations and associations and other contacts in the industries in which we operate.

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PART I.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following selected consolidated financial and other data of Globant S.A. should be read in conjunction with, and are qualified by reference to, "Operating and Financial Review and Prospects" and our audited consolidated financial statements and notes thereto included elsewhere in this annual report. The selected consolidated financial data as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 have been derived from the audited consolidated financial statements of Globant S.A. included elsewhere in this annual report and should be read in conjunction with those audited consolidated financial statements and notes thereto. The selected consolidated financial data as of December 31, 2017 set forth below have been derived from our consolidated financial statements as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 filed with the SEC on March 29, 2019 in our annual report for the year ended December 31, 2018 and which are not included in this annual report. The selected consolidated financial data as of and for the years ended December 31, 2016 and 2015 set forth below have been derived from our consolidated financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 filed with the SEC on April 7, 2017 in our annual report for the year ended December 31, 2016 and which are not included in this annual report.

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|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
|  | (in thousands, except for percentages and per share data) |
Consolidated Statements of profit or loss and other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues (1) |  | $ | 659,325 |  |  | $ | 522,310 |  |  | $ | 413,439 |  |  | $ | 322,856 |  |  | $ | 253,796 |
Cost of revenues (2) |  |  | (405,164 | ) |  |  | (318,554 | ) |  |  | (263,171 | ) |  |  | (191,395 | ) |  |  | (160,292 | )
Gross profit |  |  | 254,161 |  |  |  | 203,756 |  |  |  | 150,268 |  |  |  | 131,461 |  |  |  | 93,504 |
Selling, general and administrative expenses (3) |  |  | (172,478 | ) |  |  | (133,187 | ) |  |  | (110,813 | ) |  |  | (80,961 | ) |  |  | (71,389 | )
Net impairment losses on financial assets (4) |  |  | (228 | ) |  |  | (3,469 | ) |  |  | (1,581 | ) |  |  | (928 | ) |  |  | 1,615 |
Other operating expense, net (5) |  |  | (720 | ) |  |  | (306 | ) |  |  | (4,708 | ) |  |  | — |  |  |  | — |
Profit from operations |  |  | 80,735 |  |  |  | 66,794 |  |  |  | 33,166 |  |  |  | 49,572 |  |  |  | 23,730 |
Gain on transactions with bonds (6) |  |  | 1,569 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19,102 |
Finance income |  |  | 13,643 |  |  |  | 11,418 |  |  |  | 7,956 |  |  |  | 16,215 |  |  |  | 27,555 |
Finance expense |  |  | (26,801 | ) |  |  | (16,968 | ) |  |  | (11,036 | ) |  |  | (19,227 | ) |  |  | (20,952 | )
Finance (expense) income, net (7) |  |  | (13,158 | ) |  |  | (5,550 | ) |  |  | (3,080 | ) |  |  | (3,012 | ) |  |  | 6,603 |
Share of results of investments in associates (8) |  |  | (224 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other income and expenses, net (9) |  |  | 110 |  |  |  | 6,220 |  |  |  | 8,458 |  |  |  | 3,629 |  |  |  | 605 |
Profit before income tax |  |  | 69,032 |  |  |  | 67,464 |  |  |  | 38,544 |  |  |  | 50,189 |  |  |  | 50,040 |
Income tax (10) |  |  | (15,017 | ) |  |  | (15,868 | ) |  |  | (8,081 | ) |  |  | (14,327 | ) |  |  | (18,420 | )
Net income for the year |  |  | 54,015 |  |  |  | 51,596 |  |  |  | 30,463 |  |  |  | 35,862 |  |  |  | 31,620 |
Earnings per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 1.48 |  |  |  | 1.45 |  |  |  | 0.87 |  |  |  | 1.04 |  |  |  | 0.93 |
Diluted |  |  | 1.43 |  |  |  | 1.41 |  |  |  | 0.84 |  |  |  | 1.01 |  |  |  | 0.90 |
Weighted average number of outstanding shares (in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 36,586 |  |  |  | 35,746 |  |  |  | 34,919 |  |  |  | 34,402 |  |  |  | 33,960 |
Diluted |  |  | 37,674 |  |  |  | 36,685 |  |  |  | 36,094 |  |  |  | 35,413 |  |  |  | 35,013 |

| (1) | Includes transactions with related parties of $1,419, $5,937, $5,590, $6,462 and $6,655 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

| (2) | Includes depreciation and amortization expense of $7,350, $4,022, $4,339, $4,281 and $4,441 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively. Also includes share based compensation for $4,976, $4,248, $5,666, $917 and $735 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

| (3) | Includes depreciation and amortization expense of $16,905, $16,521, $11,789, $6,637 and $4,860 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively. Also includes share based compensation of $14,912, $8,665, $8,798, $2,703 and $1,647 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

| (4) | Includes impairments of tax credits of $48 and $1,586 for the years ended December 31, 2018 and 2017, respectively, and recoveries related to reversals of allowances for impairments of tax credits of $47 and $1,820 for the years ended December 31, 2019 and 2015, respectively. Also includes a loss of $275, $3,421, $928 and $205 on impairment of trade receivables for the years ended December 31, 2019, 2018, 2016 and 2015, respectively, and a gain related to the reversal of an allowance for impairment of trade receivables of $5 for the year ended December 31, 2017.

| (5) | Includes an impairment of intangibles assets of $720, $306 and $4,708 for the years ended December 31, 2019, 2018 and 2017, respectively.

| (6) | Includes a gain of $1,569 and $19,102 from transactions with Argentine sovereign bonds denominated in U.S. dollars acquired in the U.S. market with cash received from repayments of intercompany loans and capitalizations received by our Argentine subsidiaries for the years ended December 31, 2019 and December 31, 2015, respectively.

| (7) | Includes foreign exchange losses, net, of $8,841, $7,437, $2,729, $8,620 and $10,136 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

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| (8) | Includes a loss of $224 related to our share of the loss from our investment in Acamica, described in note 11.2 to our audited consolidated financial statements.

| (9) | Includes a loss of $85 for the year ended December 31, 2019 and gains of $6,700, $6,735 and $418, for the years ended December 31, 2018, 2017 and 2016, respectively, on the remeasurement of the contingent consideration of Avanxo, Clarice Technologies Private Ltd. (now called Globant India Private Ltd. or "Clarice"), We Are London Limited ("WAE UK"), We Are Experience, Inc. ("WAE U.S." and together with WAE UK, "WAE"), L4 Mobile, LLC ("L4"), Ratio Cypress, LLC ("Ratio) and PointSource, LLC ("PointSource"), explained in note 28.9.1 to our audited consolidated financial statements, and gains of $1,611, $1,726 and $2,981, for the years ended December 31,2018, 2017 and 2016, related to the remeasurement at fair value of the call and put option over our non-controlling interest in Dynaflows S.A. ("Dynaflows") explained in note 28.9.2 to our audited consolidated financial statements, and the derecognition of the call option over non-controlling interest of, $455, for the year ended December 31, 2018, explained in note 25.2 to our audited consolidated financial statements. Includes a loss of $1,038 for the year ended December 31, 2018 related to the settlement agreed with WAE former owners (note 28.9.1 to our audited consolidated financial statements). Includes the impairment of the investment in Collokia of $800 explained in note 11.2 to our audited consolidated financial statements, for the year ended December 31, 2018. Includes a gain of $225 related to the bargain business combination of Difier S.A., for the year ended December 31, 2016. Includes a gain related to the valuation at fair value of our 22.7% share interest held in Dynaflows of $625 for the year ended December 31, 2015.

| (10) | Includes deferred tax gains of $4,310, $7,456, $5,972, $730 and $1,102 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

Reconciliation of Non-IFRS Financial Data

Overview

To supplement our financial measures prepared in accordance with IFRS, we use certain non-IFRS financial measures including (i) adjusted diluted earnings per share ("EPS"), (ii) adjusted net income, (iii) adjusted gross profit, (iv) adjusted selling, general and administrative ("SG&A") expenses, and (v) adjusted profit from operations. These measures do not have any standardized meaning under IFRS, and other companies may use similarly titled non-IFRS financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-IFRS financial measures may not be comparable to similar non-IFRS measures presented by other companies. We caution investors not to place undue reliance on such non-IFRS measures, but instead to consider them with the most directly comparable IFRS measures. Non-IFRS financial measures have limitations as analytical tools and should not be considered in isolation. They should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with IFRS.

The reconciliations of these non-IFRS measures to the most directly comparable financial measures calculated and presented in accordance with IFRS are shown in the tables below. We use these non-IFRS measures as key measures in the evaluation of our performance and our consolidated financial results. We believe these non-IFRS measures may be useful to investors in their assessment of our operating performance and the valuation of our company. In addition, these non-IFRS measures address questions we routinely receive from analysts and investors and, in order to assure that all investors have access to similar data, we have determined that it is appropriate to make this data available to all investors.

Adjusted Gross Profit and Adjusted SG&A Expenses

We utilize non-IFRS measures of adjusted gross profit and adjusted SG&A expenses as supplemental measures for period-to-period comparisons. Adjusted gross profit and adjusted SG&A expenses are most directly comparable to the IFRS measures of gross profit and selling, general and administrative expenses, respectively. Our non-IFRS measures of adjusted gross profit and adjusted SG&A expenses exclude the impact of certain items, such as depreciation and amortization expense, share-based compensation expense and, only with respect to adjusted SG&A expenses, acquisition-related charges.

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Adjusted Profit from Operations

We utilize the non-IFRS measure of adjusted profit from operations as a supplemental measure for period-to-period comparisons. Adjusted profit from operations is most directly comparable to the IFRS measure of profit from operations. Adjusted profit from operations excludes the impact of certain items, such as share-based compensation expense, impairment of assets, net of recoveries, and acquisition-related charges.

Adjusted Diluted EPS and Adjusted Net Income

We utilize non-IFRS measures of adjusted diluted EPS and adjusted net income for strategic decision making, forecasting future results and evaluating current performance. Adjusted diluted EPS and adjusted net income are most directly comparable to the IFRS measures of EPS and net income, respectively. Our non-IFRS measures of adjusted diluted EPS and adjusted net income exclude the impact of certain items, such as acquisition-related charges, impairment of assets, net of recoveries, share-based compensation expense, expenses related to the secondary share offering in the United States of our common shares held by WPP Luxembourg Gamma Three S.àr.l. ("WPP") (see note 23 to our consolidated financial statements) and expense related to the U.S. settlement agreement.

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|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
Reconciliation of adjusted gross profit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross profit |  | $ | 254,161 |  |  | $ | 203,756 |  |  | $ | 150,268 |  |  | $ | 131,461 |  |  | $ | 93,504 |
Adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | 7,350 |  |  |  | 4,022 |  |  |  | 4,339 |  |  |  | 4,281 |  |  |  | 4,441 |
Share-based compensation expense |  |  | 4,976 |  |  |  | 4,248 |  |  |  | 5,666 |  |  |  | 917 |  |  |  | 735 |
Adjusted gross profit |  | $ | 266,487 |  |  | $ | 212,026 |  |  | $ | 160,273 |  |  | $ | 136,659 |  |  | $ | 98,680 |
Reconciliation of adjusted selling, general and administrative expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative expenses |  | $ | (172,478 | ) |  | $ | (133,187 | ) |  | $ | (110,813 | ) |  | $ | (80,961 | ) |  | $ | (71,389 | )
Adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition-related charges, net (1) |  |  | 9,571 |  |  |  | 3,516 |  |  |  | 1,131 |  |  |  | 556 |  |  |  | 337 |
Depreciation and amortization expense |  |  | 16,905 |  |  |  | 16,521 |  |  |  | 11,789 |  |  |  | 6,637 |  |  |  | 4,860 |
Share-based compensation expense |  |  | 14,912 |  |  |  | 8,665 |  |  |  | 8,798 |  |  |  | 2,703 |  |  |  | 1,647 |
Adjusted selling, general and administrative expenses |  | $ | (131,090 | ) |  | $ | (104,485 | ) |  | $ | (89,095 | ) |  | $ | (71,065 | ) |  | $ | (64,545 | )
Reconciliation of adjusted profit from operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profit from operations |  | $ | 80,735 |  |  | $ | 66,794 |  |  | $ | 33,166 |  |  | $ | 49,572 |  |  | $ | 23,730 |
Adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition-related charges, net (1) |  |  | 10,695 |  |  |  | 4,273 |  |  |  | 7,523 |  |  |  | 1,478 |  |  |  | 337 |
Impairment of assets, net of recoveries (2) |  |  | 673 |  |  |  | 354 |  |  |  | 1,586 |  |  |  | — |  |  |  | (1,820 | )
Share-based compensation expense |  |  | 19,888 |  |  |  | 12,913 |  |  |  | 14,464 |  |  |  | 3,620 |  |  |  | 2,382 |
Adjusted profit from operations |  | $ | 111,991 |  |  | $ | 84,334 |  |  | $ | 56,739 |  |  | $ | 54,670 |  |  | $ | 24,629 |
Reconciliation of adjusted net income for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income for the year |  | $ | 54,015 |  |  | $ | 51,596 |  |  | $ | 30,463 |  |  | $ | 35,862 |  |  | $ | 31,620 |
Adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition-related charges, net (1) |  |  | 11,518 |  |  |  | (2,177 | ) |  |  | (447 | ) |  |  | (1,556 | ) |  |  | 337 |
Share-based compensation expense |  |  | 19,888 |  |  |  | 12,913 |  |  |  | 14,464 |  |  |  | 3,620 |  |  |  | 2,382 |
Impairment of assets, net of recoveries (2) |  |  | 673 |  |  |  | 1,154 |  |  |  | 1,586 |  |  |  | — |  |  |  | (1,820 | )
Expenses related to secondary share offering (3) |  |  | — |  |  |  | 251 |  |  |  | — |  |  |  | — |  |  |  | — |
US settlement agreement, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 845 |  |  |  | — |
Adjusted net income for the year |  | $ | 86,094 |  |  | $ | 63,737 |  |  | $ | 46,066 |  |  | $ | 38,771 |  |  | $ | 32,519 |
Calculation of adjusted diluted EPS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Adjusted net income |  |  | 86,094 |  |  |  | 63,737 |  |  |  | 46,066 |  |  |  | 38,771 |  |  |  | 32,519 |
Diluted shares |  |  | 37,674 |  |  |  | 36,685 |  |  |  | 36,094 |  |  |  | 35,413 |  |  |  | 35,013 |
Adjusted diluted EPS |  |  | 2.29 |  |  |  | 1.74 |  |  |  | 1.28 |  |  |  | 1.09 |  |  |  | 0.93 |
Other data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Adjusted gross profit |  |  | 266,487 |  |  |  | 212,026 |  |  |  | 160,273 |  |  |  | 136,659 |  |  |  | 98,680 |
Adjusted gross profit margin percentage |  |  | 40.4 | % |  |  | 40.6 | % |  |  | 38.8 | % |  |  | 42.3 | % |  |  | 38.9 | %
Adjusted selling, general and administrative expenses |  |  | (131,090 | ) |  |  | (104,485 | ) |  |  | (89,095 | ) |  |  | (71,065 | ) |  |  | (64,545 | )
Adjusted selling, general and administrative expenses margin percentage |  |  | 19.9 | % |  |  | 20.0 | % |  |  | 21.5 | % |  |  | 22.0 | % |  |  | 25.4 | %
Adjusted profit from operations |  |  | 111,991 |  |  |  | 84,334 |  |  |  | 56,739 |  |  |  | 54,670 |  |  |  | 24,629 |
Adjusted profit from operations margin percentage |  |  | 17.0 | % |  |  | 16.1 | % |  |  | 13.7 | % |  |  | 16.9 | % |  |  | 9.7 | %
Adjusted net income for the year |  |  | 86,094 |  |  |  | 63,737 |  |  |  | 46,066 |  |  |  | 38,771 |  |  |  | 32,519 |
Adjusted net income margin percentage for the year |  |  | 13.1 | % |  |  | 12.2 | % |  |  | 11.1 | % |  |  | 12.0 | % |  |  | 12.8 | %

7

(1) Acquisition-related charges, net, include, when applicable, amortization of acquired intangible assets included in the depreciation and amortization expense line on our consolidated statements of operations, external deal costs, acquisition-related retention bonuses, integration costs, changes in the fair value of contingent consideration liabilities, charges for impairment of acquired intangible assets and other acquisition-related costs.

(2) Impairment of assets, net of recoveries includes, when applicable, charges for impairment of intangible assets, charges for impairment of investments in associates and charges for impairment of tax credits, net of recoveries.

(3) Expenses related to secondary share offering include expenses related to the secondary offering in the United States of our common shares held by WPP Luxembourg Gamma Three S.àr.l.

Consolidated Statements of Financial Position Data

|  | As of December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
Consolidated statements of financial position data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 62,721 |  |  | $ | 77,606 |  |  | $ | 52,525 |  |  | $ | 50,532 |  |  | $ | 36,720 |
Investments (current and non-current) |  |  | 20,198 |  |  |  | 9,162 |  |  |  | 8,147 |  |  |  | 9,355 |  |  |  | 25,660 |
Trade receivables |  |  | 156,676 |  |  |  | 110,898 |  |  |  | 80,078 |  |  |  | 54,170 |  |  |  | 45,952 |
Other assets (current and non-current) |  |  | 21,235 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other receivables (current and non-current) |  |  | 28,118 |  |  |  | 49,538 |  |  |  | 46,093 |  |  |  | 46,334 |  |  |  | 38,692 |
Deferred tax assets |  |  | 26,868 |  |  |  | 16,916 |  |  |  | 13,186 |  |  |  | 7,691 |  |  |  | 7,983 |
Investment in associates |  |  | 3,776 |  |  |  | 4,000 |  |  |  | 1,550 |  |  |  | 800 |  |  |  | 300 |
Other financial assets (current and non-current) |  |  | 6,210 |  |  |  | 895 |  |  |  | 1,428 |  |  |  | 1,219 |  |  |  | 2,121 |
Property and equipment |  |  | 87,533 |  |  |  | 51,460 |  |  |  | 43,879 |  |  |  | 35,676 |  |  |  | 25,720 |
Intangible assets |  |  | 27,110 |  |  |  | 11,778 |  |  |  | 11,365 |  |  |  | 13,791 |  |  |  | 7,209 |
Right-of-use assets |  |  | 58,781 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Goodwill |  |  | 188,538 |  |  |  | 104,846 |  |  |  | 98,926 |  |  |  | 65,180 |  |  |  | 32,532 |
Total assets |  |  | 687,764 |  |  |  | 437,099 |  |  |  | 357,177 |  |  |  | 284,748 |  |  |  | 222,889 |
Trade payables (current and non-current) |  |  | 36,987 |  |  |  | 17,578 |  |  |  | 11,640 |  |  |  | 5,603 |  |  |  | 4,436 |
Payroll and social security taxes payable |  |  | 72,252 |  |  |  | 58,535 |  |  |  | 40,472 |  |  |  | 30,328 |  |  |  | 25,551 |
Borrowings (current and non-current) |  |  | 51,386 |  |  |  | — |  |  |  | 6,011 |  |  |  | 217 |  |  |  | 548 |
Other financial liabilities (current and non-current) |  |  | 10,554 |  |  |  | 12,765 |  |  |  | 29,238 |  |  |  | 31,826 |  |  |  | 21,285 |
Lease liabilities (current and non-current) |  |  | 61,363 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Tax liabilities |  |  | 12,510 |  |  |  | 7,399 |  |  |  | 5,253 |  |  |  | 6,249 |  |  |  | 10,225 |
Deferred tax liabilities |  |  | 1,028 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other liabilities and provisions |  |  | 2,970 |  |  |  | 2,906 |  |  |  | 1,199 |  |  |  | 1,965 |  |  |  | 659 |
Total liabilities |  |  | 249,050 |  |  |  | 99,183 |  |  |  | 93,813 |  |  |  | 76,188 |  |  |  | 62,704 |
Total equity and non-controlling interest |  |  | 438,714 |  |  |  | 337,916 |  |  |  | 263,364 |  |  |  | 208,560 |  |  |  | 160,185 |
Total equity, non-controlling interest and liabilities |  |  | 687,764 |  |  |  | 437,099 |  |  |  | 357,177 |  |  |  | 284,748 |  |  |  | 222,889 |

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

8

Risk Factors

You should carefully consider the risks and uncertainties described below, together with the other information contained in this annual report, before making any investment decision. Any of the following risks and uncertainties could have a material adverse effect on our business, prospects, results of operations and financial condition. The market price of our common shares could decline due to any of these risks and uncertainties, and you could lose all or part of your investment. The risks described below are those that we currently believe may materially affect us.

Risks Related to Our Business and Industry

If we are unable to maintain current resource utilization rates and productivity levels, our revenues, profit margins and results of operations may be adversely affected.

Our profitability and the cost of providing our services are affected by our utilization rate of the Globers in our Studios. If we are not able to maintain appropriate utilization rates for our professionals, our profit margin and our profitability may suffer. Our utilization rates are affected by a number of factors, including:

| • | our ability to transition Globers from completed projects to new assignments and to hire and integrate new employees;

| • | our ability to forecast demand for our services and thereby maintain an appropriate headcount in each of our talent delivery centers;

| • | our ability to manage the attrition of our IT professionals; and

| • | our need to devote time and resources to training, professional development and other activities that cannot be billed to our clients.

Our revenue could also suffer if we misjudge demand patterns and do not recruit sufficient employees to satisfy demand. Employee shortages could prevent us from completing our contractual commitments in a timely manner and cause us to pay penalties or lose contracts or clients. In addition, we could incur increased payroll costs, which would negatively affect our utilization rates and our business.

If we are unable to manage attrition and attract and retain highly-skilled IT professionals, our operating efficiency and productivity may decrease, and we may not have the necessary resources to maintain client relationships and expand our business.

Our business is labor intensive and, accordingly, our success depends upon our ability to attract, develop, motivate, retain and effectively utilize highly-skilled IT professionals. We believe that there is significant competition for technology professionals in Latin America, the United States, Europe, Asia and elsewhere who possess the technical skills and experience necessary to deliver our services, and that such competition is likely to continue for the foreseeable future. As a result, the technology industry generally experiences a significant rate of turnover of its workforce. Our business plan is based on hiring and training a significant number of additional technology professionals each year in order to meet anticipated turnover and increased staffing needs. Our ability to properly staff projects, to maintain and renew existing engagements and to win new business depends, in large part, on our ability to hire and retain qualified IT professionals.

The total attrition rate among our Globers was 14.6%, 18.2% and 18.0% for the years ended December 31, 2019, 2018 and 2017, respectively. If our attrition rate were to increase, our operating efficiency and productivity may decrease. We compete for talented individuals not only with other companies in our industry but also with companies in other industries, such as software services, engineering services and financial services companies, among others, and there is a limited pool of individuals who have the skills and training needed to help us grow our company. High attrition rates of qualified personnel could have an adverse effect on our ability to expand our business, as well as cause us to incur greater personnel expenses and training costs.

9

We may not be able to recruit and train a sufficient number of qualified professionals or be successful in retaining current or future employees. Increased hiring by technology companies, particularly in Latin America, the United States, Asia and Europe, and increasing worldwide competition for skilled technology professionals may lead to a shortage in the availability of qualified personnel in the locations where we operate and hire. Failure to hire and train or retain qualified technology professionals in sufficient numbers could have a material adverse effect on our business, results of operations and financial condition.

If the pricing structures we use for our client contracts are based on inaccurate expectations and assumptions regarding the cost and complexity of performing our work, our contracts could be unprofitable, which could adversely affect our results of operations, financial condition and cash flows from operation.

We perform our services primarily under time-and-materials contracts. We charge out the services performed by our Globers under these contracts at hourly rates that are agreed to at the time the contract is entered into. The hourly rates and other pricing terms negotiated with our clients are highly dependent on the complexity of the project, the mix of staffing we anticipate using on it, internal forecasts of our operating costs and predictions of increases in those costs influenced by wage inflation and other marketplace factors. Our predictions are based on limited data and could turn out to be inaccurate. Typically, we do not have the ability to increase the hourly rates established at the outset of a client project in order to pass through to our client increases in salary costs driven by wage inflation and other marketplace factors.

Because we conduct a substantial part of our operations through our operating subsidiaries located in Argentina, Colombia, Mexico and India, we are subject to the effects of wage inflation and other marketplace factors in these countries, which have increased significantly in recent years. If increases in salary and other operating costs at those subsidiaries exceed our internal forecasts, the hourly rates established under our time-and-materials contracts might not be sufficient to recover those increased operating costs, which would make those contracts unprofitable for us, thereby adversely affecting our results of operations, financial condition and cash flows from operations.

In addition to our time-and-materials contracts, we undertake engagements on a fixed-price basis. Revenues from our fixed-price contracts represented approximately 16.1%, 17.4% and 8.9% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. Our pricing in a fixed-price contract depends on our assumptions and forecasts about the costs we will incur to complete the related project, which are based on limited data and could turn out to be inaccurate. Any failure by us to accurately estimate the resources and time required to complete a fixed-price contract on time and on budget or any unexpected increase in the cost of our Globers assigned to the related project, office space or materials could expose us to risks associated with cost overruns and could have an adverse effect on our business, results of operations and financial condition. In addition, any unexpected changes in economic conditions that affect any of the foregoing assumptions and predictions could render contracts that would have been favorable to us when signed unfavorable.

If we are unable to achieve anticipated growth, our revenues, results of operations, business and prospects may be adversely affected.

We intend to continue our expansion in the foreseeable future and to pursue existing and potential market opportunities. As we add new Studios, introduce new services or enter into new markets, we may face new market, technological and operational risks and challenges with which we are unfamiliar, and we may not be able to mitigate these risks and challenges to successfully grow those services or markets. We may not be able to achieve our anticipated growth, which could materially adversely affect our revenues, results of operations, business and prospects.

If we are unable to effectively manage the rapid growth of our business, our management personnel, systems and resources could face significant strains, which could adversely affect our results of operations.

We have experienced, and continue to experience, rapid growth in our headcount, operations and revenues, which has placed, and will continue to place, significant demands on our management and operational and financial infrastructure. Additionally, the transition in our delivery mix from the initial Argentina-based staffing to the current decentralized staffing, including by increasing the number of employees that are deployed onsite at our clients or near client locations, in Latin America, the United States, Europe and India has placed additional operational and structural demands on our resources.

10

Our future growth depends on recruiting, hiring and training technology professionals, growing our international operations, expanding our delivery capabilities, adding effective sales staff and management personnel, adding service offerings, maintaining existing clients and winning new business. Client demands, the availability of high-quality technical and operational personnel at attractive compensation rates, regulatory environments and other pertinent factors may vary significantly by region and our experience in the markets in which we currently operate may not be applicable to other regions. As a result, we may not be able to leverage our experience to expand our delivery footprint effectively into other target markets.

Effective management of these and other growth initiatives will require us to continue to improve our infrastructure, execution standards and ability to expand services. Failure to manage growth effectively could have a material adverse effect on the quality of the execution of our engagements, our ability to attract and retain professionals and our business, results of operations, prospects and financial condition.

If we were to lose the services of our senior management team or other key employees, our business operations, competitive position, client relationships, revenues and results of operations may be adversely affected.

Our future success heavily depends upon the continued services of our senior management team and other key employees. We currently do not maintain key man life insurance for any of our founders, members of our senior management team or other key employees. If one or more of our senior executives or key employees are unable or unwilling to continue in their present positions, it could disrupt our business operations, and we may not be able to replace them easily, on a timely basis or at all. In addition, competition for senior executives and key employees in our industry is intense, and we may be unable to retain our senior executives and key employees or attract and retain new senior executives and key employees in the future, in which case our business may be severely disrupted.

If any of our senior management team or key employees joins a competitor or forms a competing company, we may lose clients, suppliers, know-how and key IT professionals and staff members to them. Also, if any of our sales executives or other sales personnel, who generally maintain a close relationship with our clients, joins a competitor or forms a competing company, we may lose clients to that company, and our revenues may be materially adversely affected. Additionally, there could be unauthorized disclosure or use of our technical knowledge, practices or procedures by such personnel. If any dispute arises between any members of our senior management team or key employees and us, any noncompetition, non-solicitation and nondisclosure agreements we have with our founders, senior executives or key employees might not provide effective protection to us in light of legal uncertainties associated with the enforceability of such agreements.

If we do not continue to innovate and remain at the forefront of emerging technologies and related market trends, we may lose clients and not remain competitive, which could cause our revenues and results of operations to suffer.

Our success depends on creating software products that emotionally connect our customers with consumers and employees, leveraging the latest technologies and methodologies in the digital and cognitive space to drive increased revenues and effective communication with customers. Technological advances and innovation are constant in the technology services industry. As a result, we must continue to invest significant resources in research and development to stay abreast of technology developments so that we may continue to deliver software products that our clients will wish to purchase. If we are unable to anticipate technology developments, enhance our existing services or develop and introduce new services to keep pace with such changes and meet changing client needs, we may lose clients and our revenues and results of operations could suffer. Our results of operations would also suffer if our innovations are not responsive to the needs of our clients, are not appropriately timed with market opportunities or are not effectively brought to market. Our competitors may be able to offer engineering, design and innovation services that are, or that are perceived to be, substantially similar or better than those we offer. This may force us to compete on other fronts in addition to the quality of our services and to expend significant resources in order to remain competitive, which we may be unable to do.

11

If any of our largest clients terminates, decreases the scope of, or fails to renew its business relationship or short-term contract with us, our revenues, business and results of operations may be adversely affected.

We generate a significant portion of our revenues from our ten largest clients. During the years ended December 31, 2019, 2018 and 2017, our largest customer based on revenues, Walt Disney Parks and Resorts Online , accounted for 11.2%, 11.3% and 10.2% of our revenues, respectively. During the years ended December 31, 2019, 2018 and 2017, our ten largest clients accounted for 39.5%, 44.0% and 41.9% of our revenues, respectively.

Our ability to maintain close relationships with these and other major clients is essential to the growth and profitability of our business. However, most of our client contracts are limited to short-term, discrete projects without any commitment to a specific volume of business or future work, and the volume of work performed for a specific client is likely to vary from year to year, especially since we are generally not our clients' exclusive technology services provider. A major client in one year may not provide the same level of revenues for us in any subsequent year. The technology services we provide to our clients, and the revenues and income from those services, may decline or vary as the type and quantity of technology services we provide changes over time. In addition, our reliance on any individual client for a significant portion of our revenues may give that client a certain degree of pricing leverage against us when negotiating contracts and terms of service.

In addition, a number of factors, including the following, other than our performance could cause the loss of or reduction in business or revenues from a client and these factors are not predictable:

| • | our need to devote time and resources to training, professional development and other activities that cannot be billed to our clients.

| • | the business or financial condition of that client or the economy generally;

| • | a change in strategic priorities by that client, resulting in a reduced level of spending on technology services;

| • | a demand for price reductions by that client; and

| • | a decision by that client to move work in-house or to one or several of our competitors.

The loss or diminution in business from any of our major clients could have a material adverse effect on our revenues and results of operations.

Global economic and political conditions could have a material adverse effect on our revenues, margins, results of operations and financial condition.

We derive a significant portion of our revenues from clients located in the United States, Latin America and Europe. The technology services industry is particularly sensitive to the economic environment, and tends to decline during general economic downturns. If the U.S., Latin American, or European economies weaken or slow, or a negative or uncertain political climate develops or persists, pricing for our services may be depressed and our clients may reduce or postpone their technology spending significantly, which may, in turn, lower the demand for our services and negatively affect our revenues and profitability.

The United Kingdom formally left the European Union on January 31, 2020, with a transitional period set to end on December 31, 2020 (“Brexit”). There is continued uncertainty surrounding the future relationship between the United Kingdom and the European Union, including trade agreements between the United Kingdom and European Union. Additionally, long-term risks of Brexit include economic recessions in the United Kingdom or other European markets and currency instability for both the British Pound Sterling and the Euro. Given the number of different outcomes still possible, the impact of Brexit is difficult to determine.

If we are unable to successfully anticipate changing economic and political conditions affecting the markets in which we operate, we may be unable to effectively plan for or respond to those changes, and our revenues, margins, results of operations and financial condition could be adversely affected.

12

We are subject to global pandemic risks, which could materially and adversely affect our business, financial condition and results of operations.

Global pandemics or other disasters or public health concerns in regions of the world where we have operations could result in social, economic or labor instability and disrupt our business. For example, the ongoing coronavirus outbreak emanating from China at the beginning of 2020 has resulted in increased travel restrictions and extended shutdowns of certain businesses in certain regions. On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “public health emergency of international concern.” These events could have a material adverse impact on our business, financial condition and results of operations.

We face intense competition from technology and IT services providers, and an increase in competition, our inability to compete successfully, pricing pressures or loss of market share could materially adversely affect our revenues, results of operations and financial condition.

The market for technology and IT services is intensely competitive, highly fragmented and subject to rapid change and evolving industry standards and we expect competition to intensify. We believe that the principal competitive factors that we face are the ability to innovate; technical expertise and industry knowledge; end-to-end solution offerings; reputation and track record for high-quality and on-time delivery of work; effective employee recruiting; training and retention; responsiveness to clients' business needs; scale; financial stability; and price.

We face competition primarily from large global consulting and outsourcing firms, digital agencies and design firms, traditional technology outsourcing providers, and the in-house product development departments of our clients and potential clients. Many of our competitors have substantially greater financial, technical and marketing resources and greater name recognition than we do. As a result, they may be able to compete more aggressively on pricing or devote greater resources to the development and promotion of technology and IT services. Companies based in some emerging markets also present significant price competition due to their competitive cost structures and tax advantages.

In addition, there are relatively few barriers to entry into our markets and we have faced, and expect to continue to face, competition from new technology services providers. Further, there is a risk that our clients may elect to increase their internal resources to satisfy their services needs as opposed to relying on a third-party vendor, such as our company. The technology services industry is also undergoing consolidation, which may result in increased competition in our target markets in the United States and Europe from larger firms that may have substantially greater financial, marketing or technical resources, may be able to respond more quickly to new technologies or processes and changes in client demands, and may be able to devote greater resources to the development, promotion and sale of their services than we can. Increased competition could also result in price reductions, reduced operating margins and loss of our market share. We cannot assure you that we will be able to compete successfully with existing or new competitors or that competitive pressures will not materially adversely affect our business, results of operations and financial condition.

Our business depends on a strong brand and corporate reputation, and if we are not able to maintain and enhance our brand, our ability to expand our client base will be impaired and our business and operating results will be adversely affected.

Since many of our specific client engagements involve highly tailored solutions, our corporate reputation is a significant factor in our clients' and prospective clients' determination of whether to engage us. We believe the Globant brand name and our reputation are important corporate assets that help distinguish our services from those of our competitors and also contribute to our efforts to recruit and retain talented IT professionals. However, our corporate reputation is susceptible to damage by actions or statements made by current or former employees or clients, competitors, vendors, adversaries in legal proceedings and government regulators, as well as members of the investment community and the media. There is a risk that negative information about our company, even if based on false rumor or misunderstanding, could adversely affect our business. In particular, damage to our reputation could be difficult and time-consuming to repair, could make potential or existing clients reluctant to select us for new engagements, resulting in a loss of business, and could adversely affect our recruitment and retention efforts. Damage to our reputation could also reduce the value and effectiveness of our Globant brand name and could reduce investor confidence in us and result in a decline in the price of our common shares.

13

Our labor costs and the operating restrictions that apply to us could increase as a result of collective bargaining negotiations and changes in labor laws and regulations, and disputes resulting in work stoppages, strikes, or disruptions could adversely affect our business.

As of December 31, 2019, 4.38% of our Globers are covered by collective bargaining agreements, including all Globers from our Brazilian, French and Spanish subsidiaries, as well as some Globers from our Argentinean subsidiaries. For complete details of the covered employees see "Directors, Senior Management and Employees — Employees". There can be no assurance that our non-unionized employees will not become members of a union or become covered by a collective bargaining agreement, including through an acquisition of a business whose employees are subject to such an agreement.

We cannot assure you that we or our operating subsidiaries will not experience work disruptions or stoppages in the future, which could have a material adverse effect on our business and revenues. In addition, we cannot assure you that we will be able to negotiate new collective bargaining agreements on the same terms as those currently in effect, or that we will not be subject to strikes or work stoppages before or during the negotiation process. If we are unable to negotiate salary agreements or if we are subject to strikes or work stoppages, our results of operations, financial condition and the market value of our shares could be materially adversely affected.

Our revenues are dependent on a limited number of industries, and any decrease in demand for technology services in these industries could reduce our revenues and adversely affect our results of operations.

A substantial portion of our clients are concentrated in the following industries: media and entertainment; banks, financial services and insurance; travel and hospitality; and, technology and telecommunications, consumer retail and manufacturing, and professional services which industries, in the aggregate, constituted 97.1%, 97.8% and 96.8% of our total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. Our business growth largely depends on continued demand for our services from clients in these industries and other industries that we may target in the future, as well as on trends in these industries to purchase technology services or to move such services in-house.

A downturn in any of these or our targeted industries, a slowdown or reversal of the trend to spend on technology services in any of these industries could result in a decrease in the demand for our services and materially adversely affect our revenues, financial condition and results of operations. For example, a worsening of economic conditions in the media and entertainment industry and significant consolidation in that industry may reduce the demand for our services and negatively affect our revenues and profitability.

Other developments in the industries in which we operate may also lead to a decline in the demand for our services in these industries, and we may not be able to successfully anticipate and prepare for any such changes. For example, consolidation in any of these industries or acquisitions, particularly involving our clients, may adversely affect our business. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their profitability. This, in turn, may result in increasing pressure on us from clients in these key industries to lower our prices, which could adversely affect our revenues, results of operations and financial condition.

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We have a relatively short operating history and operate in a rapidly evolving industry, which makes it difficult to evaluate our future prospects, may increase the risk that we will not continue to be successful and, accordingly, increases the risk of your investment.

Our company was founded in 2003 and, therefore, has a relatively short operating history. In addition, the technology services industry itself is continuously evolving. Competition, fueled by rapidly changing consumer demands and constant technological developments, renders the technology services industry one in which success and performance metrics are difficult to predict and measure. Because services and technologies are rapidly evolving and each company within the industry can vary greatly in terms of the services it provides, its business model, and its results of operations, it can be difficult to predict how any company's services, including ours, will be received in the market. While enterprises have been willing to devote significant resources to incorporate emerging technologies and related market trends into their business models, enterprises may not continue to spend any significant portion of their budgets on our services in the future. Neither our past financial performance nor the past financial performance of any other company in the technology services industry is indicative of how our company will fare financially in the future. Our future profits may vary substantially from those of other companies, and those we have achieved in the past, making investment in our company risky and speculative. If our clients' demand for our services declines, as a result of economic conditions, market factors or shifts in the technology industry, our business would suffer and our results of operations and financial condition would be adversely affected.

We are investing substantial cash in new facilities and physical infrastructure, and our profitability and cash flows could be reduced if our business does not grow proportionately.

We have made and continue to make significant contractual commitments related to capital expenditures on construction or expansion of our delivery centers. We may encounter cost overruns or project delays in connection with opening new, or expanding existing, facilities. These expansions will likely increase our fixed costs and if we are unable to grow our business and revenues proportionately, our profitability and cash flows may be negatively affected.

If we cause disruptions in our clients' businesses or provide inadequate service, our clients may have claims for substantial damages against us, which could cause us to lose clients, have a negative effect on our corporate reputation and adversely affect our results of operations.

If our Globers make errors in the course of delivering services to our clients or fail to consistently meet service requirements of a client, these errors or failures could disrupt the client's business, which could result in a reduction in our revenues or a claim for substantial damages against us. In addition, a failure or inability to meet a contractual requirement could seriously damage our corporate reputation and limit our ability to attract new business.

The services we provide are often critical to our clients' businesses. Certain of our client contracts require us to comply with security obligations including maintaining network security and backup data, ensuring our network is virus-free, maintaining business continuity planning procedures, and verifying the integrity of employees that work with our clients by conducting background checks. Any failure in a client's system or breach of security relating to the services we provide to the client could damage our reputation or result in a claim for substantial damages against us. Any significant failure of our equipment or systems, or any major disruption to basic infrastructure like power and telecommunications in the locations in which we operate, could impede our ability to provide services to our clients, have a negative impact on our reputation, cause us to lose clients, and adversely affect our results of operations.

Under our client contracts, our liability for breach of our obligations is in some cases limited pursuant to the terms of the contract. Such limitations may be unenforceable or otherwise may not protect us from liability for damages. In addition, certain liabilities, such as claims of third parties for which we may be required to indemnify our clients, are generally not limited under our contracts. The successful assertion of one or more large claims against us in amounts greater than those covered by our current insurance policies could materially adversely affect our business, financial condition and results of operations. Even if such assertions against us are unsuccessful, we may incur reputational harm and substantial legal fees.

We may face losses or reputational damage if our software solutions turn out to contain undetected software defects.

A significant amount of our business involves developing software solutions for our clients as part of our provision of technology services. We are required to make certain representations and warranties to our clients regarding the quality and functionality of our software. Any undetected software defects could result in liability to our clients under certain contracts as well as losses resulting from any litigation initiated by clients due to any losses sustained as a result of the defects. Any such liability or losses could have an adverse effect on our financial condition as well as on our reputation with our clients and in the technology services market in general.

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Our client relationships, revenues, results of operations and financial condition may be adversely affected if we experience disruptions in our Internet infrastructure, telecommunications or IT systems.

Disruptions in telecommunications, system failures, Internet infrastructure or computer virus attacks could damage our reputation and harm our ability to deliver services to our clients, which could result in client dissatisfaction and a loss of business and related reduction of our revenues. We may not be able to consistently maintain active voice and data communications between our various global operations and with our clients due to disruptions in telecommunication networks and power supply, system failures or computer virus attacks. Any significant failure in our ability to communicate could result in a disruption in business, which could hinder our performance and our ability to complete projects on time. Such failure to perform on client contracts could have a material adverse effect on our business, results of operations and financial condition.

If our computer system is or becomes vulnerable to security breaches, or if any of our employees misappropriates data, we may face reputational damage, lose clients and revenues, or incur losses.

Our business is heavily dependent on the security of our IT networks and those of our clients. We often have access to or are required to collect and store confidential client and customer data, including personal data. Despite our efforts, threats to network and data security are increasingly diverse and sophisticated. Internal or external attacks on our IT servers and networks or those of our vendors or clients are vulnerable to cybersecurity risks, including viruses and worms, phishing attacks, denial-of-service attaches, physical or electronic break-ins, third party or employee theft or misuse, and similar disruptions, which could disrupt the normal operations of our engagements and impede our ability to provide critical services to our clients, thereby subjecting us to liability under our contracts and applicable data protection laws. Our business involves the use, storage and transmission of confidential information and personal data about our employees, our vendors and our clients. While we take measures designed to protect the security of, and unauthorized access to, our systems, as well as the privacy of confidential information and personal data, our security controls over our systems, or the security controls over the systems of our vendors and clients with which we operate and rely upon, as well as any other security practices we follow, may not prevent the improper access to or the unauthorized disclosure of confidential information, including any personal data or proprietary information. Many of our client contracts do not limit our potential liability for breaches of confidentiality. If any person, including any of our Globers or former Globers, penetrates our network security or misappropriates data or code that belongs to us, our clients, or our clients' customers, we could be subject to significant liability from our clients or from our clients' customers for breaching contractual confidentiality provisions or violating privacy and/or data protection laws.

Unauthorized disclosure of confidential client and customer data, including personal data, whether through breach of our or others' computer systems, systems failure, loss or theft of confidential information or intellectual property belonging to our clients or our clients' customers, or otherwise, could damage our reputation, cause us to lose clients and revenues, and result in financial and other potential losses by us, as well as require us to expend significant resources to protect against further incidents and to rectify any problems caused by these events. Any such access, unauthorized disclosure or other loss of information could result in legal claims or proceedings, liability and damages under applicable laws, regulatory penalties, breach notification, credit monitoring services, significant fines, administrative sanctions and could adversely affect our business, revenues, reputation, brand and competitive position.

Our business, results of operations and financial condition may be adversely affected by the various conflicting and/or onerous legal and regulatory obligations required in the countries where we operate.

We have a presence in many countries and plan to continue expanding our international operations, which may subject us to increased business and economic risks that could affect our financial results.

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Since we provide services to clients throughout the world, and we collect, store, process and use personal data, we are subject to laws and regulations related to security and privacy in addition to other numerous, and sometimes conflicting, legal requirements. Compliance with complex international and U.S. laws and regulations that apply to our international operations increases our cost of doing business. These numerous, and sometimes conflicting laws, and regulations include, among others, import/export controls, content requirements, trade restrictions, tariffs, taxation, anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, whistle blowing, internal control and disclosure rules, data protection and privacy requirements. Our real or perceived failure to comply with these regulations in the conduct of our business could result in fines, penalties, criminal sanctions against us or our officers, disgorgement of profits, prohibitions on doing business and adverse impact on our brand and reputation. In addition, our failure to comply with these regulations in the context of our obligations to our clients could also result in liability for monetary damages, unfavorable publicity and allegations by our clients that we have not performed our contractual obligations. Due to the varying degree of development of the legal systems of the countries in which we operate, local laws might be insufficient to defend us and preserve our rights.

In addition, because we operate from a number of cities in Latin America, North America, Europe and Asia, we are also subject to risks relating to compliance with a variety of national and local labor laws including, employee health safety and wages and benefits laws. We may, from time to time, be subject to litigation or administrative actions resulting from claims against us by current or former Globers individually or as part of class actions, including claims of wrongful terminations, discrimination, misclassification or other violations of labor law or other alleged conduct. We may also, from time to time, be subject to litigation resulting from claims against us by third parties, including claims of breach of non-compete and confidentiality provisions of our employees' former employment agreements with such third parties. Our failure to comply with applicable regulatory requirements could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to prevent unauthorized use of our intellectual property and our intellectual property rights may not be adequate to protect our business, competitive position, results of operations and financial condition.

Our success depends in part on certain methodologies, practices, tools and technical expertise our company utilizes in designing, developing, implementing and maintaining applications and other proprietary intellectual capital. In order to protect our rights in this intellectual capital, we rely upon a combination of nondisclosure and other contractual arrangements as well as trade secret, patent, copyright and trademark laws. We also generally enter into confidentiality agreements with our employees, consultants, clients and potential clients and limit access to and distribution of our proprietary information.

We hold several trademarks and intend to submit additional U.S. federal and foreign trademark applications for developments relating to additional service offerings in the future. We cannot assure you that we will be successful in maintaining existing or obtaining future intellectual property rights or registrations. There can be no assurance that the laws, rules, regulations and treaties in the countries in which we operate in effect now or in the future or the contractual and other protective measures we take are adequate to protect us from misappropriation or unauthorized use of our intellectual capital or that such laws, rules, regulations and treaties will not change.

We cannot assure you that we will be able to detect unauthorized use of our intellectual property and take appropriate steps to enforce our rights or that any such steps will be successful. We cannot assure you that we have taken all necessary steps to enforce our intellectual property rights in every jurisdiction in which we operate and we cannot assure you that the intellectual property laws of any jurisdiction in which we operate are adequate to protect our interest or that any favorable judgment obtained by us with respect thereto will be enforced in the courts. Misappropriation by third parties of, or other failure to protect, our intellectual property, including the costs of enforcing our intellectual property rights, could have a material adverse effect on our business, competitive position, results of operations and financial condition.

If we incur any liability for a violation of the intellectual property rights of others, our reputation, business, financial condition and prospects may be adversely affected.

Our success largely depends on our ability to use and develop our technology, tools, code, methodologies and services without infringing the intellectual property rights of third parties, including patents, copyrights, trade secrets and trademarks. We may be subject to litigation involving claims of patent infringement or violation of other intellectual property rights of third parties. In such cases, litigation may be necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights. However, given that litigation could be costly and time consuming and could divert the attention of management and key personnel from our business operations, we may elect to settle these claims from time to time.

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We typically indemnify clients who purchase our services and solutions against potential infringement of intellectual property rights, which subjects us to the risk of indemnification claims. These claims may require us to initiate or defend protracted and costly litigation on behalf of our clients, regardless of the merits of these claims and are often not subject to liability limits or exclusion of consequential, indirect or punitive damages. If any of these claims succeed, we may be forced to pay damages on behalf of our clients, redesign or cease offering our allegedly infringing services or solutions, or obtain licenses for the intellectual property such services or solutions allegedly infringe. If we cannot obtain all necessary licenses on commercially reasonable terms, our clients may stop using our services or solutions.

Further, our current and former Globers could challenge our exclusive rights to the software they have developed in the course of their employment. In certain countries in which we operate, an employer is deemed to own the copyright work created by its employees during the course, and within the scope, of their employment, but the employer may be required to satisfy additional legal requirements in order to make further use and dispose of such works. While we believe that we have complied with all such requirements, and have fulfilled all requirements necessary to acquire all rights in software developed by our independent contractors, these requirements are often ambiguously defined and enforced. As a result, we cannot assure you that we would be successful in defending against any claim by our current or former Globers or independent contractors challenging our exclusive rights over the use and transfer of works those Globers or independent contractors created or requesting additional compensation for such works.

We are subject to additional risks as a result of our recent and possible future acquisitions and the hiring of new employees who may misappropriate intellectual property from their former employers. The developers of the technology that we have acquired or may acquire may not have appropriately created, maintained or enforced intellectual property rights in such technology. Indemnification and other rights under acquisition documents may be limited in term and scope and may therefore provide little or no protection from these risks. Parties making infringement claims may be able to obtain an injunction to prevent us from delivering our services or using technology involving the allegedly infringing intellectual property. Intellectual property litigation is expensive and time-consuming and could divert management's attention from our business. A successful infringement claim against us, whether with or without merit, could, among other things, require us to pay substantial damages, develop substitute non-infringing technology, or rebrand our name or enter into royalty or license agreements that may not be available on acceptable terms, if at all, and would require us to cease making, licensing or using products that have infringed a third party's intellectual property rights. Protracted litigation could also result in existing or potential clients deferring or limiting their purchase or use of our software product development services or solutions until resolution of such litigation, or could require us to indemnify our clients against infringement claims in certain instances. Any intellectual property claim or litigation, whether we ultimately win or lose, could damage our reputation and materially adversely affect our business, financial condition and results of operations.

We may not be able to recognize revenues in the period in which our services are performed and the costs of those services are incurred, which may cause our margins to fluctuate.

We perform our services primarily under time-and-materials contracts and, to a lesser extent, fixed-price contracts. All revenues are recognized pursuant to applicable accounting standards.

Unlike our time-and-materials contracts, for which revenue is recognized as services are provided, our fixed-priced contracts require the use of certain accounting estimates. We utilize the input and output methods, depending on the nature of the project and the agreement with the customer, to account for these contracts. Under the input method, as labor costs represent the primary cost component under such contracts, we estimate each of our fixed-price contract's total labor cost to date as a proportion of its total expected labor cost. Under the output method, we recognize revenue on the basis of direct measurements of the value of the services transferred to date relative to the remaining services promised under the contract. We monitor these factors and continuously revise and refine our estimates during the term of our fixed-price contracts.

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Uncertainty about the project completion or receipt of payment for our services or our failure to meet all the acceptance criteria, or otherwise meet a client's expectations, may result in us having to record the cost related to the performance of services in the period that services were rendered, but delay the timing of revenue recognition to a future period in which all acceptance criteria have been met, which may cause our margins to fluctuate.

Our cash flows and results of operations may be adversely affected if we are unable to collect on billed and unbilled receivables from clients.

Our business depends on our ability to successfully obtain payment from our clients of the amounts they owe us for work performed. We evaluate the financial condition of our clients and usually bill and collect on relatively short cycles. We maintain provisions against receivables. Actual losses on client balances could differ from those that we currently anticipate and, as a result, we may need to adjust our provisions. We cannot assure you that we will accurately assess the creditworthiness of our clients. Macroeconomic conditions, such as a potential credit crisis in the global financial system, could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy. Such conditions could cause clients to delay payment, request modifications of their payment terms, or default on their payment obligations to us, all of which could increase our receivables balance. Timely collection of fees for client services also depends on our ability to complete our contractual commitments and subsequently bill for and collect our contractual service fees. If we are unable to meet our contractual obligations, we might experience delays in the collection of or be unable to collect our client balances, which could adversely affect our results of operations and cash flows. In addition, if we experience an increase in the time required to bill and collect for our services, our cash flows could be adversely affected, which could affect our ability to make necessary investments and, therefore, our results of operations.

If the current effective income tax rate payable by us in any country in which we operate is increased or if we lose any country-specific tax benefits, then our financial condition and results of operations may be adversely affected.

We conduct business globally and file income tax returns in multiple jurisdictions. Our consolidated effective income tax rate could be materially adversely affected by several factors, including changes in the amount of income taxed by or allocated to the various jurisdictions in which we operate that have differing statutory tax rates; changing tax laws, regulations and interpretations of such tax laws in multiple jurisdictions; and the resolution of issues arising from tax audits or examinations and any related interest or penalties.

We report our results of operations based on our determination of the amount of taxes owed in the various jurisdictions in which we operate. We have transfer pricing arrangements among our subsidiaries in relation to various aspects of our business, including operations, marketing, sales and delivery functions. Transfer pricing regulations require that any international transaction involving associated enterprises be on arm's-length terms. We consider the transactions among our subsidiaries to be on arm's-length terms. The determination of our consolidated provision for income taxes and other tax liabilities requires estimation, judgment and calculations where the ultimate tax determination may not be certain. Our determination of tax liability is always subject to review or examination by authorities in various jurisdictions.

Currently, we benefit from promotion regimes and tax benefits in Uruguay, India, Belarus and Argentina, although, in the case of Argentina, the effectiveness of the promotion regime is subject to additional regulation by the Argentine Executive Power. For detailed explanations and further discussion, see "Business Overview — Our Delivery Model — Government Support and Incentives". If these tax incentives in Argentina, Uruguay, India and Belarus are changed, terminated, not extended or made unavailable, or comparable new tax incentives are not introduced, we expect that our effective income tax rate and/or our operating expenses would increase significantly, which could materially adversely affect our financial condition and results of operations. See "Operating and Financial Review and Prospects — Operating Results — Certain Income Statement Line Items — Income Tax Expense".

On December 22, 2017, the United States enacted legislation referred to as the Tax Cuts and Jobs Act ("2017 Tax Act"), which instituted fundamental changes to the taxation of multinational corporations. As of the date of this annual report, certain provisions of the 2017 Tax Act may not apply to us, including those designed to (i) tax global intangible low-tax income ("GILTI"); (ii) establish a deduction for foreign derived intangible income ("FDII"); (iii) eliminate the intercompany payment deduction under Base Erosion Anti-Abuse Tax provision ("BEAT"); and (iv) establish new limitations on certain executive compensation. One or more of these provisions may apply to us in the future and any additional taxation may have an adverse impact on our results of operations and cash flows. Unless otherwise discussed, potential investors in our common shares should consult their own tax advisors regarding the effect of the 2017 Tax Act on the ownership of our common shares.

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If we are faced with immigration or work permit restrictions in any country where we currently have personnel onsite at a client location or would like to expand our delivery footprint, then our business, results of operations and financial condition may be adversely affected.

A key part of our strategy is to expand our delivery footprint, including by increasing the number of employees that are deployed onsite at our clients or near client locations. Therefore, we must comply with the immigration, work permit and visa laws and regulations of the countries in which we operate or plan to operate. Our future inability to obtain or renew sufficient work permits and/or visas due to the impact of these regulations, including any changes to immigration, work permit and visa regulations in jurisdictions such as the United States and Europe, could have a material adverse effect on our business, results of operations and financial condition.

If we are unable to maintain favorable pricing terms with current or new suppliers, our results of operations would be adversely affected.

We rely to a limited extent on suppliers of goods and services. In some cases, we have contracts with such parties guaranteeing us favorable pricing terms. We cannot guarantee our ability to maintain such pricing terms beyond the date that pricing terms are fixed pursuant to a written agreement. Furthermore, should economic circumstances change, such that suppliers find it beneficial to change or attempt to renegotiate such pricing terms in their favor, we cannot assure you that we would be able to withstand an increase or achieve a favorable outcome in any such negotiation. Any change in our pricing terms would increase our costs and expenses, which would have an adverse effect on our results of operations.

If our current insurance coverage is or becomes insufficient to protect against losses incurred, our business, results of operations and financial condition may be adversely affected.

We provide technology services that are integral to our clients' businesses. If we were to default in the provision of any contractually agreed-upon services, our clients could suffer significant damages and make claims upon us for those damages. Although we believe that we have adequate processes in place to protect against defaults in the provisions of services, errors and omissions may occur. We currently carry errors and omissions liability coverage for all of the services we provide. To the extent client damages are deemed recoverable against us in amounts substantially in excess of our insurance coverage, or if our claims for insurance coverage are denied by our insurance carriers for any reason including, but not limited to our failure to provide insurance carrier-required documentation or our failure to follow insurance carrier-required claim settlement procedures, there could be a material adverse effect on our business, results of operations and financial condition.

Strategic acquisitions to complement and expand our business have been and will likely remain an important part of our competitive strategy. If we fail to acquire companies whose prospects, when combined with our company, would increase our value, or if we acquire and fail to efficiently integrate such other companies, then our business, results of operations, and financial condition may be adversely affected.

We have expanded, and may continue to expand, our operations through strategically targeted acquisitions focused on deepening our relationships with key clients, extending our technological capacities including services over platforms, broadening our service offering and expanding the geographic footprint of our delivery centers, including beyond Latin America. We completed two acquisitions in 2008, one in 2011, two in 2012, one in 2013, one in 2014, two in 2015, three in 2016, two in 2017, one in 2018 and three in 2019. Financing of any future acquisition could require the incurrence of indebtedness, the issuance of equity or a combination of both. There can be no assurance that we will be able to identify, acquire or profitably manage additional businesses or successfully integrate any acquired businesses without substantial expense, delays or other operational or financial risks and problems. Furthermore, acquisitions may involve a number of special risks, including diversion of management's attention, failure to retain key acquired personnel, unanticipated events or legal liabilities and amortization of acquired intangible assets. In addition, any client satisfaction or performance problems within an acquired business could have a material adverse impact on our company's corporate reputation and brand. We cannot assure you that any acquired businesses would achieve anticipated revenues and earnings. Any failure to manage our acquisition strategy successfully could have a material adverse effect on our business, results of operations and financial condition.

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We have incurred significant share-based compensation expense in the past, and may in the future continue to incur share-based compensation expense, which could adversely impact our profits or the trading price of our common shares.

On July 3, 2014, our board of directors and shareholders approved and adopted the 2014 Equity Incentive Plan, which was amended by our board of directors to increase the number of common shares that may be issued as stock awards from 1,666,667 to up to 3,666,667 on May 9, 2016, and from 3,666,667 to up to 5,666,667 on February 13, 2019.

From the adoption of the plan until the date of this annual report we have granted to members of our senior management and certain other employees 30,000 stock awards, options to purchase 2,270,059 common shares and 1,073,645 restricted stock units, net of any cancelled and/or forfeited awards. Most of the options and restricted stock units were granted with a vesting period of four years, 25% of each grant becoming exercisable on each anniversary of the grant date. The remaining options and restricted stock units were granted with a vesting period agreed with those employees. Share-based compensation expense for awards of equity instruments is determined based on the fair value of the awards at the grant date. Each of our employee share options is exercisable for one of our common shares, and each of our restricted stock units is settled, automatically upon its vesting, with one of our common shares. No amounts are paid or payable by the recipient on receipt of an option or restricted stock unit. Neither the options nor the restricted stock units carry rights to dividends or voting rights. Options may be exercised at any time from the date of vesting to the date of their expiration (ten years after the grant date).

For the years ended December 31, 2019, 2018 and 2017, we recorded $19.9, $12.9 and $14.5 million, respectively, of share-based compensation expense related to the grant of options and restricted stock units.

The expenses associated with share-based compensation may reduce the attractiveness of issuing equity awards under our equity incentive plan. However, if we do not grant equity awards, or if we reduce the number of equity awards we grant, we may not be able to attract and retain key personnel. If we grant more equity awards to attract and retain key personnel, the expenses associated with such additional equity awards could materially adversely affect our results of operations and the trading price of our common shares.

Our ability to expand our business and procure new contracts or enter into beneficial business arrangements could be affected to the extent we enter into agreements with clients containing noncompetition clauses.

Some of our services agreements restrict our ability to perform similar services for certain of our clients' competitors under specific circumstances. We may in the future enter into additional agreements with clients that restrict our ability to accept assignments from, or render similar services to, those clients' customers, require us to obtain our clients' prior written consent to provide services to their customers or restrict our ability to compete with our clients, or bid for or accept any assignment for which those clients are bidding or negotiating. These restrictions may hamper our ability to compete for and provide services to other clients in a specific industry in which we have expertise and could materially adversely affect our business, financial condition and results of operations.

The terms of our credit facility place restrictions on our operating and financial flexibility.

In November 2018, Globant LLC, our U.S. subsidiary (the “Borrower”) entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with the financial institutions listed therein, as lenders, and HSBC Bank USA, N.A., as administrative agent, issuing bank and swingline lender. As of December 31, 2019, $50.4 million was outstanding under the A&R Credit Agreement.

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On February 6, 2020, the Borrower, entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”), by and among certain financial institutions listed therein, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. Under the Second A&R Credit Agreement, which amends and restates the existing A&R Credit Agreement, dated as of November 1, 2018, the Borrower may borrow (i) up to $100 million in up to four borrowings on or prior to August 6, 2021 under a delayed-draw term loan facility and (ii) up to $250 million under a revolving credit facility. In addition, the Borrower may request increases of the maximum amount available under the revolving facility in an aggregate amount not to exceed $100 million. The maturity date of each of the facilities is February 5, 2025. Pursuant to the terms of the Second A&R Credit Agreement, interest on the loans extended thereunder shall accrue at a rate per annum equal to either (i) LIBOR plus 1.50%, or (ii) LIBOR plus 1.75%, determined based on the Borrower’s Maximum Total Leverage Ratio (as defined in the Second A&R Credit Agreement). The Borrower’s obligations under the Second A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of the Borrower’s now owned and after-acquired assets. The Second A&R Credit Agreement also contains certain customary negative and affirmative covenants, which compliance may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

Indebtedness under our credit facility bears interest based on LIBOR, which may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences.

The U.K. Financial Conduct Authority, which regulates LIBOR, has announced in 2017 that it intends to stop encouraging or requiring banks to submit LIBOR rates after 2021, and as a result, methods of calculating LIBOR are evolving. If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected or we may need to renegotiate the terms of our credit agreement to replace LIBOR with the new standard that is established, if any, or to otherwise agree with the trustees or agents under such facilities or instruments on a new means of calculating interest. As of the date of this annual report we cannot reasonably estimate the expected impact on our business of the discontinuation of LIBOR.

Risks Related to Operating in Latin America.

Our two largest operations are based in Colombia and Argentina, and we have subsidiaries in other countries of Latin America, such as Uruguay, Chile, Peru, Mexico and Brazil. There are significant risks to operating in those countries that should be carefully considered before making an investment decision.

Latin America

Latin America has experienced adverse economic conditions that may impact our business, financial condition and results of operations.

Our business is dependent to a certain extent upon the economic conditions prevalent in Argentina and Colombia as well as the other Latin American countries in which we operate. Latin American countries have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and economic instability. As a consequence of adverse economic conditions in global markets and diminishing commodity prices, the economic growth rates of the economies of many Latin American countries have slowed and some have entered mild recessions. Adverse economic conditions in any of these countries could have a material adverse effect on our business, financial condition and results of operations.

Latin American governments have exercised and continue to exercise significant influence over the economies of the countries where we operate, which could adversely affect our business, financial condition, results of operations and prospects.

Historically, governments in Latin America have frequently intervened in the economies of their respective countries and have occasionally made significant changes in policy and regulations. Governmental actions to control inflation and other policies and regulations have often involved, among others, price controls, currency devaluations, capital controls and tariffs. Our business, financial condition, results of operations and prospects may be adversely affected by:

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| • | changes in government policies or regulations, including such factors as exchange rates and exchange control policies;

| • | inflation rates;

| • | interest rates;

| • | tariff and inflation control policies;

| • | price control policies;

| • | liquidity of domestic capital and lending markets;

| • | electricity rationing;

| • | tax policies, royalty and tax increases and retroactive tax claims; and

| • | other political, diplomatic, social and economic developments in or affecting the countries where we operate.

Inflation, and government measures to curb inflation in Latin America, may adversely affect the economies in the countries where we operate in Latin America, our business and results of operations.

Some of the countries in which we operate in Latin America have experienced, or are currently experiencing, high rates of inflation. Although inflation rates in some of these countries (other than Argentina, as further explained in "Our results of operations may be adversely affected by high and possibly increasing inflation in Argentina") have been relatively low in the recent past, we cannot assure you that this trend will continue. The measures taken by the governments of these countries to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and retarding economic growth. Measures to combat inflation and public speculation about possible additional actions have also contributed significantly to economic uncertainty in many of these countries and to heightened volatility in their securities markets. Periods of higher inflation may also slow the growth rate of local economies. Inflation is also likely to increase some of our costs and expenses, which we may not be able to fully pass on to our clients, which could adversely affect our operating margins and operating income.

Our business, results of operations and financial condition may be adversely affected by fluctuations in currency exchange rates (most notably between the U.S. dollar and the Argentine peso).

We conduct a substantial portion of our operations outside the United States, and our businesses may be impacted by significant fluctuations in foreign currency exchange rates. Our consolidated financial statements and those of most of our subsidiaries are prepared in U.S. dollars as their functional currency, whereas some of our subsidiaries' operations are performed in local currencies. Therefore, the resulting exchange differences arising from the translation to our presentation currency are recognized in the finance gain or expense item or as a separate component of equity depending on the functional currency for each subsidiary. Fluctuations in exchange rates relative to the U.S. dollar could impair the comparability of our results from period to period and could have a material adverse effect on our results of operations and financial condition.

In addition, our results of operations and financial condition are particularly sensitive to changes in the Argentine peso, Uruguayan peso, Mexican peso and Colombian peso/U.S. dollar exchange rates because a significant part of our operations are conducted in these countries where our costs are incurred, for the most-part, in Argentine pesos, Uruguayan pesos, Mexican pesos and Colombian pesos, while the substantial portion of our revenues generated outside of these countries are in U.S. dollars. Consequently, appreciation of the U.S. dollar relative to the Argentine peso, Mexican peso and Colombian peso, to the extent not offset by inflation in these countries, could result in favorable variations in our operating margins and, conversely, depreciation of the U.S. dollar relative to the Argentine peso, Mexican peso and Colombian peso could impact our operating margins negatively.

In recent years, the Argentine peso has suffered significant devaluations against the U.S. dollar and has continued to devaluate against the U.S. dollar. As a result of this economic instability, Argentina's foreign debt rating has been downgraded on multiple occasions based upon concerns regarding economic conditions and rising fears of increased inflationary pressures. This uncertainty may also adversely impact Argentina's ability to attract capital.

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The increasing level of inflation in Argentina has generated pressure for further depreciation of the Argentine peso. The Argentine peso depreciated against the U.S. dollar by 31.2% in 2014, 52.1% in 2015, 21.9% in 2016, 18.4% in 2017, 102.2% in 2018, and 59.02% in 2019 based on the official exchange rates published by the Argentine Central Bank. The sharp depreciation in recent years has fostered inflation and created strong volatility in the U.S. dollar exchange rate.

Since the reinstatement of rigid restrictions and foreign exchange controls in September 1, 2019 through February 27, 2020, which, among other things, significantly curtailed access to the official foreign exchange market (the "FX market") by individuals and entities (see "— Item 4.B Business Overview — Regulatory Overview — Foreign Exchange Controls — Argentina."), through February 27, 2020, the Argentine peso depreciated against the U.S. dollar by 8.31% in the FX Market. During that time, an unofficial U.S. dollar trading market developed in which the Argentine peso/U.S. dollar exchange rate is significantly higher than the rate in the FX Market. We cannot predict future fluctuations in the Argentine peso/U.S. dollar exchange rate or further foreign exchange restrictions.

Our business is dependent to a certain extent on maintaining our labor and other costs competitive with those of companies located in other regions around the world from which technology and IT services may be purchased by clients in the United States and Europe. We periodically evaluate the need for hedging strategies with our board of directors, including the use of such instruments to mitigate the effect of foreign exchange rate fluctuations. During the year ended December 31, 2019, our Argentine, Uruguayan and Colombian operating subsidiaries entered into foreign exchange contracts for the purpose of hedging the risk of exposure to fluctuations in the Argentine peso, Uruguayan peso and Colombian peso against the U.S. dollar. During the years ended 2018 and 2017, our Argentine operating subsidiaries entered into foreign exchange contracts for the purpose of hedging the risk of exposure to fluctuations in the Argentine peso against the U.S. dollar. If we do not hedge such exposure or we do not do so effectively, appreciation of the Argentine peso, the Uruguayan peso or the Colombian peso against the U.S. dollar may raise our costs, which would increase the prices of our services to our customers, which, in turn, could adversely affect our business, financial condition and results of operations.

We face the risk of political and economic crises, instability, terrorism, civil strife, expropriation and other risks of doing business in Latin America, which could adversely affect our business, financial condition and results of operations.

We conduct our operations primarily in Latin America. Economic and political developments in Latin America, including future economic changes or crises (such as inflation, currency devaluation or recession), government deadlock, political instability, terrorism, civil strife, changes in laws and regulations, restrictions on the repatriation of dividends or profits, expropriation or nationalization of property, restrictions on currency convertibility, volatility of the foreign exchange market and exchange controls could impact our operations or the market value of our common shares and have a material adverse effect on our business, financial condition and results of operations.

Argentina

Government intervention in the Argentine economy could adversely affect the economy and our results of operations or financial condition.

During recent years, the Argentine government has frequently intervened in the Argentine economy, including through the implementation of expropriation policies or nationalizations.

For example, in April 2012, the Argentine government provided for the nationalization of YPF S.A., the main Argentine oil company. In February 2014, the Argentine government and Repsol, from whom YPF was expropriated, announced that they had reached an agreement on the terms of the compensation payable to Repsol for the expropriation of the YPF shares, which settled the claim filed by Repsol with International Centre for Settlement of Investment Disputes (the "ICSID"). Such compensation amounted to US$5 billion, payable in the form of Argentine sovereign bonds with various maturities.

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There are other examples of government intervention. In December 2012 and August 2013, the Argentine Congress established new regulations relating to domestic capital markets. Such regulations generally provided for increased intervention in the capital markets by the government, authorizing, for example, the Argentine Securities Commission (Comisión Nacional de Valores or "CNV") to appoint observers with the ability to veto the decisions of the board of directors of companies admitted to the public offering regime in Argentina under certain circumstances and suspend the board of directors for a period of up to 180 days. On May 9, 2018, however, the Argentine Congress passed the Productive Financing Law No. 27,440, which reformed, among others, the Capital Markets Law No. 26,831 abrogating this power granted to the CNV and generally modernizing the entire regulatory framework applicable to the Argentine capital market, by incorporating current international practices to contribute to its development.

Since December 2019, Frente de Todos (a new coalition formed to participate in the general elections) returned to power with Mr. Alberto Fernández, as president and former president Cristina Kirchner, as vice-president. The new administration has recently adopted, and may continue to adopt, several measures that could imply further government intervention. For example, Decree No. 34/2019, issued on December 13, 2019, duplicated the amount of the statutory severance payments payable to employees hired before December 13, 2019 and fired between December 13, 2019 and June 13, 2020. Moreover, by Decree No. 14/2020 issued on January 3, 2020, the Argentine Executive Power approved a mandatory salary increase for the private sector employees of Argentine pesos 3,000 in January 2020 and additional Argentine pesos 1,000 in February 2020, and during February is intending to obtain the enactment of a draft bill regulating the offer and display of products in supermarkets, that has already been approved by the House of Representatives and, as of the date of this annual report, is pending of approval by the Senate.

Expropriations and other interventions by the Argentine government similar to those described above can have an adverse impact on the level of foreign investment in Argentina, the access of Argentine companies to the international capital markets and Argentina's commercial and diplomatic relations with other countries and, consequently, could adversely affect our business, financial condition and results of operations.

Our results of operations may be adversely affected by high and possibly increasing inflation in Argentina.

Inflation has materially undermined the Argentine economy and the government's ability to create conditions that would permit stable growth. High inflation may also undermine Argentina's foreign competitiveness in international markets and adversely affect economic activity and employment, as well as our business and results of operation. In particular, the margin on our services is impacted by the increase in our costs in providing those services, which is influenced by wage inflation in Argentina, as well as other factors.

The Argentine National Institute of Statistics and Census (Instituto Nacional de Estadística y Censos) (“INDEC”) implemented certain methodological reforms and adjusted certain indexes based on these reforms. The lack of accuracy in the INDEC's indexes could result in a further decrease in confidence in Argentina's economy, which could, in turn, have an adverse effect on our ability to access the international credit markets at market rates to finance our operations and growth. See "In the past, the credibility of several Argentine economic indexes has been called into question."

According to data published by the INDEC, the Customer Price Index ("CPI") increased 11.9% as of October 2015 (for the first nine months of year 2015). In November 2015, the INDEC suspended the publication of the CPI. According to the publicly available information based on data from the Province of San Luis, the CPI grew by 31.6% in 2015 and 31.4% in 2016. According to the publicly available information based on data from the City of Buenos Aires, the CPI grew by 29.6% in 2015 and 41.0% in 2016. After implementing certain methodological reforms and adjusting certain macroeconomic statistics based on these reforms, in June 2016 the INDEC resumed its publication of the CPI. According to the INDEC, the CPI between May and December 2016 was 16.9% and in the year 2017 was 24.8%.

Several factors, including but not limited to the raising of the interest rate by the U.S. Federal Reserve and the inability of the Argentine government to perform structural changes and reduce the fiscal deficit, provoked a sharp depreciation of 59.02% of the Argentine Peso during 2019 that fostered inflation. According to the INDEC, the CPI was 47.6% in 2018 and 59.8% in 2019.

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Uncertainty surrounding future inflation rates may have an adverse impact for Argentina in the long-term credit market. The Macri administration (2015-2019) adopted a series of measures to try to control the foreign exchange rate and inflation, including the execution of a financing agreement with the International Monetary Fund (“IMF”) for US$57.1 billion, and the Argentine Central Bank defined foreign exchange intervention and non-intervention zones for the U.S. dollar exchange rate and increased the Argentine pesos interest rates. In addition, the Macri administration adopted an inflation targeting regime in parallel with the floating exchange rate regime and set inflation targets. The Central Bank increased stabilization efforts to reduce excess monetary imbalances, raised Argentine pesos interest rates to offset inflationary pressure and adopted a policy of zero currency issuance. Also, on April 17, 2019, the Macri administration announced a series of additional economic measures to control inflation, including the freezing of prices of 60 basic products for at least six months and the commitment to avoid new tariff increases above those already announced. However, those and other measures adopted by the Macri Administration and the Argentine Central Bank caused a deepening recession (the Gross Domestic Product (“GDP”) decreased 6.2% in 2018 and 1.7% in 2019), increasing unemployment and medium and small companies failures, while high inflation and foreign exchange instability continued. Since September 2019 with the re-enactment of the foreign exchange controls, the official foreign exchange rate remained relatively stable. Since the presidential election in October 2019, the new administration has not yet adopted additional measures to control inflation other than the adoption of an agreement with the United Association of Supermarkets to the control of the price of 336 basic products in January 2020 and the draft bill regulating the offer and display of products in supermarkets, that has already been approved by the House of Representatives and as of the date of this annual report is pending of approval by the Senate.

Inflation rates could continue escalating, and there is uncertainty regarding the effects that the measures taken, or that may be taken, by the Argentine government to control inflation could have in the medium term. If inflation remains high or continues to increase, Argentina's economy may be negatively impacted and our results of operations could be materially affected.

In the past, the credibility of several Argentine economic indexes has been called into question.

The intervention of the Argentine government in the INDEC in 2007, the change in the way the inflation index was measured and the imposition of fines by the Fernández de Kirchner administration on private consultants reporting inflation rates higher than the INDEC’s resulted in a decrease in the confidence in Argentina's economic statistics.

In February 2014, the INDEC released a new inflation index, known as National Urban Consumer Price Index (Índice de Precios al Consumidor Nacional Urbano) that measured the prices of goods across the country and replaces the previous index that only measured inflation in the urban sprawl of the City of Buenos Aires. Even though the new methodology brought inflation statistics closer to those estimated by private sources, material differences between official inflation data and private estimates remained during 2015.

However, during December 2015 and January 2016, the Macri administration declared the national statistical system and the INDEC to be in a state of administrative emergency through December 31, 2016. Accordingly, the new head of the INDEC announced the temporary suspension of the publication of official data of prices, poverty, unemployment and gross domestic product ("GDP") until the completion of a full review of INDEC's policies. Shortly thereafter, the INDEC released an alternative CPI index based on data from the City of Buenos Aires and the Province of San Luis. The INDEC resumed its publication of the CPI in June 2016, after implementing certain methodological reforms and adjusting certain macroeconomic statistics on the basis of those reforms. As a consequence of these reforms, on November 9, 2016, the IMF lifted its censure on Argentina, noting that Argentina had resumed the publication of data in a manner consistent with its obligations under the Articles of Agreement with the IMF. Still, uncertainty remains as to whether official data and measurement procedures sufficiently reflect inflation in the country, and what effect these reforms will have on the Argentine economy. In March 2018, the Argentine government announced a draft bill to provide INDEC with total autonomy and to transform it into an entity that will facilitate greater statistical independence of the main macroeconomic indicators, which as of the date of this annual report has not yet been enacted.

As of the date of this annual report, the impact that these measures and any future measures taken by the Argentine government with respect to the INDEC will have on the Argentine economy and investors' perception of the country cannot be predicted.

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The results of the negotiations on the restructuring of the International Monetary Fund’s three-year Stand-By Arrangement for Argentina could have an adverse effect on the Argentine economy in general and our business in particular.

In late May 2018, the Macri administration requested the IMF financial support to help strengthen the Argentine economy in light of the financial market turbulence suffered in early 2018. In June 2018, Argentina and the IMF reached an agreement on an economic plan that could be supported by IMF financing in the form of a Stand-By Arrangement for $50 billion, and on June 20, 2018, the IMF’s Executive Board approved such plan and the consequent three-year Stand-By Arrangement. On September 2018 the Argentine government negotiated an extension to the Stand-By Arrangement from $50 billion to $57.1 billion. As of December 2019, the IMF disbursed an aggregate of US$44.70 billion and as of the date of this annual report there were additional disbursements pending for a total of US$12.40 billion.

The purpose of the Stand-By Arrangement was to support the Argentine government’s economic priorities, which include strengthening the Argentine economy and protecting the living standards of the Argentine citizens. The Fernández administration announced that would not request the disbursements of the pending amounts under the Stand-By arrangement and is negotiating the extension of the repayment terms that mature in 2021 and 2022.

As of the date of this annual report, we cannot guarantee that the Argentine government and the IMF will reach an agreement on the restructuring of the Stand-By Arrangement, nor are we able to predict the future consequences for the Argentine economy in general or our business in particular if such agreement fails.

Argentina's ability to obtain financing from international markets may be limited, which may in turn impair its ability to implement reforms and public policies and foster economic growth and could impact the ability of Argentine companies to obtain financing outside of Argentina.

Argentina's 2001 sovereign default and its failure to fully restructure its sovereign debt and negotiate with the holdout creditors has limited Argentina's ability to access international financing. In 2005, Argentina completed the restructuring of a substantial portion of its indebtedness and settled all of its debt with the IMF. Additionally, in June 2010, Argentina completed the restructuring of a significant portion of the defaulted bonds that were not exchanged in the 2005 restructuring, amounting to approximately 93% of the defaulted debt eligible for restructuring. However, holdout bondholders that declined to participate in the restructuring, filed lawsuits against Argentina in several countries, including the United States. Since late 2012, rulings from courts in the United States favored holdout bondholders.

In February 2016, the Macri´s administration entered into settlement agreements with holdout bondholders holding a significant portion of the defaulted bonds unchanged and has repaid the majority of the holdout creditors with the proceeds of a US$16.5 billion international offering of 3-year, 5-year, 10-year and 30-year bonds in April 2016. Although the size of the claims involved has decreased significantly, litigation initiated by bondholders that have not accepted Argentina's settlement offer continues in several jurisdictions.

Additionally, foreign shareholders of several Argentine companies have filed claims with the ICSID alleging that the emergency measures adopted by the Argentine government since the crisis in 2001 and 2002 differ from the just and equal treatment standards set forth in several bilateral investment treaties to which Argentina is a party. ICSID has ruled against Argentina with respect to many of these claims.

In January 2018, a new claim against the Argentine government was submitted by the fund “Draw Capital Partners” in New York in relation to certain interests due between 2014 and 2016. This claim has reopened discussions around Argentina’s foreign debt, despite the agreement reached by Macri’s administration to overcome the default.

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Pursuant to a report issued by the Secretary of Finance of the Argentine government, as of December 2019, Argentina’s foreign debt amounted to US$311.25 billion, which represented 91.6% of Argentina’s GDP. In 2020, the Argentine government must make payments of about US$52 billion on sovereign debt in U.S. dollar and Argentine pesos, including about US$37 billion in foreign sovereign; and in 2021 the Argentine government must make payments of about US$37.1 billion on sovereign debt in U.S. dollars and Argentine pesos.

In addition, in January 26, 2020 the Province of Buenos Aires, the largest estate in Argentina, also had a maturity of provincial sovereign debt for US$277 million in principal amount and interests that, after the failure of the negotiations for an extension, canceled within the curing period in February 5, 2020. The Province of Buenos Aires has additional payments under its sovereign debt for US$110 million maturing in May 2020 and US$750 million maturing in June 2020. The Province will seek to restructure its sovereign debt in U.S. dollars simultaneously with the restructuring of the Argentine sovereign debt.

Because the Argentine government is facing maturities of sovereign debt in U.S. dollars and Argentine pesos for about US$11 billion during the first quarter of 2020 and US$26 billion during the second quarter of 2020, the Argentine Executive Power proposed a restructuring deadline of March 31, 2020. The sovereign debt maturing has collective action clauses pursuant to which the restructuring of their maturities requires the consent of holders holding at least 75% of the aggregate principal amount of each of the bonds. It has been reported the existence of holders’ committees holding blocking positions in some or all of the bonds to be restructured.

On February 13, 2020, US$1.6 billion of dual currency bonds issued by Argentina’s government matured. During February 2020, the Argentine government launched an offer to exchange the dual currency bonds with new peso-denominated bonds due in 2021, but only about 10% of the aggregate principal amount of the dual currency bonds was tendered. Following the failure of the exchange offer, the Argentine government sought to sell another peso-denominated bond, but ultimately terminated that plan. The Argentine government then issued Decree No. 141/2020, pursuant to which it postponed the payment of principal and suspended the accrual of interest under the dual currency bonds until September 30, 2020.

Due to these payment obligations and the lack of the Argentine government´s access to additional international or multilateral private financing, as of the date of this report, the country risk index published by JP Morgan amounted to 2094 basic points, which represents a high uncertainty on the ability of the Argentine government to make the payments due under its sovereign debt in the short and medium term.

On February 12, 2020, the Argentine Congress enacted the Law No. 27,544 for the Restoration of the Sustainability of the Public Debt issued under Foreign Law, which granted the Ministry of Economy the power to restructure the Argentine government external public debt.

If the Argentine government does not restructure the sovereign bonds with the required majority of holders (at least 75% in principal amount) Argentina may default on the sovereign debt again. In such event, Argentina's ability to obtain international or multilateral private financing or direct foreign investment may be limited, which may in turn impair its ability to implement reforms and public policies to foster economic growth, impair the ability of private sector entities to access the international capital markets or make the terms of such financing much less favorable that those accessible by companies in other countries in the region and may accelerate the depreciation of the Argentine peso, foster inflation and deepen the economic crisis and recession. In addition, Argentina may face again litigation from sovereign debt holdout holders.

Lack of access to international or domestic financial markets could affect the projected capital expenditures for our operations in Argentina, which, in turn, may have an adverse effect on our financial condition or the results of our operations.

A continued decline in the global prices of Argentina's main commodity exports could have an adverse effect on Argentina's economic growth.

High commodity prices have contributed significantly to the increase in Argentine exports since 2002 as well as in governmental revenues from export taxes. However, relying on the export of certain commodities, such as soy, has made the Argentine economy more vulnerable to fluctuations in the prices of commodities. Since the beginning of 2015, international commodity prices of Argentina's primary commodity exports have declined, which has had an adverse effect on Argentina's economic growth. If international commodity prices continue to decline, the Argentine economy could be adversely affected. In addition, adverse weather conditions can affect the production of commodities by the agricultural sector, which account for a significant portion of Argentina's export revenues.

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These circumstances would have a negative impact on the levels of government revenues, available foreign exchange and the government's ability to service its sovereign debt, and could either generate recessionary or inflationary pressures, depending on the government's reaction. Either of these results would adversely impact Argentina's economic growth and, therefore, our financial condition and results of operations.

Argentina continues to face considerable economic uncertainty.

Due to the foreign exchange crisis in the second half of 2018, the Argentine government implemented a series of measures aiming to reduce the fiscal deficit drastically, including the suspension of public infrastructure works, the depreciation of the Argentine peso, the re-imposition of export duties, the request of a stand-by loan agreement with the IMF and the elimination of the Supportive Federal Fund (by which the Federal Government distributed 30% of the proceeds of the export duties on soybean and soybean products to the provinces and municipalities), among other things.

As a consequence of inflation since 2018, in August 2019, the Argentine government issued a decree eliminating the VAT on certain basic food products until December 31, 2019. However, the Argentine Supreme Court issued an injunction stating that the fiscal costs of the VAT reduction must be borne only by the federal government, and could not affect the co-share of the Provincial Estates. Elimination of the VAT on those products, however, was not extended beyond December 31, 2019. The Macri administration favored the financing of the fiscal deficit through the issuance of new debt in the international debt markets. The fiscal, monetary and currency adjustments undertaken by the Macri administration subdued growth in the short-term. Immediately after most of the foreign exchange controls were lifted on December 10, 2015, the dismantling of the multiple exchange regime resulted in the official Argentine peso exchange rate (available only for certain types of transactions) falling in value by 40.1%, as the Argentine peso-U.S. dollar exchange rate reached Argentine pesos 13.76 to US$1.00 on December 17, 2015. As of December 2016, the Argentine peso depreciated 22.15% and as of December 2017, the Argentine peso depreciated 18.45%. During 2018, the Argentine peso has depreciated 103.83% accumulating a total depreciation of 284.84% since December 16, 2015 (immediately after most of the foreign exchange controls were lifted and dismantling of the multiple exchange regimes). Between December 31, 2018 and April 30, 2019, the Argentine peso depreciated 16.4% against the U.S. dollar. For containing the escalade of the Argentine peso-U.S. dollar exchange rate, during 2018 the Central Bank sold more than US$14 billion, reducing the Central Bank reserves; and increased the Argentine peso interest rates to more than 70%, affecting the access to domestic financing. All the foregoing caused a deepening recession (the GDP decreased 6.2% in 2018 and 1.7% in 2019), increasing unemployment and medium and small companies failures, while high inflation and foreign exchange instability continued.

In addition, during 2018 the Argentine government used the issuance of local short term Treasury Bills to finance fiscal deficit and control the foreign exchange rate through the absorption of Argentine pesos, such as Letras del Tesoro (LETES), Letras del Tesoro Capitalizables (LECAP), Letras del Tesoro en Pesos Argentinos Ajustadas por el CER (LECER) y Letras del Tesoro Atadas al Tipo de Cambio (LELINK), raising the Argentine peso interest rates. In August 2019, by Decree No. 596/2019 the Argentine government restructured the maturity of the LETES, LECAP, LECER and LELINK without haircuts, pursuant to which the principal amount under such Treasury Bills held by institutional holders will be paid in installments pursuant to the following schedule: (i) 15% on the maturity date; (ii) 25% 90 calendar days from the maturity date; and (iii) 60% 180 calendar days from the maturity date. In December 2019, pursuant to Decree No. 49/2019, the Fernández administration extended the LETES´ maturity until August 2020.

After assuming office in December 2019, President Alberto Fernández announced that his administration would continue with the Central Bank’s zero currency issuance policy and increased taxes to finance the fiscal deficit. However, it is yet uncertain the effects that these measures will have in the fiscal deficit and on the economy in general.

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In addition, the Argentine government faces maturities of sovereign debt for about US$90 billion in 2020 and 2021 in U.S. dollar and Argentine pesos, which must restructure. See “Argentina's ability to obtain financing from international markets may be limited, which may in turn impair its ability to implement reforms and public policies and foster economic growth and could impact the ability of Argentine companies to obtain financing outside of Argentina.”.

If the Argentine government does not restructure the sovereign bonds Argentina may default on the soverign debt again, what may worsen the current economic conditions and provoke a general economic crisis, which could have an adverse effect on our financial condition and results of operations.

The Argentine government may order salary increases to be paid to employees in the private sector, which could increase our operating costs and adversely affect our results of operations.

In the past, the Argentine government has passed laws, regulations and decrees requiring companies in the private sector to increase wages and provide specified benefits to employees, and may do so again in the future. Argentine employers, both in the public and private sectors, have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Due to the high levels of inflation, employees and labor organizations are demanding significant wage increases. The Argentine government increased the minimum salary multiple times from 3,600 Argentine pesos in January 2014 to 16,875 Argentine pesos in October 2019. The INDEC published data regarding the evolution of salaries in the private and public sectors, reflects salary increases of approximately 26.7% and 25.26% in the private and public sectors, respectively, between January 2017 and December 2017; approximately 28.7% salary increases in both private and public sectors between January 2018 and November 2018; and 37.6% in both private and public sectors between January 2019 and October 2019.

Due to high levels of inflation and full employment in the high tech industry, we expect to raise salaries in line with the market. During the year ended December 31, 2018, labor unions agreed with employers´ associations on annual salary increases between 30% and 40%. In addition, on November 12, 2018, the Argentine government issued a decree imposing the payment of an extraordinary non-remuneratory bonus of Argentine pesos 5,000 to all workers in the private sector, payable in two installments in December 2018 and February 2019. On September 25, 2019, the Argentine government issued a decree imposing another payment of an extraordinary non-remuneratory bonus of 5,000 Argentine pesos to all workers in the private sector. Pursuant to Law No. 27,541, the Argentine government may apply mandatory salary increases to private entities. Through Decree No. 14/2020 issued on January 3, 2020, the Argentine Executive Power approved a mandatory salary increase for the private sector employees of 3,000 Argentine pesos in January 2020 and additional 1,000 Argentine pesos in February 2020.

In addition, on December 28, 2017, the Argentine Congress passed Argentine Law No. 27,426 granting employees the option to maintain their employment status until the age of 70, though employees may choose to retire earlier at the age of 65 for male employees or 60 for female employees.

If future salary increases in the Argentine peso exceed the pace of the devaluation of the Argentine peso, such salary increases could have a material and adverse effect on our expenses and business, results of operations and financial condition and, thus, on the trading prices for our common shares.

Argentine exchange controls and restrictions have been reinstated in Argentina limiting the access to the FX Market and impairing the availability of foreign investments and international credit and access to capital markets, which could have a material adverse effect on our financial condition and business.

Due to the foreign exchange crisis generated in August 2019 and the continued reduction of the Argentine Central Bank’s foreign currency reserves, since September 1, 2019 the Argentine government reimposed rigid exchange controls and transfer restrictions, substantially limiting the ability of legal entities to obtain foreign currency or make certain payments or distributions out of Argentina. See "Information on the Company - Business Overview - Foreign Exchange Controls".

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In response to the re-imposition of the foreign exchange restrictions, an unofficial U.S. dollar trading market developed in which the Argentine peso-U.S. dollar exchange rate differed substantially from the official Argentine peso-U.S. dollar exchange rate. In addition, access to foreign currency and its transfer out of Argentina can also be obtained through capital markets transactions called Blue-Chip Swaps, subject to certain restrictions, which also is significantly more expensive than acquiring foreign exchange through the FX Market.

In the past, the Argentine government also imposed informal restrictions, such as limitations on the ability of certain local companies and individuals to purchase foreign currency. Informal restrictions may consist in de facto measures restricting local residents and companies from purchasing foreign currency through the FX Market to make payments out of Argentina, such as prepayments under foreign debt, dividend distributions, capital reductions, and payment for importation of goods and services.

These measures could lead to political and social tensions and undermine the Argentine government’s public finances, as has occurred in the past, which could adversely affect Argentina’s economy and prospects for economic growth, which, in turn, could adversely affect our business and results of operations.

Blue-chip swap transactions increase our exposure to fluctuations in the value of the Argentine peso, which, in turn, could have an adverse effect on our operations and the market price of our common shares.

During the years ended December 31, 2019, 2015 and 2014, our Argentine subsidiaries, used cash received from repayments of intercompany loans and capital contributions to acquire Argentine sovereign bonds, including Bonos del Gobierno Nacional en Dólares Estadounidenses ("BODEN") and Bonos Argentinos ("BONAR"), in the U.S. market denominated in U.S. dollars.

After acquiring these bonds and after holding them for a certain period of time, our Argentine subsidiaries sold those bonds in the Argentine market. The fair values of the bonds in the Argentine market (in Argentine pesos) during the years ended December 31, 2019, 2015 and 2014 were higher than their quoted prices in the U.S. market (in U.S dollars) converted at the official exchange rate prevailing in Argentina (which is the rate used to convert these transactions in foreign currency into our Argentine subsidiaries' functional currency), we recognized a gain when remeasuring the fair value of the bonds in Argentine pesos into U.S. dollars at the official exchange rate prevailing in Argentina.

If we decide to engage in blue-chip swap transactions in the future, we cannot assure you that the quoted price of BODEN and/or BONAR in Argentine pesos in the Argentine markets will be higher than the quoted price in the U.S. debt markets in U.S. dollars converted at the official exchange rate prevailing in Argentina or that the Argentine government will not make any legislative, judicial, or administrative changes or interpretations, any of which could impair our Argentine subsidiaries to pursue such transactions, and have a material adverse effect on our business, results of operations and financial condition.

Foreign exchange restrictions have impaired our ability to receive dividends and distributions from our Argentine subsidiaries, receive the proceeds of any sale of our assets in Argentina and receive certain payments to us or other of our subsidiaries out of Argentina through the FX market.

Since September 1, 2019 the Argentine government reimposed rigid exchange controls and transfer restrictions, substantially limiting the ability of legal entities to obtain foreign currency or make certain payments or distributions abroad. Among others, the foreign exchange restrictions require the prior authorization of the Argentine Central Bank for the access to the FX Market for purposes of acquiring foreign currency for portfolio purposes by legal entities and making dividend distributions (except in certain limited circumstances and amounts). See "Information on the Company - Business Overview - Foreign Exchange Controls".

Pursuant to the new foreign exchange regulations, our Argentine subsidiaries have access to the FX Market to make payments of dividends or other distributions of earnings out of Argentina from January 17, 2020 without the prior authorization of the Argentine Central Bank up to an amount equal to 30% of the value of all new capital contributions of foreign direct investments made to our Argentine subsidiaries since such date to the extent that the proceeds of those capital contributions have been repatriated into Argentina and converted into Argentine pesos through the FX Market and they have been capitalized and the registration of such capitalization has been requested before the Public Registry of Commerce. The access to the FX Market for the payment of dividends in excess of the amounts described above or not complying with those requirements are subject to the prior authorization of the Argentine Central Bank.

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The new foreign exchange regulations have also restricted the ability of our Argentine subsidiaries to access the FX Market to acquire foreign currency without the prior authorization of the Argentine Central Bank for portfolio purposes and the ability of foreign residents to access the FX Market to acquire foreign currency for any purpose, including for example for the conversion and transfer out of Argentina of the proceeds of the sale of assets received by the foreign resident in Argentina.

In addition, the new foreign exchange regulations require the prior authorization of the Argentine Central Bank for making any payments of services to foreign related entities except for expenses payable for their normal operation.

Additionally, the access to foreign currency and its transfer abroad can also be obtained through capital markets transactions called Blue-Chip Swaps subject to certain restrictions, which, however are significantly more expensive than acquiring foreign exchange through the FX Market.

The domestic revenues of our Argentine subsidiaries (excluding intercompany revenues to other Globant subsidiaries, which are eliminated in consolidation) were $30.9 in 2019, $23.8 million in 2018 and $13.3 million in 2017, representing 4.7%, 4.6%, and 3.2% of our annual consolidated revenues, respectively.

Our Argentine subsidiaries are impaired in their ability to make dividends distributions and payments of services to the Company or other Globant foreign subsidiaries through the FX Market and we and other Globant foreign subsidiaries are also impaired from accessing the FX Market to transfer out of Argentina any monies collected in such jurisdiction; or the making of such payments and transfers would be subject to substantial additional costs which, in either case, could adversely affect our business and results of operations.

Foreign exchange restrictions have reimposed the mandatory repatriation of export services receivables.

Since September 1, 2019 the Argentine government reimposed the mandatory repatriation into Argentina and the conversion into Argentine pesos through the FX Market of the receivables for export services within 5 consecutive days computed from the date they are received. See "Information on the Company - Business Overview - Foreign Exchange Controls".

The re-imposition of the repatriation of export services receivables and the additional restrictions imposed on the access to the FX Market (See “Foreign exchange restrictions have impaired our ability to receive dividends and distributions from our Argentine subsidiaries, receive the proceeds of any sale of our assets in Argentina and receive certain payments to us or other of our subsidiaries out of Argentina through the FX market.”), could have a material adverse effect on our business, results of operations and financial condition.

Our operating cash flows may be adversely affected if there is a delay in obtaining reimbursement of value-added tax credits from AFIP.

During the years ended December 31, 2019, our Argentine operating subsidiary IAFH Global S.A. recognized an aggregate of $0.6 million in value-added tax credits. These tax credits may be monetized by way of cash reimbursement from AFIP. Obtaining this cash reimbursement requires submission of a written request to AFIP, which is subject to its approval. In the event that AFIP delays its approval of the request for reimbursement of these value-added tax credits, our ability to monetize the value of those credits would be delayed, which could adversely affect our cash flows.

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The imposition of duties on export services could adversely affect our results of operations.

On December 4, 2018, Argentina approved the budget bill for year 2019 through Law 27,467, which amended the Customs Code to allow for duties to be applied to the exportation of services (and not only goods). In addition, the Argentine Executive Power was allowed to impose export duties of up to 30% until December 31, 2020. However, in case of services and goods that were not subject to export duties before September 2, 2018, the maximum rate is 12%. On January 2, 2019, the Argentine Executive Power issued Decree No. 1201/2018, which established an export duty on export of services at a rate of 12% with a maximum limit of Argentine pesos (ARS) 4 per each U.S. dollar of the amount arising from the invoice or equivalent document.

On December 28, 2019, Decree 99/2019 was published in the Official Gazette to extend the application of duties on export of services until December 31, 2021 with a rate of 5% without limit. The new rate is in force from January 1, 2020.

A service is deemed “exported” when it is rendered in Argentina but it is effectively used or exploited off shore. Such utilization or exploitation is effective upon the first utilization or act of disposal of the service by the recipient even when, if appropriate, the latter intends such service for consumption.

If additional increases of the current rates for export duties were imposed on the export of services, the results of our operations could be adversely affected.

Changes in Argentine tax laws may adversely affect the results of our operations, financial condition and cash flows.

In 2012, the Argentine government terminated its treaties with Spain for the avoidance of double taxation. As a result, the exemption from personal assets tax that was available pursuant to such treaty for equity interests in local companies owned by Spanish residents no longer applies. The new double taxation treaty with Spain, which was adopted on December 23, 2013 and applied retroactively from January 1, 2013, does not include a similar exemption. Under the new treaty, and subject to the conditions set forth therein, the tax applicable on dividends distributed by our Argentine subsidiaries to our Spanish subsidiaries is limited to 10% of the gross amount of dividends distributed, and income tax withholding on financial interest is limited to 12%.

On December 29, 2017, the Argentine government enacted Law No. 27,430, which reduced the corporate income tax rate from 35% to 30% for fiscal years beginning on or after January 1, 2018 and 25% for fiscal years beginning on or after January 1, 2020. Additionally, the distribution of dividends is subject to a 7% tax rate related to financial results from fiscal years beginning on or after January 1, 2018 and 13% tax rate for the distribution of dividends related to financial results from fiscal years beginning on or after January 1, 2020.

On December 23, 2019, the Argentine Government enacted the Ley de Solidaridad Social y Reactivación Productiva No. 27,541 (the "Law on Social Solidarity and Productive Reactivation " or the "Social Solidarity Law") which declared a public emergency in economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters, and also delegated legislative powers to the National Executive Power, until December 31, 2020. According to the Social Solidarity Law, the corporate income and dividend tax rates for tax years commencing on or after January 1, 2020 through December 31, 2020 are 30% and 7%, respectively. Consequently, the effectiveness of the 25% and 13% tax rates have been delayed until tax years commencing after December 31, 2020.

The Social Solidarity Law also introduced amendments to the income tax, personal assets tax, excise tax on certain goods, tax on debits and credits in local bank accounts and social security rules. It also established a new tax on certain purchases of foreign currency, a new tax debt settlement plan for certain taxpayers, and established new rates on exports of goods and services.

Argentine companies are required to pay the personal assets tax corresponding to Argentine resident individuals, foreign individuals and foreign entities for holding equity interests in such companies as of December 31 of each year. The applicable tax rate until 2018 was 0.25% and the tax is levied on the equity stated in the latest financial statements.

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Under the Social Solidarity Law, the tax rate applicable to shares or participations in the capital of companies governed by the Argentine General Companies Law was increased from 0.25% to 0.50% of the pro-rata equity value.

We cannot assure that the Argentine government or any of its political divisions will not adopt additional changes and reforms in tax matters, nor that these reforms and those that may be adopted in the future will not adversely affect our business, results of operations or financial condition.

Exposure to multiple provincial and municipal legislation and regulations could adversely affect our business or results of operations.

Argentina is a federal country with 23 provinces and one autonomous city (City of Buenos Aires), each of which, under the Argentine national constitution, has full power to enact legislation concerning taxes and other matters. Likewise, within each province, municipal governments have broad powers to regulate such matters. Due to the fact that our delivery centers are located in multiple provinces, we are also subject to multiple provincial and municipal legislation and regulations. Although we have not experienced any material adverse effects from this, future developments in provincial and municipal legislation concerning taxes, provincial regulations or other matters may adversely affect our business or results of operations.

Colombia

Colombia has experienced several periods of internal security issues that could affect the economy and impact our business, and our results from operations.

Colombia has suffered from periods of criminal violence over the past four decades, primarily due to the activities of guerrilla groups such as the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia) (“FARC”), paramilitary groups and drug cartels and criminal bands known as Bacrim. In regions of the country with limited governmental presence, these groups have exerted influence over the local population and funded their activities by protecting and rendering services to drug traffickers. In response, the Colombian government has implemented various security measures and has strengthened its military and police forces by creating specialized units. The Colombian government and the FARC signed a peace agreement on September 26, 2016, which was amended by the Colombian Congress on November 30, 2016 and is currently being implemented after four years of negotiation. As a result, during the transition process, Colombia may experience internal security issues, and drug-related crime and guerilla, and paramilitary activities, which may have a negative impact on the Colombian economy. In addition, the peace agreement reached with the FARC may be modified by current or future governments, including President Duque’s administration. Although the Colombian Congress has approved certain regulations implementing the final peace agreement, including laws governing the Special Peace Justice System (Jurisdicción Especial para la Paz), laws enacted by the Colombia Congress in this regard may differ from the provisions of the peace agreement. If there are deviations from the peace agreement, there can be no assurance that criminal actions will not escalate in Colombia.

Pursuant to the peace agreements negotiated between FARC and the Colombian government, FARC occupies five seats in the Colombian Senate and five seats in the Colombian House of Representatives. We cannot predict which policies will be adopted by the Colombian government and whether the policies would have a negative impact on the Colombian economy or our business, financial condition and results of operations.

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Despite efforts by the Colombian government, drug-related crime, guerrilla paramilitary activity and criminal bands continue to exist in Colombia, and allegations have surfaced regarding members of the Colombian congress and other government officials having ties to guerilla and paramilitary groups. Although the Colombian government and the National Liberation Army (“ELN”) have been in talks since February 2017 to end a five-decade war, the Colombian government has suspended the negotiations after a series of rebel attacks and, in 2019, a minority group of dissidents of the peace process with FARC announced their return to illegal activities. Any possible escalation in the violence associated with this terrorist attack and/or these activities may have a negative impact on the Colombian economy. Our business or financial condition could be adversely effected by the rapidly changing economic or social conditions related to such circumstances, including the Colombian government's ability to implement the peace agreement with the FARC. Such changes could include the passing of legislation that could increase our tax burden and impact the overall Colombian economy.

Any further downgrade in the credit rating of Colombia could adversely affect the Colombian economy.

The outlook of Colombia’s credit rating was changed to negative by Standard & Poor’s Financial Services LLC (“S&P”) and Fitch Ratings (“Fitch”) in 2016 and by Moody’s Corporation (“Moody’s”) in February 2018. In December 2017, S&P downgraded the rating of Colombia’s long-term foreign currency sovereign credit ratings on Colombia from “BBB” to “BBB-.” Additionally, on February 22, 2018 Moody’s changed Colombia’s rating outlook from stable to negative. Currently, Colombia’s long-term debt denominated in foreign currency is rated “Baa2” by Moody’s, “BBB-” by S&P and “BBB” by Fitch. Any further downgrade of Colombia’s credit rating could adversely affect the Colombian economy and our results of operations. We cannot assure as to whether there will be further deterioration of the Colombian economy particularly due to the fiscal deficit and Colombia’s public debt. If the condition of the Colombian economy were to deteriorate, we would likely be adversely affected.

Any additional taxes resulting from changes to tax regulations or the interpretation thereof could adversely affect our consolidated results.

Colombia underwent tax reforms in 2019, 2018, 2016 and 2014.In October 2019, the Colombian Constitutional Cort held that the 2018 tax reform enacted by the Colombian Congress was unconstitutional because of procedural flaws in Congress’s approval process. The 2018 tax reform governed the 2019 taxable year but ceased as of January 1, 2020. Nonetheless, the tax rules introduced by the 2018 tax reform (and repealed by the Constitutional Court) were reinstated by Congress in a new 2019 tax reform.

The 2019 tax reform was published and approved on December 27, 2019 and is intended to replicate the provisions that were introduced by the 2018 tax reform, with some minor modifications. As a result, income tax withholding rates resulting from payments made to foreign entities remains at a general rate of 20%, except for foreign indebtedness exceeding one year, where the applicable income tax withholding remains at 15%. Dividends paid to foreign shareholders (individuals or corporations) paid out of profits that were subject to corporate income tax became subject to a withholding tax of 10% (resulting in an increase of 2.5% from 7.5% introduced by the 2018 tax reform) and dividends paid out of profits that were not subject to corporate income tax became subject to a withholding tax of 32% for 2020, with a progressive reduction of the tax rate by 1% for each upcoming year, until 2020 (in which year the tax rate is stabilized in 30%) plus the foregoing 10%, which applies to the balance after the withholding is applied.

The 2019 tax reform introduced a new equity tax applicable to: (i) Colombian resident individuals (ii) non-resident individuals on their Colombian assets, (iii) non-distributed inheritance of non-residents and (iv) foreign non-resident entities owning assets in Colombia different from shares, account receivables and portfolio investments; whose net equity in Colombia as of January 1, 2020 is COP $5,000 million or higher. The equity tax would be triggered in January 1, 2020, and 2021 at rate of 1%.

We cannot assure you that Colombian tax laws will not change or may be interpreted differently by authorities, and any change could result in the imposition of additional taxes. Additional tax regulations could negatively affect our results of operations and cash flow. In addition, national or local taxing authorities may not interpret tax regulations in the same way that we do. Differing interpretations could result in future tax litigation and associated costs.

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The Colombian government and the Colombian central bank exercise significant influence on the Colombian economy, which could have an impact on our business, financial condition and results of operations.

The Colombian government and the Colombian central bank could intervene in Colombia’s economy and make changes in monetary, fiscal and regulatory policy, which could result in currency devaluation and the changes in international reserves.

Although the Colombian government has not imposed foreign exchange restrictions since 1990, Colombia’s foreign currency markets have historically been extremely regulated. Colombian law permits the Colombian central bank to impose foreign exchange controls to regulate the remittance of dividends and/or foreign investments in the event that the foreign currency reserves of the Colombian central bank fall below a level equal to the value of three months of imports of goods and services into Colombia. An intervention that precludes us from possessing, utilizing or remitting dollars would impair our financial condition and results of operations.

The Colombian government has considerable power to shape the Colombian economy and, consequently, affect the operations and financial performance of businesses. The Colombian government may seek to implement new policies aimed at controlling further fluctuation of the Colombian peso against the U.S. dollar and fostering domestic price stability. The president of Colombia has considerable power to determine governmental policies and actions relating to the economy and may adopt policies that are inconsistent with those of the prior government or that negatively affect us.

If the United States imposes sanctions on Colombia in the future, our business may be adversely affected.

Colombia is among several nations whose eligibility to receive foreign aid from the United States is dependent on its progress in stemming the production and transit of illegal drugs, which is subject to an annual review. Although Colombia is currently eligible for such aid, Colombia may not remain eligible in the future. A finding by the United States that Colombia has failed demonstrably to meet its obligations under international counter-narcotic agreements may result in the imposition of economic and trade sanctions on Colombia which could result in adverse economic consequences in Colombia and could further heighten the political and economic risks associated with our operations there.

Risks Related to the Company and the Ownership of Our Common Shares

The price of our common shares may be highly volatile.

The market price of our common shares may be volatile and may be influenced by many factors, some of which are beyond our control, including:

| • | the failure of financial analysts to cover our common shares or changes in financial estimates by analysts;

| • | actual or anticipated variations in our operating results;

| • | changes in financial estimates by financial analysts, or any failure by us to meet or exceed any of these estimates, or changes in the recommendations of any financial analysts that elect to follow our common shares or the shares of our competitors;

| • | announcements by us or our competitors of significant contracts or acquisitions;

| • | future sales of our common shares; and

| • | investor perceptions of us and the industries in which we operate.

In addition, the equity markets in general have experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of certain companies' securities, securities class action litigation has been instituted against these companies. This litigation, if instituted against us, could adversely affect our financial condition or results of operations.

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Holders of our common shares may experience losses due to increased volatility in the U.S. capital markets.

The U.S. capital markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance or results of operations of those companies. These broad market fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, as well as volatility in international capital markets, may cause the market price of our common shares to decline.

In addition, downgrades to the U.S. government's sovereign credit rating by any rating agency, as well as negative changes to the perceived creditworthiness of U.S. government-related obligations, could have a material adverse impact on financial markets and economic conditions in the United States and worldwide. Any volatility in the capital markets in the United States or in other developed countries, whether resulting from a downgrade of the sovereign credit rating of U.S. debt obligations or otherwise, may have an adverse effect on the price of our common shares.

We may be classified by the Internal Revenue Service as a "passive foreign investment company" (a "PFIC"), which may result in adverse tax consequences for U.S. investors.

We believe that we will not be a PFIC for U.S. federal income tax purposes for our current taxable year and do not expect to become one in the foreseeable future. However, because PFIC status depends upon the composition of our income and assets and the market value of our assets (including, among others, less than 25% owned equity investments) from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year. Because we have valued goodwill based on the market value of our equity for purposes of taxation, a decrease in the price of our common shares may also result in us becoming a PFIC. The composition of our income and our assets will also be affected by how, and how quickly, we spend the cash. Under circumstances where the cash is not deployed for active purposes, our risk of becoming a PFIC may increase. If we were treated as a PFIC for any taxable year during which a U.S. investor held common shares, certain adverse tax consequences could apply to such U.S. investor. See "Additional Information — Taxation — U.S. Federal Income Tax Considerations — Passive foreign investment company rules."

We may need additional capital and we may not be able to obtain it.

We believe that our existing cash and cash equivalents and cash flows from operations, including the cash available under our revolving line of credit, will be sufficient to meet our anticipated cash needs for at least the next 12 months. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain another credit facility or expand the existing one. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to additional operating and financing covenants that would restrict our operations.

Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

| • | investors' perception of, and demand for, securities of technology services companies;

| • | conditions of the U.S. capital markets and other capital markets in which we may seek to raise funds;

| • | our future results of operations and financial condition;

| • | government regulation of foreign investment in the United States, Europe, and Latin America; and

| • | global economic, political and other conditions in jurisdictions in which we do business.

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Concentration of ownership among our existing executive officers, directors and principal shareholders may prevent new investors from influencing significant corporate decisions or adversely affect the trading price of our common shares.

As of February 13, 2020, our directors and executive officers, entities affiliated with them and greater than 5% shareholders, beneficially own an aggregate of approximately 25.22% of our outstanding common shares, of which 0.76% represents common shares subject to options that currently are exercisable or will be exercisable within 60 days of February 13, 2020 as well as common shares issuable upon settlement of restricted stock units that have vested or will vest within 60 days of February 13, 2020 . As a result, these shareholders may exercise significant influence over matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, and may have significant influence over our management and policies. This concentration of influence could be disadvantageous to other shareholders with interests different from those of our officers, directors and principal shareholders. For example, our officers, directors and principal shareholders could delay or prevent an acquisition or merger even if the transaction would benefit other shareholders. In addition, this concentration of share ownership may adversely affect the trading price of our common shares because investors often perceive disadvantages in owning shares in companies with principal shareholders.

Our business and results of operations may be adversely affected by the increased strain on our resources from complying with the reporting, disclosure, and other requirements applicable to public companies in the United States.

Compliance with existing, new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance. Changing laws, regulations and standards include those relating to accounting, corporate governance and public disclosure; these include but are not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Sarbanes-Oxley Act of 2002, new SEC regulations and NYSE listing guidelines that result out of the NYSE listing. These laws, regulations and guidelines may lack specificity and are subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. In particular, our efforts to comply with certain sections of Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") and the related regulations regarding required assessment of internal controls over financial reporting and our external auditor's audit of that assessment requires the commitment of significant financial and managerial resources. Testing and maintaining internal controls can divert our management's attention from other matters that are important to the operation of our business. We also expect the regulations to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time consuming and costly.

Existing, new and changing corporate governance and public disclosure requirements could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards. Our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In addition, new laws, regulations and standards regarding corporate governance may make it more difficult for our company to obtain director and officer liability insurance. Further, our board members and senior management could face an increased risk of personal liability in connection with their performance of duties. As a result, we may face difficulties attracting and retaining qualified board members and senior management, which could harm our business. If we fail to comply with new or changed laws or regulations and standards differ, our business and reputation may be harmed.

Failure to establish and maintain effective internal controls in accordance with Section 404 could have a material adverse effect on our business and common share price.

As a public company, we are required to document and test our internal control procedures in order to satisfy the requirements of Section 404, which will require management assessments and certifications of the effectiveness of our internal control over financial reporting. During the course of our testing, we may identify deficiencies that we may not be able to remedy in time to meet our deadline for compliance with Section 404. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. In addition, our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting but may not be able or willing to issue an unqualified report. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of remediation actions and testing or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy.

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If we are unable to conclude that we have effective internal control over financial reporting, our independent auditors are unable to provide us with an unqualified report as required by Section 404, or we are required to restate our financial statements, we may fail to meet our public reporting obligations and investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our common shares.

Our exemption as a "foreign private issuer" from certain rules under the U.S. securities laws may result in less information about us being available to investors than for U.S. companies, which may result in our common shares being less attractive to investors.

As a "foreign private issuer" in the United States, we are exempt from certain rules under the U.S. securities laws and are permitted to file less information with the SEC than U.S. companies. As a "foreign private issuer," we are exempt from certain rules under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our common shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as companies that are not foreign private issuers whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information. As a result, our shareholders may not have access to information they may deem important, which may result in our common shares being less attractive to investors.

We do not plan to declare dividends, and our ability to do so will be affected by restrictions under Luxembourg law.

We have not declared dividends in the past and do not anticipate paying any dividends on our common shares in the foreseeable future. In addition, both our articles of association and the Luxembourg law of August 10, 1915 on commercial companies as amended (loi du 10 août 1915 sur les sociétés commerciales telle que modifiée) (the "Luxembourg Companies Law") require a general meeting of shareholders to approve any dividend distribution except as set forth below.

Our ability to declare dividends under Luxembourg law is subject to the availability of distributable earnings or available reserves, including share premium. Moreover, if we declare dividends in the future, we may not be able to pay them more frequently than annually. As permitted by Luxembourg Companies Law and subject to the provisions thereof, our articles of association authorize the declaration of dividends more frequently than annually by our board of directors in the form of interim dividends so long as the amount of such interim dividends does not exceed total net income made since the end of the last financial year for which the standalone annual accounts have been approved, plus any net income carried forward and sums drawn from reserves available for this purpose, less the aggregate of the prior year's accumulated losses, the amounts to be set aside for the reserves required by law or by our articles of association for the prior year, and the estimated tax due on such earnings.

We depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make dividend payments, which they may not be able to do.

Our subsidiaries conduct all of our operations. We have no relevant assets other than the equity interests in our subsidiaries. As a result, our ability to make dividend payments depends on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by covenants in our or their financing agreements or by the law of their respective jurisdictions of incorporation. If we are unable to obtain funds from our subsidiaries, we will be unable to distribute dividends. We do not intend to seek to obtain funds from other sources to pay dividends. See "— Risks Related to Operating in Latin America — Argentina — The imposition in the future of restrictions on transfers of foreign currency and the repatriation of capital from Argentina may impair our ability to receive dividends and distributions from, and the proceeds of any sale of, our assets in Argentina."

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Our shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. corporation, which could adversely impact trading in our common shares and our ability to conduct equity financings.

Our corporate affairs are governed by our articles of association and the laws of Luxembourg, including the laws governing joint stock companies. The rights of our shareholders and the responsibilities of our directors and officers under Luxembourg law are different from those applicable to a corporation incorporated in the United States. There may be less publicly available information about us than is regularly published by or about U.S. issuers. In addition, Luxembourg law governing the securities of Luxembourg companies may not be as extensive as those in effect in the United States, and Luxembourg law and regulations in respect of corporate governance matters might not be as protective of minority shareholders as state corporation laws in the United States. Therefore, our shareholders may have more difficulty in protecting their interests in connection with actions taken by our directors and officers or our principal shareholders than they would as shareholders of a corporation incorporated in the United States.

Neither our articles of association nor Luxembourg law provides for appraisal rights for dissenting shareholders in certain extraordinary corporate transactions that may otherwise be available to shareholders under certain U.S. state laws. As a result of these differences, our shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. issuer.

Holders of our common shares may not be able to exercise their pre-emptive subscription rights and may suffer dilution of their shareholding in the event of future common share issuances.

Under Luxembourg Companies Law, our shareholders benefit from a pre-emptive subscription right on the issuance of common shares for cash consideration. However, in accordance with Luxembourg law, our articles of association authorize our board of directors to suppress, waive or limit any pre-emptive subscription rights of shareholders provided by Luxembourg law to the extent our board deems such suppression, waiver or limitation advisable for any issuance or issuances of common shares within the scope of our authorized share capital. Such common shares may be issued above, at or below market value as well as by way of incorporation of available reserves (including a premium). This authorization is valid from the date of the publication in the Luxembourg's official gazette (Recueil Electronique des Sociétés et Associations) of the decision of the extraordinary general meeting of shareholders held on May 8, 2017, which publication occurred on May 19, 2017, and ends on May 19, 2022. In addition, a shareholder may not be able to exercise the shareholder's pre-emptive right on a timely basis or at all, unless the shareholder complies with Luxembourg Companies Law and applicable laws in the jurisdiction in which the shareholder is resident, particularly in the United States. As a result, the shareholding of such shareholders may be materially diluted in the event common shares are issued in the future. Moreover, in the case of an increase in capital by a contribution in kind, no pre-emptive rights of the existing shareholders exist.

We are organized under the laws of the Grand Duchy of Luxembourg and it may be difficult for you to obtain or enforce judgments or bring original actions against us or our executive officers and directors in the United States.

We are organized under the laws of the Grand Duchy of Luxembourg. The majority of our assets are located outside the United States. Furthermore, the majority of our directors and officers and some experts named in this annual report reside outside the United States and a substantial portion of their assets are located outside the United States. Investors may not be able to effect service of process within the United States upon us or these persons or to enforce judgments obtained against us or these persons in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for an investor to bring an original action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons. Furthermore, Luxembourg law does not recognize a shareholder's right to bring a derivative action on behalf of the company except in limited cases.

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As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the United States and the Grand Duchy of Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. A valid judgment in civil or commercial matters obtained from a court of competent jurisdiction in the United States may be entered and enforced through a court of competent jurisdiction in Luxembourg, subject to compliance with the enforcement procedures (exequatur). The enforceability in Luxembourg courts of judgments rendered by U.S. courts will be subject prior any enforcement in Luxembourg to the procedure and the conditions set forth in the Luxembourg procedural code, which conditions may include the following as of the date of this annual report (which may change):

| • | the judgment of the U.S. court is final and enforceable (exécutoire) in the United States;

| • | the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules);

| • | the U.S. court has applied to the dispute the substantive law that would have been applied by Luxembourg courts;

| • | the judgment was granted following proceedings where the counterparty had the opportunity to appear and, if it appeared, to present a defense, and the decision of the foreign court must not have been obtained by fraud, but in compliance with the rights of the defendant;

| • | the U.S. court has acted in accordance with its own procedural laws;

| • | the judgment of the U.S. court does not contravene Luxembourg international public policy; and

| • | the U.S. court proceedings were not of a criminal or tax nature.

Under our articles of association and also pursuant to separate indemnification agreements, we indemnify our directors for and hold them harmless against all claims, actions, suits or proceedings brought against them, subject to limited exceptions. The rights and obligations among or between us and any of our current or former directors and officers are generally governed by the laws of the Grand Duchy of Luxembourg and subject to the jurisdiction of the Luxembourg courts, unless such rights or obligations do not relate to or arise out of their capacities listed above. Although there is doubt as to whether U.S. courts would enforce such provision in an action brought in the United States under U.S. federal or state securities laws, such provision could make enforcing judgments obtained outside Luxembourg more difficult to enforce against our assets in Luxembourg or jurisdictions that would apply Luxembourg law.

Luxembourg insolvency laws may offer our shareholders less protection than they would have under U.S. insolvency laws.

As a company organized under the laws of the Grand Duchy of Luxembourg and with its registered office in Luxembourg, we are subject to Luxembourg insolvency laws in the event any insolvency proceedings are initiated against us including, among other things, Regulation (EU) No. 2015/848 of the European Parliament and the Council of May 20, 2015 on insolvency proceedings (recast). Should courts in another European country determine that the insolvency laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could have jurisdiction over the insolvency proceedings initiated against us. Insolvency laws in Luxembourg or the relevant other European country, if any, may offer our shareholders less protection than they would have under U.S. insolvency laws and make it more difficult for them to recover the amount they could expect to recover in a liquidation under U.S. insolvency laws.

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ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Globant is a Luxembourg société anonyme (a joint stock company). The company's legal name is "Globant S.A." We were founded in 2003 by Martín Migoya, our Chairman and Chief Executive Officer, Guibert Englebienne, our Chief Technology Officer, Martín Umaran, our Chief of Staff, and Nestor Nocetti, our Executive Vice President of Corporate Affairs. Our founders' vision was to create a company, starting in Latin America that would dream and build digital journeys that matter to millions of users, while also generating world-class career opportunities for IT professionals, not just in metropolitan areas but also in outlying cities and countries.

Since our inception, we have benefited from strong organic growth and have built a blue chip client base comprised of leading global companies. Over that same period, we have expanded our network of locations from one to 56. In addition, we have garnered several awards and recognition from organizations such as Endeavor, the IDC MarketScape, Global Services, the International Association of Outsourcing Professionals, and Fast Company, and we have been the subject of business-school case studies on entrepreneurship at the Massachusetts Institute of Technology, Harvard University and Stanford University in conjunction with the World Economic Forum.

In 2006, we started working with Google. We were chosen due to our cultural affinity and innovation. While our growth has primarily been organic, since 2008 we have made eighteen complementary acquisitions. Our acquisition strategy is focused on deepening our relationship with key clients, extending our technology capabilities, broadening our service offering and expanding the geographic footprint of our delivery centers, including beyond Latin America.

In 2008, we acquired Accendra, a Buenos Aires-based provider of software development services, in order to deepen our relationship with Microsoft and broaden our technology expertise to include Sharepoint and other Microsoft technologies. That same year we also acquired Openware, a company specializing in security management based in Rosario, Argentina.

In 2011, we acquired Nextive. The Nextive acquisition expanded our geographic presence in the United States and enhanced our U.S. engagement and delivery management team as well as our ability to provide comprehensive solutions in mobile technologies.

In 2012, we acquired TerraForum, an innovation consulting and software development firm in Brazil. The acquisition of TerraForum allowed us to expand into Brazil, one of the largest economies in the world.

In August 2013, we acquired 22.75% of Dynaflows S.A. In October 2015, we obtained the control over Dynaflows through acquiring an additional number of shares, and in October 2018, we completed the acquisition of the company by acquiring the remaining minority stake. This acquisition allowed us to broaden our Services over Platforms strategy.

In October 2013, we acquired a majority stake in the Huddle Group, a company specializing in the media and entertainment industries, with operations in Argentina, Chile and the United States. We acquired the remaining 13.75% minority stake in Huddle Investment in October 2014.

In July 2014, we closed the initial public offering of our common shares in the United States.

In October 2014, we acquired BlueStar Holdings. Through this acquisition, we commenced our operations in Perú.

In April 2015, we closed a follow-on secondary offering of our common shares in the United States through which certain selling shareholders sold 3,994,390 common shares previously held by them. In July 2015, we closed another follow-on secondary offering in the United States through which certain selling shareholders sold 4,025,000 common shares previously held by them.

In May 2015, we acquired Clarice which allowed us to establish our presence in India.

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Also, in 2015, we launched new Studios to complement our offerings, including one focused on Cognitive Computing, and we incorporated a complementary approach to build digital journeys fast and in an innovative manner though: our service-over-platform offering.

During 2016, we introduced a new model that intends to reshape our go-to-market strategy to scale our company in the coming years, called 50 Squared. The main goal of this new approach is to focus our team in the top 50 high potential accounts that have the capacity to grow exponentially over time. To do so, we appointed our most senior people from Sales, Technology and Operations to lead these teams and take our company to the next level. This account focus has become the most important pillar of our go-to-market strategy and every account within Globant now has the goal to become part of this program.

In May 2016, we acquired We Are London Limited ("WAE UK") and We Are Experience, Inc. ("WAE US") (jointly, WAE UK and WAE US are "WAE"). The purpose of these acquisitions was related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of WAE.

In November 2016, we entered into a stock purchase agreement with 3Cinteractive corp. ("3C") to purchase the 100% of the capital stock of its wholly owned subsidiary, Difier, an Uruguayan company. At the same time, we signed a consulting services agreement to provide software development services to 3C for a term of four years.

During the same month, we acquired L4 Mobile, LLC. The purpose of this acquisition was related to strengthening our leading position in the digital services space and expanding our capabilities in the United States.

In February 2017, we acquired Ratio Cypress, LLC, a limited liability company organized and existing under the laws of the State of Washington in the United States. Ratio offers design, development and quality assurance services necessary to build and manage robust digital products and video streaming solutions for major media companies.

In June 2017, we acquired PointSource, a design and development technology agency, based in Raleigh, North Carolina, and Chicago. The purpose of this acquisition was related to the benefit of expected synergies, revenue growth and expanding our capabilities in the United States. As part of this transaction, we acquired an option to purchase PointSource LLC, a company incorporated in Belarus. In February 2018, after exercising our option, we commenced operations in Belarus.

In June 2018, we closed a secondary offering in the United States of 6,687,548 of our common shares held by WPP Luxembourg Gamma Three S.àr.l. ("WPP").

In October, 2018, we signed an asset purchase agreement to acquire, the business of Small Footprint Inc., a corporation organized and existing under the laws of North Carolina, United States, including the acquisition of its wholly owned subsidiary in Romania, Small Footprint, LLC. The purpose of this acquisition was to deepen our expansion into Eastern Europe while also improving our onsite capacity in the United States.

During 2018 we launched new Studios to complement our offerings, including one focused on Cybersecurity and another on Over-the-Top, and we also launched StarMeUp OS as a part of our Services-Over-Platform strategy. StarMeUp OS is an operating system made up of smart applications built to help organizations with digital transformation from the inside out.

In February 2019, we closed the acquisition of Avanxo (Bermuda) Limited ("Avanxo"), a cloud consulting and implementation company headquartered in Bermuda, with operations in Brazil, Mexico, Colombia, Peru, Argentina and the United States. The purpose of this acquisition was to expand our cloud implementation solutions and bring Globant's native digital culture to corporate process optimization.

In August 2019, we acquired Belatrix Global Corporation S.A., a leading agile product development company with presence in Peru, Colombia, Spain, the United States and Argentina. Their customer portfolio reinforces our 50-squared approach, delivering strategic digital transformation to some of the largest organizations worldwide and it also strengthens our broad expertise in industries like finance, payment, insurance, health care and retail.

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In September 2019, the Business Hacking Studio was launched. This Studio seeks non-traditional ways to optimize business value based on metrics of success, improving cost efficiency and uncovering new revenue streams. Business Hacking brings a new approach to Globant and is expected to represent a fundamental part of our service offering.

In November 2019, we signed an asset purchase agreement to acquire the business of BI Live, a company focused on implementing Business Intelligence solutions using SAP technologies, accelerating innovation through three main areas: Making SAP ease to consume, unleashing the value of SAP data and enabling Cloud ready SAP systems.

Corporate Information

Our principal executive office is located at 37A Avenue J.F. Kennedy L-1855, Luxembourg and our telephone number is + 352 20 30 15 96. We maintain a website at http://www.globant.com. Our website and the information accessible through it are not incorporated into this annual report.

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B. Business overview

Overview

We are a disruptor in the professional services arena. We leverage the latest technologies and methodologies in the digital and cognitive space to help organizations transform in every aspect. We create software products that emotionally connect our customers with millions of consumers and employees, and we work with them to improve their efficiency. Our principal operating subsidiaries are located in Argentina, Mexico, Colombia and India. For the year ended December 31, 2019, 75.3% of our revenues were generated by clients in North America, 16.9% in Latin America, 0.7% in Asia and 7.1% in Europe, including many leading global companies.

Digital and cognitive transformations require completely different approaches than traditional IT projects. These transformations represent the reinvention and evolution of professional services organizations. Through Artificial Intelligence, we are refining the digital transformation process by focusing on a new approach to generating real business impact. We base our growth and differentiation around a podular and autonomous company structure that supports innovation. Moreover, technology savvy teams, entrepreneurship and agility drive efficiency to our customers throughout digital and cognitive evolution. We differentiate ourselves from our competitors as follows:

| • | We are a pure play in the digital and cognitive fields

| • | We have global presence with delivery centers in North America, Latin America, Europe and Asia.

| • | We offer deep knowledge of the latest trends and technologies.

Our Globers are our most valuable asset. As of December 31, 2019, we had 11,855 Globers and 56 locations across 37 cities in Latin America, Asia, Europe and North America, throughout 16 countries, supported by six client management locations in the United States, and one client management location in each of United Kingdom, France, Colombia, Uruguay, Argentina and Brazil. Our reputation for cutting-edge work for global blue chip clients and our footprint across the world provide us with the ability to attract and retain well-educated and talented professionals. We are culturally similar to our clients and we function in multiple time zones. We believe that these characteristics have helped us build solid relationships with our clients in the United States, Latin America and Europe and facilitate a high degree of client collaboration.

Our clients include companies such as Google, Electronic Arts, Southwest Airlines Co. and Walt Disney Parks and Resorts Online, each of which was among our top ten clients in the year ended December 31, 2019. 85.9% of our revenues for the year ending December 31, 2019 came from existing clients who used our services in the prior year. We believe our success in building our attractive client base in the most sophisticated and competitive markets for IT services demonstrates the superior value proposition of our offering and the quality of our execution as well as our culture of innovation and entrepreneurial spirit.

Our revenues increased from $413.4 million for 2017 to $659.3 million for 2019, representing a Compound Annual Growth Rate ("CAGR") of 26.3% over the two-year period. Our revenues for 2019 increased by 26.2% to $659.3 million, from $522.3 million for 2018. Our net income for 2019 was $54.0 million, compared to a net income of $51.6 million for 2018. The $2.4 million increase in net income from 2018 to 2019 was primarily driven by strong revenue growth. In 2017, 2018 and 2019, we made several acquisitions to enhance our strategic capabilities, none of which contributed a material amount to our revenues in the year the acquisition was made. See "Information on the Company — History and Development of the Company."

Our Industry

We are experiencing an amazing moment for technology. In which we have two massive and disruptive technological revolutions occurring simultaneously. The digital and the cognitive revolutions are affecting how companies connect with consumers and employees as well as providing opportunities to make huge gains in efficiency.

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Today's users move fast and are keen to interact with their digital ecosystem anywhere and anytime, in a painless, fast, relevant, smart and restriction-free way. They demand personalized, seamless and frictionless experiences that will simplify their lives. We are also facing an abundance of demand for more intelligent and human-like behavior and technology on the market. These revolutions are leveraging new technologies that did not exist or were not mature enough until a few years ago, such as AI, UX, Internet of Things, Mobile, Cloud Computing and virtual reality "VR".

According to IDC, it is expected that by 2022, more than 60% of global GDP may be digitized, with growth in every industry driven by digitally enhanced offerings, operations, and relationships and, from 2019 through 2022, almost $7 trillion will be spent on information technology. We are a pure play in the digital space.

Technologies that support this new digital and cognitive era are also experiencing increased demand:

| • | According to Tractica, artificial intelligence revenue is expected to grow at a 60% CAGR by 2025.

| • | According to Mordor Intelligence, the virtual reality market is expected to reach $80 billion to $90 billion by 2023.

| • | According to Digi-Capital, mobile augmented reality is expected to drive a $108 billion VR/AR market by 2021.

Tech Trends

| • | Immersive Reality - Interactive simulation dimension is well-advanced in gaming, media & entertainment, retail, therapies, and training, and companies are experimenting with creating engaging experiences with intuitive interactions. They are using laser-based volumetric displays of holographic images, along with sensors and cameras. It is expected that immersive reality will eventually give way to screenless interactions. TechCrunch estimates that the immersive technology sector will represent $108 billion in 2021.

| • | Smarter Assistance - Technologies like natural language programming, natural language generation, computer vision, and invisible computing are individually enabling businesses and their customers to complete tasks by voice interactions and movement recognition. With speech and image recognition, chatbots, and invisible machine learning operate in unison, as part of a smart assistance ecosystem designed to seamlessly assist users in their daily lives. The market size of voice assistant applications is expected to grow from $1.3 billion in 2019 to $5.2 billion by 2024, at a 31.9% CAGR during that period, according to a report by MarketsandMarkets.

| • | Context-Aware Computing - Context-aware computing is the use of artificial intelligence to create systems that work in customized ways based on the context of user activities. With volumes of diverse and low-level data available through device interactions, context-aware computing considers communications and situations in order to respond accordingly. The context-aware computing market is expected to reach a value of $158 billion by 2024, at a30.0% CAGR over 2019-2024, according to a report by MarketWatch.

| • | Self-Adaptive Security - Self-adaptive security is a dynamic system that is intelligent and intuitive in its approach to combat cyber attacks. The platform works on machine learning powered security information and event management technologies, backed by prescriptive analytics. The adaptive security market was valued at $4.78 billion and anticipates to grow at a 15% CAGR between 2019 and 2024, according to a report by Research and Markets.

| • | Blockchain - Blockchain solutions have been embraced across various industries over the past few years. Blockchain’s sophistication is expected to dramatically improve how organizations operate digitally, and major players are building their future web services with blockchain. In 2019, we expect that, companies will focus on pushing forward blockchain investments and driving returns on such investments. The global blockchain market size was valued at $1.6 billion in 2018 and is expected to grow at a CAGR of 69.4% from 2019 to 2025, according to a report by MarketsandMarkets.

| • | Quantum Computing - Quantum computing is the use of computing of quantum-mechanical phenomena such as superposition and entanglement to perform computation. A quantum computer is used to perform such computation, which can be implemented theoretically or physically. By the end of 2025, more than $23 billion in revenue is anticipated to be realized through the adoption of quantum computing across the globe. During this decade forecasted period, the global market for quantum computing is expected to expand exponentially at a stellar CAGR of 30.9%, according to Persistence Market Research.

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| • | 5G - It is critical that data transfer capabilities keep pace with computing capabilities. 5G is the latest generation of cellular mobile communications. We expect that 5G will ensure the connectivity and transfer of data seamlessly and speedily for machine-to-machine communication (IoT grid and analytical/AI platform) and provide scaling possibilities in the mobile network. According to a report from MarketsandMarkets, the 5G infrastructure market is expected to be worth $2.86 billion by 2020 and $33.72 billion by 2026, growing at a CAGR of 50.9%.

| • | Cloud Technologies - With a surge in collected data and the need to power AI and machine learning ("ML") processes, cloud computing is the preferred method for organizations to digitize their business completely. Companies are leveraging cloud technologies to transform their internal IT departments and build a business-ready IT that is able to streamline development lifecycle and reduce time to market, as well as transform organizational culture by disbanding silos. In the future, we expect cloud computing to serve as a software building platform rather than only server provisioning. Enterprises seeking to bring digital transformation into their internal applications without replacing them will refactor their core applications using cloud native technologies like containers. Others will be bolder and seek core SaaS based multi-cloud technologies with new developing tools, integration and deployment options. According to Forrester, nearly 60% of North American enterprises today rely on public cloud platforms.

Market Trends

Across all industries, we have observed a trend to smarter digital systems that embrace the latest technology and optimize customer experiences as well as their internal processes. Companies are seeking to transform their business as new users and requirements arise. At the same time, we see that many organizations try to transform themselves internally, cemented through effective change management.

For many companies, however, it becomes difficult to build a digitally-native culture from scratch or change the status quo of existing IT departments. It is hard to be successful using old practices to create innovative technology products. As Forrester points out, "Transformation starts with developing the right set of strategy choices and the ability to help shape digital thinking and a digital culture that supports continuous innovation. It is cemented through effective change management." Many of these companies are relying on partners to spearhead their transformation efforts.

Our Differentiators

We dream of making the world a better place, one step at a time. We thrive by transforming organizations to be ready for a digital and cognitive future, providing world-class opportunities for talent around the globe. We are contributing to the advancement of our industry as we build a sustainable company, committed to diversity and non-environmental impact. These are our three key differentiators:

1. We are one of the first players to deliver engineering, innovation and design, at scale

We create software products that emotionally connect our customers with millions of consumers and employees, and we work with our customers to improve their efficiency. This requires the right blend of engineering, design and innovation, and we are one of the first players to deliver that at scale.

We accomplish this through our Studios, deep pockets of expertise on the latest technologies and trends. Our Studio model fosters creativity and innovation while allowing us to build, enhance and consolidate expertise around a variety of emerging technologies. This approach focuses first on technology and second on Industry depth. Studios deliver insights from different industries to create disruptive solutions.

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2. We are built around a podular structure

We have organized our teams through an Agile Pod model. Driven by a culture of self-regulated teamwork, each team—or Pod—works directly with our customers with a full maturity path that evolves as they increase speed, quality and autonomy.

As opposed to the traditional IT services structures, Globant’s podular model eliminates the need for command and control methods and provides teams with full independence in customer interaction.

3. We use artificial intelligence ("AI") for everything

As the digital and cognitive revolutions change the landscape of our industry, it is crucial to rethink how organizations must adapt and evolve. We have launched the “Augmented Globant” initiative to embrace the power of artificial intelligence to augment Globant's capabilities and contribute to the advancement of the technology industry.

Our Augmented Globant initiative is designed to augment talent and capacity, in order to build an AI-driven industry-leading company.

Our Approach

Technology is not enough to create solutions for a true digital and cognitive transformation. At Globant, we are committed to helping our customers throughout their Organizational Fitness Lifecycle.

In order to be sustainable and successful, transformations need to impact every single dimension of the organization. With consumers and employees at the center of every strategy, our services address every stage of the transformational process.

We start with clients by providing the necessary tools and support that allow companies to jumpstart their cultural and methodology transformations. We then accompany our clients as they define and test their new digital strategies to engage consumers and employees. We continue scaling on the construction and evolution of these and other digital and cognitive initiatives, followed by the two final stages in the cycle: pushing a secure product to the cloud, and making it famous so that it reaches the proper audience. At this time the fitness cycle remains in an endless and progressive loop to ensure organizations stay relevant.

We deliver these services through our unique set of Studios, our Service over Platforms strategy, our own methodology called Agile Pods, and our Stay Relevant approach.

Studios:

We believe that our Studio model is an effective way of organizing our company into smaller operating units, fostering creativity and innovation while allowing us to build, enhance and consolidate expertise around a variety of emerging technologies. Each of our Studios has specific domain knowledge and delivers tailored solutions focused on specific technology challenges. This method of delivery is the core of our services offering and our success. We group them in three different categories: Strategic (these studios are key to shaping our clients' business strategy; they help ensure that organizations are relevant and sustainable); Specialty (studios that power digital transformations and create quality digital products with innovative technologies and emerging trends); Foundation (the engine that allows us to meet scale and provides efficiency and quality to our clients' digital transformations).

Service Over Platforms:

At Globant, we are changing the way services are provided with our Services over Platforms strategy. This set of platforms is designed to help deliver digital and cognitive transformations in an agile and innovative manner. These products have the flexibility to adapt to our clients' needs as we provide microservices to complement them.

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In this way, many of our Studios create platforms to accelerate the path to our solutions. We price this service in the same way SaaS companies do: cost per transaction, cost per user or cost per month according to each platform.

Agile Pods Methodology:

We have developed a software product design and development model, known as Agile Pods. It is designed to better align business and technology teams. Driven by a culture of self-regulated teamwork and collaboration across skills, partners and country borders.

Leveraged across divisions, Agile Pods are dedicated to mature emerging technologies and market trends, and provide a constant influx of mature talent and solutions that create intellectual property for our clients. They are self-organized teams that work to meet creative and production goals, make technology decisions and reduce risk. These teams are fully responsible for creating solutions, building and sustaining features, products or platforms.

In addition, savings are delivered to clients due to sustained productivity boosts as the Agile Pods begin to operate at a higher maturity level. We ensure consistency, accountability and replicability by having Agile Pods follow a well-defined set of maturity criteria. Maturity models describe levels of growth and development as follows: Maturity, Quality, Velocity, and Autonomy. Each level acts as a foundation for the next and lays out a path for learning and growth. As Agile Pods evolve from one level to the next, they are equipped with the understanding and tools to accomplish goals more effectively.

Associated metrics guide improvement efforts and generate quantitative and qualitative insights to inform iterative design and planning decisions.

Stay Relevant

To fully implement a digital and cognitive transformation, we also help our customers stay relevant within their industries and audiences by providing helpful information and initiatives to understand the users’ environment, competitors and behavior. With research, Subject Matter Experts gatherings, webinars, workshops and conferences, our thought leaders offer valuable insights to help organizations create valuable and emotional experiences for the audience.

Augmented Globant

We launched Augmented Globant to embrace the power of artificial intelligence, augment our capabilities and improve the software development industry.

Our vision is to transform the industry by augmenting talent and capacity, building an AI-driven industry-leading company.

Our current initiatives include:

• Augmented Coding – We are enhancing the coding experience to augment engineers’ capacity. With Augmented Coding, our collaborators can find code within a project repository. It accelerates ramp-up times and improves quality on delivery.

• Augmented Culture – The StarMeUp Operating System ("StarMeUp OS" or "SMU OS") is a system that helps us understand the human element within an organization. We can discover cultural leaders, influencers, trend generators and even disengaged teams. It helps us detect and retain talent, promote integration and foster the company’s growth. We are using AI to uncover cultural insights.

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Culture

Our culture is the foundation that supports and facilitates our distinctive approach. It can be best described as entrepreneurial, flexible, sustainable and team-oriented, and is built on three main motivational pillars and six core values.

Our motivational pillars are: Autonomy, Mastery and Purpose. Through Autonomy, we empower Globers to take ownership of their client projects, professional development and careers. Mastery is about constant improvement, aiming for excellence and exceeding expectations. Finally, we believe that only by sharing a common Purpose we will build a company for the long-term that breaks from the status quo, is recognized as a leader in the delivery of innovative software solutions and creates value for our stakeholders.

Our core values are:

| · | Act Ethically – In our view, the achievement of professional excellence requires high ethical standards. We believe in doing business in an ethical manner and know our achievements go hand-in-hand with the responsibility to improve our society.

| · | Think Big – We believe that we can build a world-class company that provides Globers with a global career path. Our work is based on constant challenges and growth.

| · | Constantly Innovate – We seek to innovate in order to break paradigms.

| · | Aim for Excellence in Your Work – We know that problems we face now will reappear in future projects so we try to solve the obstacles that affect us today.

| · | Be a Team Player – We encourage Globers to get to know their colleagues and to support one another. Together, we are going to improve our profession, company and countries. We operate as one team whether it's solving a problem or celebrating excellent results. We also all have the right to be heard and respected.

| · | Have Fun – As Globers, we believe in finding pleasure in our daily tasks, creating a pleasant work atmosphere and building friendships among colleagues.

Consistent with our motivational pillars and core values, we have designed our workspaces to be enjoyable and stimulating spaces that are conducive to social and professional interaction. Our delivery centers include, among others, brainstorming rooms, music rooms and ''chill-out'' rooms. We also organize activities throughout the year, such as sports tournaments, outings, celebrations, and other events that help foster our culture. We believe that our work environment fosters creativity, innovation and collaborative thinking, as well as enables Globers to tap into their intrinsic motivation for the benefit of our company and our clients.

Innovation

As fundamental values of our day-to-day, innovation and creativity are not managed from a specific area. Instead, these values are emphasized throughout our company.

In our view, it is critical that each and every one of our Globers be an innovator. In addition to offering a flexible and collaborative work environment, we also actively seek to build the capabilities required to sustain innovation through several ongoing processes and initiatives including: design thinking workshops (internally and with customers), Think Big Sessions (open technology talks) and Globant Labs (a space where Globers can ideate and develop their own projects).

Be kind

Our Sustainability Plan has evolved to our Be Kind initiative. We strive to make the world a better place by transforming organizations and people’s lives. Be Kind is a call to action to transform ourselves through kindness. We want to put our mark on the world, so we need to continue making every effort to make this come true.We believe that our innovative approach to transform organizations, our healthy performance, our global talent, and our unique culture are the main pillars which allow us to dream bigger and to believe that this purpose is feasible.

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We seek to sustainably develop our company in the long term, integrating it with the community and the planet. To do so, we focus on approaching the community providing them world-class opportunities for talent around the globe, with a diverse and inclusive perspective, and taking into consideration the future generations, reducing any environmental impact we may have.

Our Be Kind initiative focus on three main pillars:

| 1. | Be kind to peers: by promoting diversity, gender equality and connecting IT opportunities with underprivileged people around the globe. We are convinced that there is no innovation without diversity, and there is no improvement without plurality. Some of the plans we have:

| · | Equal-employment opportunities - We strongly support equal employment opportunities for all applicants regardless of race, color, religion, sex, gender identity, pregnancy, national origin, ancestry, citizenship, age, marital status, physical or mental disability, sexual orientation, genetic information, or any other characteristic.

| · | Women That Build - We always look for opportunities to empower women in the IT industry and in leadership positions, as part of our culture. We support these efforts with our Women That Build campaign. This includes a series of internal and external initiatives that promote the inclusion and professional growth of women in our industry.

| · | Code your Future - Today the technology industry generates millions of job opportunities, even faster than the education system provides trained personnel. This generates not only an unprecedented opportunity but also a big training gap worldwide. We aim to reduce this training gap through education opportunities for our region’s young talent. We invest in several initiatives today that can reach many more people, with the potential to transform their future in the very short term.

| · | B.I.G. (Back in the Game) - BIG is an initiative that aims to empower experienced technologists who are currently on a career break and looking to relaunch their technological expedition.

| · | Inclusion programs - We support inclusion programs to help people in a vulnerable situation providing them new opportunities. We combine several programs which include skill-training scholarships and other activities to promote IT related studies. In doing so, we are facilitating the expansion of knowledge and the access to employment in a vibrant market of job opportunities.

| 2. | Be kind to humanity: by working with our customers to create accessible software for everyone.

| 3. | Be kind to the planet: by reducing and compensating the impact of our actions in the environment.

We want to promote a culture of environmental care. In our view, the best way to do this is leading by example. We have a plan to progressively adopt renewable energy for our company. We are also working to reduce our scope 3 emissions through several initiatives. Our goal is to achieve sustainable growth, and we encourage our ecosystem to join us in this mission.

Entrepreneurship

Globant was created as a start up. It was built by entrepreneurs and, over the years, many Globers have made a difference by creating and dreaming big with us. Entrepreneurship is the inner force that moves us, and we encourage Globers to dream and create meaningful and rewarding experiences for our customers.

During 2018, we created Globant Ventures, which is our own accelerator for tech startups in Argentina. The objective of Globant Ventures is to promote the emergence of new entrepreneurs involved cutting-edge areas of technology, such as Artificial Intelligence among other emerging trends.

Career growth

Globers who are eager to grow, learn something new, and discover other possibilities have a vast number of opportunities available to explore at Globant. We want to empower them to take ownership over their career, and make the most out of these five professional development dimensions:

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| · | Technology - Our more than 20 Studios consolidate experience in more than 100 emerging technologies and practices where Globers can learn, develop, specialize and stay relevant. We have numerous trainings and development opportunities that allow them to grow professionally.

| · | Clients - We have a portfolio of leading global brands to work with and for Globers to specialize in their career.

| · | Industries - We work with leading companies from different industries, such as media, health care, finance, travel, gaming and e-learning. This enables Globers to benefit from an in-depth look into many industries and gives them the opportunity to specialize in one.

| · | Specialty - Globers can reinvent their career, their role or position. They can develop their career growing within their current path by gaining seniority or moving internally into other roles in different areas of expertise.

| · | Geocultural diversity - We encourage Globers to work wherever they want and embrace cultural exchanges. Our Globers can work on projects with people from diverse cultures and have the possibility to live an international experience. We have open positions and relocation opportunities in all of our offices.

Competitive Strengths

We believe the following strengths differentiate Globant and create the foundation for continued rapid growth in revenues and profitability:

Deep domain expertise in emerging technologies and related market trends

We have developed strong core competencies in emerging technologies and practices such as the ones mentioned above, and we have a deep understanding of market trends. Our areas of expertise are organized in Studios, which we believe provide us with a strong competitive advantage and allow us to leverage prior experiences to deliver superior software solutions to clients.

Long-term relationships with blue chip clients

We have built a roster of blue chip clients such as Google, Electronic Arts, Southwest Airlines Co. and Walt Disney Parks and Resorts Online, many of which themselves are at the forefront of emerging technologies. In particular, we have been working with Disney and Electronic Arts for more than ten and twelve years, respectively. We believe that our success in developing these client relationships reflects the innovative and high value-added services that we provide along with our ability to positively impact our clients' business. Our relationships with these enterprises provides us with an opportunity to access large IT, research and development and marketing budgets. These relationships have driven our growth and have enabled us to engage with new clients.

Global delivery with access to deep talent pool

Latin America has an abundant talent pool of individuals skilled in IT. Over 345,000 engineering and technology students have graduated annually from 2012 – 2016 from universities in Latin America and the Caribbean region according to The Science and Technology Indicator Network (Red de Indicadores de Ciencia y Tecnología), a research organization that tracks science and technology indicators in the region. Latin America's talent pool (including Mexico, Brazil, Argentina, Colombia and Uruguay) is composed of more than 1,000,000 professionals according to Stackoverflow, SmartPlanet and NearshoreAmericas. Our highly skilled Globers come from leading universities in the regions where our delivery centers are located. Among our surveyed Globers, approximately 95.0% have obtained a university degree or are enrolled in a university while they are employed by our company, and many have specialized industry credentials or licensing, including in Systems Engineering, Electronic Engineering, Computer Science, Information Systems Administration, Business Administration and Graphic and Web Design. Our time zone and cultural similarity have helped us build solid relationships with our clients in the United States and Europe and differentiate us on projects that require a high degree of client collaboration.

A key element of our strategy is to expand our delivery footprint, including increasing the number of employees that are deployed onsite at our clients or near client locations. In particular, we intend to focus our recruitment efforts on the United States. We will continue to focus on expanding our global delivery footprint to gain access to additional pools of talent to effectively meet the demands of our clients and to increase the number of Globers that are deployed onsite at our clients or near client locations.

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Highly experienced management team

Our management team is comprised of seasoned industry professionals with global experience. Our management sets the vision and strategic direction for Globant and drives our growth and entrepreneurial culture. On average, the members of our senior management team have 20 years of experience in the technology industry giving them a comprehensive understanding of the industry as well as insight into emerging technologies and practices and opportunities for strategic expansion.

Strategy

We seek to be a leading provider that leverages the latest technologies and methodologies in the digital and cognitive space to help organizations transform in every aspect. The key elements of our strategy for achieving this objective are as follows:

Grow revenue with existing and new clients

We will continue to focus on delivering innovative and high value-added solutions that drive revenues for our clients, thereby deepening our relationships and leading to additional revenue opportunities with them. We will continue to target new clients by leveraging our engineering, design and innovation capabilities and our deep understanding of emerging technologies. We will focus on building our brand in order to further penetrate our existing and target markets where there is a strong demand for our knowledge and services.

Remain at the forefront of innovation and emerging technologies

We believe our Studios have been highly effective in enabling us to deliver innovative software solutions that leverage our deep domain expertise in emerging technologies and related market trends. As new technologies emerge and as market trends change, we will continue to add Studios to remain at the forefront of innovation, to address new competencies that help us stay at the leading-edge of emerging technologies, and to enable us to enter new markets and capture additional business opportunities.

Attract, train and retain top quality talent

We place a high priority on recruiting, training, and retaining employees, which we believe is integral to our continued ability to meet the challenges of the most complex software development assignments. In doing so, we seek to decentralize our delivery centers by opening centers in locations that may not have developed IT services markets but can provide professionals with the caliber of technical training and experience that we seek. Globant offers highly attractive career opportunities to individuals who might otherwise have had to relocate to larger IT markets. We will continue to develop our scalable human capital platform by implementing resource planning and staffing systems and by attracting, training and developing high-quality professionals, strengthen our relationships with leading universities in different countries, and help universities better prepare graduates for work in our industry. We have agreements to teach, provide internships, and interact on various initiatives with the several universities in Argentina, Colombia, Uruguay, Mexico, Brazil and India.

Selectively pursue strategic acquisitions

Building on our track record of successfully acquiring and integrating complementary companies, we will continue to selectively pursue strategic acquisition opportunities that deepen our relationship with key clients, extend our technology capabilities, broaden our service offerings and expand the geographic footprint of our delivery centers, including beyond Latin America, in order to enhance our ability to serve our clients.

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Our Services

We leverage the latest technologies and methodologies in the digital and cognitive space to help organizations transform in every aspect. We create software products that emotionally connect our customers with millions of consumers and employees, and we work with them to improve their efficiency.

We deliver these services through our unique set of Studios, our Service over Platforms strategy, our own methodology called Agile Pods, and our Stay Relevant approach.

Studios: Our Studios are deep pockets of expertise designed to foster creativity and innovation by focusing on a specific domain of knowledge.

Services Over Platforms: Our experience building software products allows to develop a set of platforms designed to help create Digital Journeys in an agile and innovative manner. These products have the flexibility to adapt to our clients' needs as we provide microservices to compliment them.

Agile Pods: Agile Pods are cross-functional and multidisciplinary teams that bring together design and engineering in order to deliver the right products. Agile Pods are measured according to four variables: innovation, velocity, quality, and autonomy. We encourage pods to mature over time to become more aligned with our customers' needs.

Studios

Our Studio model is an effective way of organizing our company into smaller operating units, fostering creativity and innovation while allowing us to build, enhance and consolidate expertise around a variety of emerging technologies. Each of our Studios has specific domain knowledge and delivers tailored solutions focused on specific technology challenges.

Our Studios deliver solutions for the different kinds of projects, cross-pollinating insights from different industries to create disruptive ideas. Our expertise can connect with consumers and employees, even when redefining an internal process. This approach is essential to help our customers challenge the status quo and transform their organizations.

Business Hacking: Non-traditional ways to create new business value

Digitalization and high consumer expectations are radically changing the way we interact with each other, and organizations who know how to manage these trends will be successful. Our business hacking framework is designed to make transformations tangible, measurable and in order to find new ways to optimize culture and business impact.

The portfolio of services we provide through the Studio includes:

| · | Transformational programs - We strive to create sustainable transformations by focusing on those from behavior to technology, while positively impacting business metrics. Transformations needs to be tangible, measurable and sustainable in order to find new ways to optimize culture and business impact.

| · | ROI and Cost Efficiency - Visible impact metrics help to make a transformation tangible and sustainable. Organizations make decisions about how to invest efforts and energy to transform key aspects of their business impact based on these metrics.

| · | New Revenue Streams - We seek to identify new revenue streams for our clients by analyzing data and consumer behavior within the context of a sustainable transformational program. Creating business impact through collaboration, experimentation, knowledge sharing and human centricity enhaces our solution.

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Future of Organizations: Making organizations come alive

The Future of Organizations Studio focuses on helping companies with their internal digital transformation and digital corporate culture. The goal of this Studio is to ensure our customers' success by engaging employees and considering them to be one of the most important stakeholders of the organization.

Platforms and apps that integrate and act as the operating system for the organization of the future. We help organizations with their digital transformation, enabling them to manage their culture effectively, engaging their employees from day one to ensure success.

Stay Relevant: Bringing insights to create the right strategy.

The Stay Relevant Studio's mission is to provide valuable information to help organizations remain at the forefront of users' expectations, delivering insights to enable them to build exceptional journeys and experiences, and to foster emotional connections with audiences (See "Item 4.B - Business Overview - Stay Relevant" for more information about this studio).

Agile Delivery: Aligning stakeholders and methodologies to meet business goals.

Digital Transformation programs require alignment from the strategic, tactic and support levels as a crucial factor to their success. As a backbone to these programs, leaders are expected to steer engagement, innovation, effectiveness and commitment from the teams while achieving predictability in terms of timeframe, budget and quality. We create sustainable operations designed to scale and guarantee the lowest cost of ownership.

The portfolio of services we provide through our Agile Delivery Studio includes:

| · | Delivery Management - We deliver high value solutions by steering teams into a continuous improvement approach to product development. We set clear and common goals to achieve outstanding results within budgets, with scalable and sustainable operations.

| · | Agile Consultancy - We educate, mentor and enable organizations to capitalize on the principles and competencies found in paradigms such as Agile, Systems Thinking, Lean and others. We support the transition and journey until it reaches a point of self-sustainability.

| · | Management Consulting - We provide consulting services related to processes, quality and performance indicators. We provide visibility for effective decision making process and PMO Development service for our clients. Our design process is intended to contribute to operational goals.

Product Acceleration: Delivering best-in-class digital products

Our Product Acceleration Studio utilizes modern product management techniques to ensure products solve the right problems, meet user expectations, and achieve business value.

The portfolio of services we provide through our Product Acceleration Studio includes:

| · | Product Strategy - We focus on market research, business model definition to help companies identify customer acquisition strategies and products in order to close the gap between corporate strategy and identified problems. Product Managers help companies discover core user problems, define effective solutions, implement product development practices, establish product organizations, evolve product governance, and define go-to-market strategies.

| · | Product Delivery - Fully engaged product owners who are able to collaborate with stakeholders, customers, and development team to set vision, experience, and outcome objectives. Through iterative wins, we develop continuously focused product solutions that are driven by priority value.

| · | Product Coaching - Product management coaches help companies establish people-centric product development practices, including skills training, organizational consulting and team definition.

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Design: Designing relevant experiences

Our UX Design Studio focuses on delivering quality, design, strategy, and production to address worldwide digital challenges. Our designs are based on observations of consumer behavior and market trends. Our goal is to create concrete and relevant solutions that appeal to both users and businesses.

The portfolio of services we provide through our UX Design Studio includes:

| · | User Experience - By identifying verbal and non-verbal stumbling blocks, we refine and iterate to create an exceptional user experience. From user research and usability analysis to interactive design, we enhance interactions, information architecture, usability and persuasion. We help our clients inspire their communities, foster adoption and drive conversion results.

| · | Visual Design - We utilize an insightful and conceptual approach to create and execute designs. We develop visual elements of an interphase and implement a brand personality into the interaction design. We establish relationships with the users by creating emotional interfaces and brands based on deep analyses of end-users and market trends. In much the same way that a piece of art appeals to the human eye, we strive to visually and emotionally engage users.

| · | Service Design - Service design involves the activity of mapping, prototyping and planning cutting-edge product-service systems and how the actors should interact to bring those omni-relevant experiences to market. From strategic and operations management to business design, we apply a holistic approach to understand, create and orchestrate strategic scenarios, working in collaboration with multidisciplinary teams. Our service designers co-design with clients and customers translating research insights into actionable plans and viable opportunities for growth.

| · | Industrial Design - Modern style and design must go hand in hand with technology, particularly at a time when consumers have high standards in terms of the quality of functional and non-functional features. Our practice is focused on creating beautiful and natural designs that feed all the senses. For many years screens have had all the design focus, but with the introduction of haptics and other feedback mechanisms, it's key to consider the rest of the senses in the product or experience design.

Scalable Platforms: Supporting reliable products

Scalable Platforms have become extremely important in today's digitally connected environment. We provide the architectural base to accelerate omni-channel strategies, improve internal processes and build consistent cross-channel customer experiences to support reliable products.

To enable digital products through a robust architecture, we apply our best practices and patterns on the design of a back-end ecosystem, which allows our clients to accelerate their businesses in an agile way. We have broad experience providing back-end solutions that support scalability, security, availability, performance, quality and high adaptability to internal and external integrations. We focus on complex architecture modeling, microservices and API management strategies to accelerate the digital transformation by providing capabilities that businesses need in order to bring systems together, secure integrations, deliver improved customer experiences and capitalize on new opportunities.

The portfolio of services we provide through the Studio is focused on the integrated delivery of:

| · | API Management - In a world where multiple channels are facing different solutions in terms of communications, APIs are powering digital transformations and orchestrating across these channels in terms of technologies and industries. We help enterprises embrace an API-centric approach to grow their digital businesses and seamless experiences.

| · | Microservices - We evolve monolithic architectures to a new architectural style that structures an application as a collection of loosely coupled services, organized around business capabilities. The microservices architecture enables the continuous delivery/deployment of large, complex applications. It also empowers organizations to evolve its technology stack fostering an evolutionary model to be ready for new innovative challenges in the future.

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| · | Complex Architecture Modeling - To manage these complex product intricacies in an agile manner, we apply our extensive experience working with best practices, methodologies and techniques, such as domain driven design, hexagonal, onion, reactive architectures and continuous delivery to handle business complexity.

| · | Future Commerce - Nowadays, the customer journey has several new engagement touch points across marketing, sales, and services. Traditional retailers struggle to keep up with them, as times move fast, and there is also a strong need to keep processes efficient and coordinated. This can be achieved with the correct understanding of the business and the implementation of the right technology.

Continuous Evolution: Making evolution happen

The Continuous Evolution Studio focuses on evolving existing applications and helping our clients to improve the value of their software over time by aligning business needs with a mix of traditional techniques and new market trends.

Every piece of software built meets a business need for which it was intended, but those needs are not static. Software evolution is a key to improving value over time, and having the right partner will pave the way to achieving success. As new trends and technologies arise, customer behavior changes and market needs must quickly adapt. We retrofit innovation into existing products in order to create continuous engagement among users. We provide a new experience with multidisciplinary teams specialized in software evolution and world-class operations designed to support any kind of application after implementation is complete. Our teams ensure quality and efficiency while bringing innovation, optimization, performance improvement, and constant evolution to their products.

The portfolio of services we provide through the Studio includes:

| · | Software Archeology - Taking over of a product that has had a long life cycle can be challenging without access to the appropriate documentation or team members. Software Archeology is our way to take control of any software solution, in any condition, at any moment, without a long, hard or expensive process. By completing a systematic study of remaining material evidence, such as code, tests and documentation recovered, we can gain a clear understanding of the software, as well as the context with which it operates. This enables us to outline a proper plan and roadmap for the team that will work on it.

| · | IT Service Management - Our experience with Information Technology Infrastructure Library ("ITIL") helps us cover a full cycle of continuous improvement by carrying out an assessment of the organization, and subsequently delivering recommendations for implementation, as well as solutions that enable supporting areas to satisfy the company's demand. Managing an internal service desk might not be optimal for most companies, we provide a single point of contact service composed by multidisciplinary teams with specialized processes based on ITIL best practices and focused on ensuring the continuity of the ongoing operation.

| · | Software Evolution - Our takeover framework provides a robust set of tools and processes that our teams use in order to gain ownership of the product they will be working on. Through a detailed assessment, we are able to understand the current situation and define a roadmap to achieve a controlled execution phase. Then, we introduce new market trends, technologies and innovative solutions to existing products.

Gaming: Engaging through play

Our Gaming Studio specializes in the design and development of world-class games and digital platforms, which work across console, PC, web, social and mobile channels.

We enable our clients to leverage game mechanics by helping them develop a vision and execute an idea through production, launch and operation. We believe that our expertise and experience with some of the most recognized companies in the gaming industry enables us to add value to our customers' businesses. We utilize our experience, creative talent, well-established technology frameworks and processes to scale and foster innovation.

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The portfolio of services we provide through our Gaming Studio includes:

| · | Game Engineering - We streamline the development process creating feature-rich products around the core intellectual property of our clients. We co-develop AAA games working directly for world-class video game developers.

| · | Game Experience - Our Gaming Studio is capable of creating all components of a gamified experience. For example, we can create a complete video-game or apply gamification techniques to a current product, combining game design with user experience to provide experiences across multiple platforms. We seek to engage users and achieve business goals through fun and play.

| · | Digital Platform Services - We create and expand centralized platforms for cross-platform development. A digital platform consists of a coherent technical offer to access a universe of distant, interactive or non-interactive services which can be broadcasted or supplied on-line.

| · | Virtual & Augmented Reality - Virtual reality extends beyond gaming and entertainment. In the near future, we expect it to become omnipresent and a critical component of IT. Augmented reality allows a user to expand his or her mind beyond reality, displaying information in the user's field of view where the real and virtual worlds are tightly coupled. Our Gaming Studio provides ideation sessions, customer engagements, market reach and content creation to bring the next generation of technology to our clients' businesses.

| · | Graphics Engineering - We provide services to develop products and tools to bring artists' designs to life. This includes animation, lighting, shading, visualization tools and rendering.

| · | 3D & 2D Art - We focus on creating high-end game art for AAA productions. We monitor the latest technical and artistic pipelines as well as the latest art techniques in order to stay relevant to current industry standards. We provide character and environment art, from the conception stage to the final game ready asset.

| · | e-Sports - We provide an interactive and engaging experience for target audiences. Whether it's virtual reality, second screen or main screen, we combine our engineering, product design and community management solutions to help our clients increase spectators and connect observers and players.

Internet of Things: Connecting the physical world

Our Internet of Things Studio offers technology solutions for the current device ecosystem and additional applications for the Internet of things.

We help our customers develop their new product ideas and gather information about behavior, activities and sensor-collected data, and then process all the information to develop new services.

The portfolio of services we provide through the Studio includes:

| · | IOT Experiences - Our experience in development and open source tools position us with the experience needed to handle new digital connected journeys based on current technology. Our engineers are ready to integrate the next generation of devices.

| · | Platforms - Our platforms provide interaction and feedback to and from devices and highly scalable platforms and real time analysis to respond to different scenarios. All of the data produced by wearables and IoT enabled devices can be collected, stored and processed on the appropriate data platform. This enables our customers to extract valuable knowledge and insights by applying the right Big Data strategy and enabling intelligent interactions.

| · | Hardware integration - We assist customers with the connection between sensors and backend services through devices or hardware. Our team can handle different approaches ranging from custom made hardware to integration with third party providers.

| · | IoT Consultancy - We help our clients by researching, consulting and advising based in our core expertise in product engineering and digital transformation.

Data & Analytics: Turning data into insights

In our Data & Analytics Studio, our mission is to empower our clients with a competitive advantage by unlocking the true value of data to create meaningful, actionable and timely business insights.

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We break down internal data silos that have different data structures, velocities and volumes, and enrich that data with external sources, creating a scalable Enterprise Data Platform, democratizing the data and fostering organizational changes towards a data-driven culture. Our Data Engineers combine data, business processes, and state-of-the-art IT tools and algorithms that enable businesses to engage in a deeper, interactive and more meaningful conversation with their data, using visual discovery techniques to reveal hidden patterns and trends and obtain relevant and useful business insights for decision-making purposes.

The portfolio of services we provide through this Studio includes:

| · | Data Architecture - With the widespread usage of devices and the viralization of social networks, massive volumes of digital data have become available. Companies are trying to take an advantage and extract valuable conclusions around their businesses by cross referencing data with traditional and innovative unstructured sources. We offer business-aware real-time analytics and enterprise information management services, which include traditional data warehousing using relational database management systems and next-generation non-relational and distributed database management technology.

| · | Data Science - We utilize mathematical and statistical tools of data science to "fill the gap" between what our clients know from their data, and what they would like to know if all data was available. This includes predictions, optimizations and classifications.

| · | Mission Critical - We partner with our clients in successfully executing highly complex strategic software projects, optimizing their architecture design and identifying potential bottlenecks early in the process. We give special attention to factors such as adaptability when user base increases or information volume grows, maintainability along time, providing dynamically scalable software architectures, enforcing data security from the ground up, and ensuring transactions are processed within required timeframes to avoid revenue loss.

| · | Data Integration - Creating a scalable Enterprise Data Refinery that can pull and consolidate massive amounts of data from heterogeneous systems is not an easy task. We provide development services over multiple tools, languages and platforms in order to create data pipelines and workflows with high standards of availability, performance and security that will pull, cleanse, enrich and consolidate your company's data.

Data Visualization - Well-designed data visualization and dashboards extend beyond current status and indicators, and synthesize complex sets of data into key views, charts and graphs, revealing results in ways that common tools and spreadsheets cannot. The functionality to drill data down and to integrate the view with statistics and business intelligence tools, further the end users' ability to glean insights from masses of numbers. We enable users to engage in an interactive and more relevant conversation with their data, allowing users to explore the unknown, navigate the data and discover hidden patterns and trends on their own.

UI Engineering: Building Digital products

We specialize in building the next generation of User Interface ("UI") digital products leveraging the latest technologies and architectures, multi-device techniques, big-scale applications, component based systems, intelligent user interfaces and the latest trends in user experience.

By providing a set of UI practices and technologies, we create engaging products through interactive interfaces across multiple channels and devices, independent of platforms and delivering the same experience in a frictionless way. Those interfaces are aware of users, from context to context, device to device and act proactively to make the experience simpler, leaner, faster and suggesting new behaviors based on interactions. We deliver leading digital products for users, makings use of tools, frameworks and components, providing a single architecture and codebase with the right functionality in any platform.

The portfolio of services we provide through the Studio is focused on the integrated delivery of:

| · | Large Scale Web Applications - Omni-channel solutions are needed to power digital transformations. This is done by building responsive and scalable web applications following different approaches, from single page applications to server side rendered applications with a loosely coupled, modular, component based architecture, mobile-first and SEO friendly techniques among other best practices.

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| · | Hybrid & Cross-Compiled Development - We create downloadable applications using cutting-edge technologies with access to hardware features that run in multiple native platforms using a combination of JavaScript frameworks. This allow companies to face omni-channel challenges by using hybrid strategies giving support to mobile devices, kiosks, POS, and others, through a single codebase.

| · | Accessibility - Accessibility considerations need to be built into the everyday practices across the full web product life-cycle from conception and specification through development and delivery. We have the required expertise to develop an accessibility compliant application according to applicable regulations.

Mobile: Enabling mobility everywhere

Whether our clients need to build a new product, mobilize an existing product or maintain an existing solution, which can be native, hybrid or built through cross-compilers, our Mobile Studio is experienced on the latest tools and frameworks to help you reach your business goals. Leveraging on our experience from our Agile Pods Methodology, cross-industries knowledge, and a combination of state-of-the-art and traditional user interface tactics, we add value when creating or improving our clients' mobile strategy.

The portfolio of services we provide through our Mobile Studio includes:

| · | Consultancy - We help organizations move towards the next maturity stage regarding mobility. Based on our experience working with over 100 organizations, from startups to fortune-500 companies, we built our consultancy framework to assess organization’s maturity and provide solutions to deliver high quality mobile products.

| · | Fast Prototyping - Our Fast Prototyping Framework can build a working prototype to validate our clients' business ideas or jumpstart their projects to a scalable solution. We utilize proven base tech stalk and platforms to minimizing coding.

| · | App Evolution - We help clients to take control of their legacy projects by incorporating the latest trends and technologies, whether they need to switch vendors, update their codebase, migrate between hybrid and native, or rebuild from scratch their existing product. Our sustain framework will detect potential issues on their apps regarding new OS versions or required updates on frameworks they might be using.

| · | Platform Integration - Most mobile apps require a connection to a backend. While most boutiques fail at integrations, our Studios Model and extensive experience implementing most API Management Systems, Custom or Out-Of-The-Box Microservices Solutions.

| · | Enhanced Experiences - We take the best of the available technical features to deliver rich and emotional moments using Augmented Reality, Biometric sign-in, Force Touch, Apple/Google Pay, Animations, Coregraphics, Geofencing Services, Rich Notifications or any specific technology which is only achievable by building a native custom experience.

| · | Hardware Integration - Helping extend client product’s reach outside the main mobile device, we develop integrations with Chromecast, beacons, POS, Printers, Custom Hardware and create standalone experiences for Smart Watches, Apple TV and Android TV/Chromecast.

| · | Complex Engineering - Our team of performance experts develop low level integration with frameworks like NDK or by using C++ to improve performance on critical transactional applications and develop scalable architectures that will help our clients build the core of your suit of mobile products.

Artificial Intelligence: Enabling the future today

We strive to enable the future today with state-of-the-art techniques, including deep learning, other neural networks and traditional ML approaches, coupled with the increased capacity of machines to understand complex patterns out of data.

The portfolio of services we provide through the Studio includes:

| · | Machine Learning: We build solutions powered by ML using traditional approaches (regressions, decision trees, HMM, SVM) and new deep learning methods. Our focus still relies on a human centric design and, therefore, we apply ML to adapt the Journey to create a seamless and emotionally-engaged experience. We utilize ML to provide an as-good-as-a-human decision process (contextual, adaptive) to delegate low-value-added decisions or alert when a critical decision is needed.

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| · | Pattern Recognition: We leverage the power of signal processing (video, images, audio, text or any other type of data), to recognize and understand patterns. New opportunities are flourishing from the availability of volumes of new data in different forms; together with computer power and new algorithms.

| · | Natural Language Understanding: Natural Language Understanding ("NLU") enables a computer to understand and generate natural language (either typed or spoken). We develop software with NLU capabilities to explore new ways of emotional engagement. We enable users to address software, through different devices, as though the user was addressing another person. Our software applies computational techniques in order to understand the syntax and semantics of language.

Process Automation: Efficiency driven by technology

Our Process Automation Studio delivers solutions that enable our clients to be more efficient, innovative and agile.

Companies strive to enhance their efficiency as they grow and competition increases. Our goal is to provide solutions that improve productivity, create competitive advantages, foster innovation and provide agility. We work to establish quick wins that are refined using an iterative approach to deliver more value on each cycle while optimizing throughput.

The portfolio of services we provide through our Process Automation Studio includes:

| · | Process Appraisal - An in-depth analysis of the processes is done so that they can be valued and prioritized to outline the best automation strategy. In order to have quick wins that deliver actual value to the business we do a joint work with our clients to define measurable criteria that support the decision on where to start and the set of technologies to use and be successful.

| · | Automated Solutions - Process automation is not just selecting a single tool in the market and automate a flow but rather a conscious analysis of the set of technologies to be used understanding the context on which they will run. Our extensive knowledge of technologies allows us to define the appropriate architecture considering infrastructure and automation needs while leveraging AI and data scraping techniques among more traditional solutions.

| · | Process Evolution - Monitoring and governance of automated process is key to improving efficiency. Through the definition of the appropriate set of metrics and tools we control the operation identifying bottleneck areas and optimize performance, as well as including new processes to automation strategy.

Blockchain: Building Trust

Our Blockchain studio is focused on helping our customers to resolve trust-related problems and inefficiencies. We provide research and development services over multiple blockchain implementations as well as over several decentralized storage systems. We are focused on understanding the business and finding how a blockchain can be leveraged to solve a problem.

The portfolio of services we provide through the Studio includes:

| · | Training - We work with our specialists on distributed ledger technologies to understand how they work and get a deep understanding on the different implementations available.

| · | Advisory - We conduct a deep dive into businesses alongside our specialists as our clients discover how blockchain technologies can be applied to improve some of their processes.

| · | Fast Prototyping - Our Fast Prototyping Framework can help build a working prototype to validate our clients' business idea or jumpstart their projects to a scalable solution in record time. We achieve this by using an already tested base tech stack.

| · | Solutions - We build end-to-end solutions that harness the benefits of blockchains to create trustworthy and efficient systems tailored to specific business needs.

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Cloud Ops: Delivering products faster

Our Cloud Ops Studio combines some of the leading cloud technologies, continuous integration and continuous delivery practices with our capabilities to facilitate new and more efficient ways of doing business.

Cloud and Dev Ops are independent but mutually reinforcing strategies for delivering business value. Cloud and Dev Ops evolved in response to three fundamental transformations. First, we are transitioning from a product economy to a service economy. Second, the business environment demands that companies shift their focus from stability and efficiency to agility and innovation. They need to increase delivery frequency and continue their service evolution. Third, the digital dimension is filling the physical dimension.

The portfolio of services we provide through our Cloud Ops Studio includes:

| · | Cloud - From roadmap definition to managed services, we can support our clients' cloud journey. Working with cloud platforms since 2009, we developed the expertise and framework to deliver consultancy services for cloud adoption strategy, application transformation, disaster recovery definition and ongoing support. Our main goal is enabling IT agility with pragmatism that is fully aligned with each client's core business leveraging Amazon Web Services, Microsoft Azure, Google Compute Platform and OpenStack (including, IaaS, Containers, Serverless technologies among others).

| · | Devops - We utilize Dev Ops in our clients' development cycles to enable continuous integration and continuous deployment of their products, allowing production updates several times a day rather than once every few months. This practice also allows improvements in the overall product cycle as it accelerates acceptance testing, and enables business owners to see what the teams are producing in real time, delivering new products and features with a faster time to market.

| · | Cloud Native Patrol - Our Cloud Native Patrol assists our clients to accelerate and support complex cloud native projects. The cloud ecosystem is becoming very complex, and cloud providers continue to innovate by adding new tools while enriching existing ones. The same is happening with the whole cloud native landscape (orchestration, service discovery, containers, automation, configuration management, observability, PaaS). Cloud Native Patrol addresses the challenges of supporting the complete ecosystem.

Quality Engineering: Enabling quality everywhere

The success of our clients' businesses is directly tied to the quality of complex and highly integrated software. Our clients' software drives opportunities, but it also exposes them to new risks. We believe that only a high quality product has a chance of succeeding in today's market.

Our Quality Engineering Studio focuses on reducing our clients' business risks. We provide a comprehensive suite of innovative and robust testing services that ensure high-quality products to meet the needs of demanding, technology-avid users. Cutting edge quality strategies increase test efficiency, decrease time to market and reduce the risks inherent in producing challenging digital journeys.

Our "round the clock" approach leverages the close-knit nature of quality assurance across geographies and time-zones to achieve continuous testing. This approach aligns with build schedules to utilize the onshore, nearshore and offshore teams to their maximum potential.

The portfolio of services we provide through our Quality Engineering Studio includes:

| · | Functional Testing - We offer comprehensive quality assurance services to ensure that the final system/service delivered to our clients meets and exceeds their business requirements. Our quality control analysts are involved in the software development process from the start of each project, helping clients identify the needs of their audience and prepare for accurate targeting suitability of the products we will be creating together.

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| · | Load & Performance Testing - Measuring and assessing the performance of widely used global sites and applications is a technically challenging and multidisciplinary effort. A comprehensive test strategy needs to consider a broad, real life scenario and needs to analyze each product as it will ultimately run. Validations include responsiveness, throughput, scalability, reliability and resource usage. Our practice includes stress testing, load testing and performance testing.

| · | Mobile Testing - Supporting multiple devices and platforms, and planning for production monitoring approaches, is necessary to achieve end-to-end quality. We utilize compatibility testing, responsive design testing, test automation and acceptance testing among other practices.

| · | Test Automation - We have deep expertise in providing test automation services and developing test automation solutions and frameworks. We believe test automation is a key testing practice to increase test efficiency, reduce time to market and limit human error inherent with manual testing. Test automation is preparing to efficiently handle future requests through smoke testing, regression testing, integration testing, services testing and other automated processes.

| · | Accessibility - Todays digital solutions need to provide equal access and equal opportunity to people with disabilities though compliance with accessibility standards. We help our customers to improve the quality of their digital products (web and mobile solutions) removing barriers that prevent interactions, ensuring accessibility WCAG 2.0 AA Compliance, Section 508 and ADA.

Cybersecurity: Making customer platforms safe and secure

Our Cybersecurity Studio supports the entire range of services from product conceptualization through execution to ensure that all customer platforms are safe and secure.

As data privacy and security become increasingly top of mind, cyber attacks can increase risk in business for today’s organizations if they don’t have strategies for staying ahead.

The portfolio of services we provide through the Studio includes:

| · | Secure Digital Journey - With this service, a security expert assesses customers security needs. This expert collaborates with our digital solutions teams to ensure needs are met right from the functional and design phase of project development without compromising user experience. Ultimately, this service is designed to ensure that digital experiences will be secure.

| · | Security Advisor - We have deep expertise in performing manual and automated penetration tests. This technique allows us to assess customers’ security environments to identify risks that could affect digital platforms, and analyze the likelihood and impact for the business. To be a security advisor is more than executing a penetration test, it is understanding business risk with real impact to the business, identifying alternatives to mitigate, and providing guidelines to completely fix.

| · | Security Patrol - We monitor traffic on users’ digital platforms, and measure specific security indicators that allow us to rapidly respond against cyber threats. The team handles events with strict predefined protocols to contain and mitigate potential incidents.

Digital Content: Managing scalable content

Our Digital Content Studio focuses on developing digital online strategies through the creation of original and customized products and solutions.

We want to empower our clients' businesses by taking care of the complete life-cycle of a digital strategy, from development of user-friendly and appealing content management systems, to the complete go-to-market digital promotion. We also want to work with our clients to develop digital marketing campaigns, learning solutions, content strategies and engaging audiovisual content that supports their goals.

The portfolio of services we provide through the Studio includes:

| · | Content Management Systems - We help our clients deliver an excellent digital experience through the use of platforms. We understand that our clients' content must reach to the right people on the right devices at the right times.

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| · | Digital Marketing - We provide services to develop digital online strategies focusing on empowering our clients' businesses by creating and implementing original and customized online marketing solutions.

| · | Content Hub - We develop digital strategies through the creation of original and customized content.

Media OTT: Every pixel, every screen

Our Media OTT Studio design, build and launch premium video experiences across every mobile device, OTT box, Smart TV, and Game Console for our media clients.

We understand and provide services that support the entire streaming supply chain; from ingest and transcode through to user experience and playout. We do it across all consumer devices and we help drive user engagement and monetization on each.

The portfolio of services we provide through the Studio includes:

| · | Bespoke Development - Our professional services team creates streaming experiences that showcase client’s content and drive business value across any screen.

| · | Streaming Strategy - Winning in digital media begins with a deep understanding of industry dynamics, identifying how trends disrupt the competitive landscape, and establishing methods to enable and encourage ongoing innovation. Our team of strategists, engineers, delivery managers and designers help media companies turn their content offerings into successful digital businesses.

| · | Multi-Screen Design - We closely watch every trend and track the evolving capabilities across all platforms. This ensures we can apply our design philosophies to create compelling experiences that showcase the content and drive the business value for our clients.

| · | Signal (Platform) - Signal enables media companies to reach and engage customers across every screen. It allows them to manage and monetize Live and VOD content. Publishers can quickly launch these best-in-class experiences and dynamically update content and styles through the Signal Portal. Signal simplifies the OTT workflow and allows companies to focus on their content and business vision. Our cutting edge modularized technology allows our clients to choose between a full service or select items to fit the right need.

Our Studio model allows us to optimize our expertise in emerging technologies and related market trends for our clients across a variety of industries.

Services over Platforms

At Globant, we are evolving at the way services are provided with our Services over Platforms strategy. This set of platforms is designed to help deliver digital and cognitive transformations in an agile and innovative manner. These products have the flexibility to adapt to our clients’ needs as we provide microservices to complement them.

In this way, many of our Studios create platforms to accelerate the path to our solutions. Among these platforms we can mention, StarMeUp OS from our FOO Studio. Signal, our platform to accelerate the distribution of content from our OTT Studio. Globant Minds, our AI platform from the AI Studio, and Acamica our online education platform to accelerate the cultural transformation.

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StarMeUp OS

StarMeUp OS is an operating system made up of smart applications that assist organizations with their digital transformations. The goal of this operating system is to help employees overcome inherently human limitations and create a space where they can have more meaningful interactions, generating a richer experience and empowering employees to make even more significant contributions. StarMeUp OS is comprised of five solutions:

StarMeUp: A peer-to-peer recognition platform that strengthens the corporate culture and reinforces organizational values, while providing valuable insights in real time, such as identifying positive influencers and a better view into organizational network dynamics.

BetterMe: Employees can share real-time feedback with anyone else in the organization. It provides an ongoing view of performance and continual opportunities for improvement.

BeThere: By sharing photos of significant moments and events, employees can stay connected and informed in an engaging way, no matter where they are in the world.

TakePart: More actively include employees in the organizational transformation by creating a space for them to suggest, and vote, on new ideas, that lead to more dynamic organizational changes.

BriefMe: A platform ideal for communications teams to get the most critical information to employees at the right time through strategically located screens.

Signal

It enables media companies to reach and engage customers across every screen. It allows them to manage and monetize Live and VOD content.

ACAMICA

In 2016, we invested in ACAMICA, an e-learning platform for global companies to run online and personalized academies and private training modules, with an emphasis on user experience and social interactions.

Agile Pods Methodology

We have developed a software product design and development model, known as Agile Pods. It is designed to better align business and technology teams. Driven by a culture of self-regulated teamwork and collaboration across skills, partners and country borders.

Leveraged across divisions, Agile Pods are dedicated to mature emerging technologies and market trends, and provide a constant influx of mature talent and solutions that create intellectual property for our clients. They are self-organized teams that work to meet creative and production goals, make technology decisions and reduce risk. These teams are fully responsible for creating solutions, building and sustaining features, products or platforms.

In addition, savings are delivered to clients due to sustained productivity boosts as the Agile Pods begin to operate at a higher maturity level. We ensure consistency, accountability and replicability by having Agile Pods follow a well-defined set of maturity criteria. Maturity models describe levels of growth and development as follows: Maturity, Quality, Velocity, and Autonomy. Each level acts as a foundation for the next and lays out a path for learning and growth. As Agile Pods evolve from one level to the next, they are equipped with the understanding and tools to accomplish goals more effectively.

Associated metrics guide improvement efforts and generate quantitative and qualitative insights to inform iterative design and planning decisions.

Our Delivery Model

Our cultural affinity with our clients enables increased interaction that creates close client relationships, increased responsiveness and more efficient delivery of our solutions. As we grow and expand our organization, we will continue diversifying our footprint by expanding into additional locations globally.

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We believe our presence in many countries creates a key competitive advantage by allowing us to benefit from the abundance of high-quality talent in the region, cultural similarities and geographic proximity to our clients.

Availability of High-Quality Talent

We believe that Latin America has emerged as an attractive geographic region from which to deliver a combination of engineering, design, and innovation capabilities for enterprises seeking to leverage emerging technologies. Latin America has an abundant skilled IT talent pool. According to the Science and Technology Indicator Network (Red de Indicadores de Ciencia y Tecnologia), over 345,000 engineering and technology students have graduated annually from 2012 – 2016 from universities in Latin America and the Caribbean region. Latin America's talent pool (including Mexico, Brazil, Argentina, Colombia and Uruguay) is composed of approximately 1,000,000 professionals according to different sources, such as Stackoverflow, SmartPlanet and Nearshore Americas. This labor pool remains relatively untapped compared to other regions such as the United States, Central and Eastern Europe and China. The region's professionals possess a breadth of skills that is optimally suited for providing technology services at competitive rates. Moreover, Argentina and Brazil have been in the top ten of the Gunn Report's Global Index of Creative Excellence in Advertising for the last 17 years. In addition, institutions of higher education in the region offer rigorous academic programs to develop professionals with technical expertise who are competitive on a global scale. Furthermore, Latin America has a significant number of individuals who speak multiple languages, including English, Spanish, Portuguese, Italian, German and French, providing a distinct advantage in delivering engineering, design and innovation services to key markets in the United States and Europe.

India offers significant graduate talent. According to the Strategic Review of The National Association of Software and Services Companies (NASSCOM), the Indian IT-BPM Industry currently employs around 4 million people. In terms of students, more than 5 million students graduate every year, and almost 15% of these graduates are considered employable by Tier 1/Tier 2 companies.

Government Support and Incentives

Argentina

Software companies with operations in Argentina whose activities are the creation, design, development, production, implementation or adjustment (upgrade) of developed software systems and their associated documents (in accordance with Section 4 of the Software Promotion Law No. 25,922) may participate in the benefits contemplated by this regime provided they meet at least two of the following requirements: (i) proves expenses in software research and development activities; (ii) prove existence of a known quality standard applicable to the products or software processes, or the performance of activities in order to obtain such known standard recognition; or (iii) export of software (as defined in Section 5 of the Software Promotion Law). The Law was originally enacted in 2004 and extended in 2011 for another five years until December 31, 2019, and established a number of incentives to promote Argentine enterprises engaged in the design, development and production of software. These incentives include:

| · | Fiscal stability throughout the period that the promotion regime is in force. In accordance with Section 7 of the Software Promotion Law, fiscal stability means the right to maintain the aggregate federal tax rate in effect at the time of the beneficiary's registration in the National Registry of Software Producers through December 31, 2019. Such stability does not comprise import or export duties nor export refunds (Section 7 of Regulatory Decree No. 1315/2013). The aggregate federal tax burden included under the fiscal stability benefit is that burden existing on the date of the beneficiary's registration before the applicable registry, in accordance with laws and regulations in force by that time;

| · | a 60% reduction in the total amount of corporate income tax as applied to income from the promoted activities This benefit will be applicable both to Argentine-source and non-Argentine-source income, in the terms set forth by the application authority, but it would not be applicable to foreign source income obtained by permanent establishments held abroad by Argentine residents (Section 13 of Regulatory Decree No. 1315/2013);

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| · | conversion of up to 70% of certain monthly social security tax (contribution) payments into a tax credit (Section 8 of the Software Promotion Law) during the first year following the beneficiary's registration in the National Registry of Software Producers. After the first year, such percentage will be determined annually by the competent authorities for each beneficiary, depending on the beneficiary's degree of compliance with the regime's requirements (Section 9 of Regulatory Decree No. 1315/2013). This tax credit may not be transferred to third parties. The tax credit can be used to offset the beneficiary's income tax liability only up to certain percentage, determined by the ratio of annual software and computer services exports and the aggregate annual sales resulting from promoted activities declared by the beneficiary (Section 9 of Regulatory Decree No. 1315/2013);

| · | an exclusion from any restriction on import payments related to hardware and IT components and non-applicability of any value-added tax withholding or collection regimes (Section 8 of the Software Promotion Law).

Argentine Ministry of Economy approved our subsidiaries as beneficiaries of the Software Promotion Law as following: (i) on October 10, 2006: IAFH Global S.A. (ii) on April 13, 2007: Sistemas Globales S.A. and (iii) on April 29, 2008: BSF SA. As a result, these subsidiaries have enjoyed fiscal stability in their federal tax burden as in effect at the time they were notified of their inclusion in the promotion regime.

The Software Promotion Law was modified during 2011 through Law No. 26,692. Even though all benefits awarded under the Software Promotion Law as originally enacted in 2004 remained in effect, pursuant to Section 10 of the Software Promotion Law (as amended by Law No. 26,692), IAFH Global S.A., Sistemas Globales S.A. and BSF S.A. were obliged to reapply for registration in the National Registry of Software Producers by July 8, 2014 in order to obtain the benefits established in the Software Promotion Law as described above.

On September 9, 2013, Decree No. 1315/2013 introduced additional implementing rules, including, among other matters, further clarifications to qualify for the promotion regime and specific requirements to be met in order to remain registered in the National Registry of Software Producers during the years after such registration has taken place. These requirements include, among others, minimum annual revenue, minimum percentage of employees involved in the promoted activities, minimum aggregate amount spent in salaries paid to employees involved in the promoted activities, minimum research and development expenses and the filing of evidence of software-related services exports. In addition, Regulatory Decree No. 1315/2013 states that the 60% reduction in corporate income tax provided under the Software Promotion Law shall only become effective as of the beginning of the fiscal year after the date on which the applicant is accepted for registration in the National Registry of Software Producers. The implementing regulation also provides that upon the formal approval of an applicant's registration in the National Registry of Software Producers, any promotional benefits previously granted to such person under the Software Promotion Law as originally enacted in 2004 shall be extinguished. Finally, Regulatory Decree No. 1315/2013 delegates authority to the Secretary of Industry and AFIP to adopt "complementary and clarifying" regulations in furtherance of the implementation of the Software Promotion Law.

On March 11, 2014, AFIP issued General Resolution No. 3,597, which provides that, as a further prerequisite to participation in the Software Promotion Law, exporters of software and related services must register in a newly established Special Registry of Exporters of Services (Registro Especial de Exportadores de Servicios).

According to the abovementioned regulations, on March 14, May 28, 2014 and June 23, 2014, our Argentine subsidiaries IAFH Global S.A., Sistemas Globales S.A. and BSF S.A., respectively, were accepted for registration in the Special Registry of Exporters of Services.

On June 25, 2014, our Argentine subsidiaries IAFH Global S.A. and Sistemas Globales S.A. applied for registration in the National Registry of Software Producers. The Secretary and Subsecretary of Industry issued rulings approving registration in the National Registry of Software Producers of certain of our subsidiaries as follows: (i) Sistemas Globales S.A. on March 18, 2016, (ii) IAFH Global S.A. on April 13, 2015 and (iii) BSF S.A. on November 23, 2015. In each case, the ruling made the effective date of registration retroactive to September 18, 2014 and provided that the benefits enjoyed under the Software Promotion Law as originally enacted were not extinguished until the ruling goes into effect (which have occurred upon its date of publication in the Argentine government's official gazette on before mentioned dates).

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On May 22, 2019, the Argentine Congress enacted Law No. 27,506 ("Ley de Economía del Conocimiento"), which provides a promotional regime for the Knowledge Economy ("Knowledge based Economy Law"). The Knowledge based Economy Law will be valid from January 1, 2020 until December 31, 2029 and aims to promote economic activities that apply knowledge and digitization of information, supported by advances in science and technology, to obtain goods and services and improve processes.

The Knowledge based Economy Law promotes many activities, among others: software, computer and digital services; audiovisual production and post-production; biotechnology, neurotechnology and genetic engineering; geological and prospecting services and others related with electronic and communications; professional services as long as they are exported; nanotechnology and nanoscience; aerospace and satellite industry; nuclear industrial engineering; artificial intelligence, robotic and industrial internet, the internet of things, augmented and virtual reality.

The Knowledge based Economy Law creates the "National Registry of Beneficiaries" for the registration of the potential beneficiaries. According to the Knowledge based Economy Law, the eligible beneficiaries are those who perform as a main activity any of the promoted activities and meet at least two of the following requirements: (i) performance of continuous improvements in the quality of the services, products and/or processes, or through a quality norm suitable to their services, products and/or processes; and/or (ii) expenditures in research and development activities for at least 3 % of the total revenue and/or training of employees assigned to the performance of the promoted activities for at least 8 % of the total payroll; and/or (iii) exports of goods and/or services derived from the performance of any of the promoted activities for at least a certain percentage, which varies depending on the kind of activity and the beneficiary.

The main activity is satisfied when it represents at least 70% of the total turnover.

Pursuant to the Knowledge based Economy Law, since registration, the beneficiaries will enjoy the following benefits:

| · | Enhanced fiscal stability as from registration and for the term of validity of the regime. This benefit may be also extended to provincial and municipal taxes, as long as such jurisdictions adhere to this Knowledge based Economy Law.

| · | Exemption from any value-added tax withholding or collection regimes.

| · | A reduced corporate income tax rate of 15% to the extent that the beneficiaries maintain their payroll in accordance with the conditions provided for in the regulations.

| · | Allowance to take a tax credit derived from any payment or withholding of foreign taxes even if the taxed income constitutes an Argentine source of income.

| · | A reduction on their employer social security contributions, in relation to each employee, of an amount equal to 7,003 ARS per month for year 2020, as amended by the Social Security Law.

| · | Granting a tax credit bond equal to 1.6 times the amount of the employer’s social security contributions that the beneficiary did not pay due to the benefit mentioned in the above paragraph. The tax credit bond, which is onetime transferable, can be used to offset the beneficiary's income tax liability and/or value added tax liability with no restriction.

For registration before the National Registry of beneficiaries, applicants must: (i) have submitted an application for the provisional incorporation into the new regime until December 31, 2019 (which allows the definitive registration to have effects as from January 1, 2020), and (ii) file a definitive application before June 30, 2020. Sistemas Globales S.A. and IAFH S.A. filed their provisional applications for registration in the National Registry of Beneficiaries on November 12, 2019, and BSF S.A. did so on December 3, 2019. As of the date of this annual report, the filing of the definitive applications is still pending.

On October 10, 2019, the Ministry of Production and Labor issued Resolution No. 1084/2019, which appointed the Secretariat of Entrepreneurs and Small and Medium-Sized Enterprises as enforcement authority of the regime and authorized the Secretariat to issue the complementary regulations. Consequently, the Secretariat issued Resolution No. 449/2019, establishing the procedure to be followed and the conditions to be met to file the definitive applications for registration before the National Registry of beneficiaries. Also, pursuant to such Resolution, the Secretariat was put in charge of analyzing the information submitted and verifying compliance with all the relevant requirements.

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On December 23, 2019, the Argentine Government enacted the Ley de Solidaridad Social y Reactivación Productiva No. 27,541 (the “Law on Social Solidarity and Productive Reactivation” or the “Social Solidarity Law”), which amended and repealed certain social security regulations and, therefore, the amount of the reduction of the employer social security contributions originally established as a benefit by the Knowledge based Economy Law was reduced and may not be subject to further adjustments. According to the Social Solidarity Law, the general reduction for employers from their employer social security contributions, in relation to each employee, is established in an amount equal to ARS 7,003 per month for year 2020.

However, on January 20, 2020, the Ministry of Productive Development issued Resolution No. 30/2020, replacing the Secretary of Entrepreneurs and Small and Medium Sized Companies for the Secretariat of Industry, Knowledge Economy and External Commercial Management of the Ministry of Productive Development as enforcement authority of the new Knowledge based Economy Law regime and revoked the registration procedures established by Resolution No. 449/2019 and suspended the registration application analysis and procedures until new complementary regulations are issued by such new enforcement authority.

Therefore, the Knowledge based Economy Law is currently in force, but is currently subject to additional regulation by the enforcement authority that as of the date of this annual report have not yet been issued.

In the meantime, the Argentine Executive Power is considering a bill to modify the Knowledge based Economy Law to include the following:

| · | The fiscal stability benefit would imply only stability regarding the benefits under the Knowledge based Economy Law and not regarding the tax system in general.

| · | Beneficiaries would not be subject to any value-added tax withholding or collection regimes only in the case of export operations.

| · | Beneficiaries will be allowed to deduct as cost any payment or withholding of foreign taxes if the taxed income constitutes an Argentine source of income.

| · | 60% reduction in the total amount of corporate income tax applied to income from the promoted activities.

| · | tax credit equal to the 70% of the social security contribution paid.

| · | The social security contribution benefit would apply only to a portion of the beneficiary’s payroll (in principle up to 3,745 employees, except when there is an increase of the payroll) and, in the future, might be distributed according to a quote.

Uruguay

In 1988, Law No. 15,921 created Uruguay's Free Trade Zone regime allowing any type of industrial, commercial, or service activity to be carried out in a specifically delimited areas of the Uruguayan territory and be performed outside Uruguay.

The main benefits are the following:

| · | Almost full tax exemption (Corporate Income Tax "IRAE", Net Wealth Tax-IP, Value Added Tax – VAT and several withholding taxes) and customs duties exemption;

| · | Foreign employees may opt out of the Uruguayan social security system and, with regard to personal income tax, opt to be subject to Non-Residents Income Tax at a 12% flat rate instead of Individual Tax;

On December 8, 2017, Uruguay’s Executive Power enacted Law No. 19,566, introducing changes to Law No. 15,921, The new Law allows services rendered to third countries from the Free Trade Zone to also be rendered to corporate income taxpayers inside Uruguayan, non-Free Trade Zone territory.

Our subsidiary in Uruguay, Sistemas Globales Uruguay S.A., is situated in a Free Trade Zone and is eligible for the fiscal benefits.

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Additionally, according to the provisions set forth in Decree No. 150/007, income from software production and related services is IRAE exempt, provided they are completely used abroad. Said exemption includes development, implementation at client’s site, version upgrading and correction, customization, quality testing and certification, software maintenance, training and advising. Related services refer to hosting, call center, outsourcing, marketing and other services, whenever software is the main purpose, even when said software has not been developed by the service provider.

In this context, services provided by our subsidiary in Uruguay, Difier, are exempt from income tax.

India

In India, under the Special Economic Zones Act of 2005, the services provided by export-oriented companies within Special Economic Zones (each, a "SEZ") are eligible for a deduction of 100% of the profits or gains derived from the export of services for the first five years from the financial year in which the company commenced the provision of services and 50% of such profits or gains for the five years thereafter. Companies must meet the conditions under Section 10AA of Income Tax Act to be eligible for the benefit. Other tax benefits are also available for registered SEZ companies.

Some locations of our Indian subsidiary are located in a SEZ and have completed the SEZ registration process. Consequently, we started receiving the tax benefit on August 2, 2017. With the growth of our business in an SEZ, our Indian subsidiary may be required to compute its tax liability under Minimum Alternate Tax ("MAT") in future years at the current rate of approximately 21.34%, including surcharges, as its tax liability under the general tax provisions may be lower compared to the MAT liability.

Belarus

The High Technology Park ("HTP") was established in Minsk in 2005 to promote the IT industry in Belarus. The HTP is located east of Minsk and has a special legal regime in effect until 2020.

A legal entity and an individual entrepreneur receive HTP resident status if their activities include: analysis and design of information systems and software; data processing based on client or proprietary software, fundamental and applied research, experimental R&D in the field of natural and technical sciences (R&D involving HTP activity) and utilization of R&D results, among others.

HTP residents pay 1% of their revenue to the HTP Administration and enjoy the following benefits:

| · | Exemption from Corporate Income tax and Value Added Tax on the sale of goods, work or services or from the transfer of property rights in Belarus.

| · | Exemption from land tax and real estate tax on properties that are in the HTP.

| · | Payments by HTP residents to foreign companies in the form of dividends, royalty and interest are subject to withholding tax at a rate of 5%.

| · | Dividend payments are not subject to an offshore duty;

On December 21, 2017, the President of the Republic of Belarus published the Decree No. 8, which extends the duration of the HTP’s tax incentives and the special legal regime until January 1, 2049.

Our subsidiary located in Belarus is a HTP resident and currently benefits from the tax holidays and will continue with exemption as long as the regime remains in effect.

Methodologies and Tools

Effectively delivering the innovative software solutions that we offer requires highly evolved methodologies and tools. Since inception, we have invested significant resources into developing a proprietary suite of internal applications and tools to assist us in developing solutions for our clients and manage all aspects of our delivery process. These applications and tools are designed to promote transparency, and knowledge-sharing, enhance coordination and cooperation, reduce risks such as security breaches and cost overruns, and provide control as well as visibility across all stages of the project lifecycle, for both our clients and us. Our key methodologies and tools are described below.

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Agile Development Methodologies

See "— Item 4.B — Business Overview — Our Services — Agile Pods Methodologies."

Quality Management System

We have developed and implemented a quality management system in order to document our best business practices, satisfy the requirements and expectations of our clients and improve the management of our projects. We believe that continuous process improvement produces better software solutions, which enhances our clients' satisfaction and adds value to their business.

Our quality management system is certified under the requirements of the international standard ISO 9001:2015, the CMMI Maturity Level 3 process areas (which indicates that processes are well characterized and understood, and are described in company standards, procedures, tools and methods) and PMI by implementing the following practices:

| · | Assuring that quality objectives of the organization are fulfilled;

| · | Defining standard processes, assets and guidelines to be followed by our project teams from the earliest stages of the project life cycle;

| · | Continuously evaluating the status of processes in order to identify process improvements or define new processes if needed;

| · | Objectively verifying adherence of services and activities to organizational processes, standards and requirements;

| · | Providing support and training regarding the quality management system to all employees to achieve a culture that embraces quality standards;

| · | Informing related groups and individuals about tasks and results related to quality control improvement;

| · | Raising issues not resolvable within the project to upper management for resolution; and

| · | Periodically gathering and analyzing feedback from our clients regarding our services to learn when we have met expectations and where there is room for improvement.

Since 2013, Globant certified ISO 27001, a standard that provides a model for establishing, implementing, operating, monitoring, reviewing, maintaining, and improving an information security management system (ISMS). The process of certifying ISO 27001 ensures that ISMS is under explicit management control. In 2016, we migrated successfully to the ISO 27001:2013.

Glow

In order to manage our talent base, we have developed a proprietary software application called Glow. Glow is the central repository for all information relating to our Globers, including academic credentials, industry and technology expertise, work experience, past and pending project assignments, career aspirations, and performance assessments, among others. Every Glober can access Glow and regularly update his or her technical skills.

We use Glow as a management tool to match open positions on Studio projects with available Globers, which allows us to staff project teams rapidly and with the optimal blend of industry, technology and project experience, while also achieving efficient utilization of our resources. We believe, based on management's experience in the industry, that we are one of few companies in our industry to employ such a tool for this purpose. Accordingly, we believe Glow provides us with a significant competitive advantage.

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Clients

At Globant, we focus on delivering innovative and high value-added solutions that drive revenues and brand awareness for our clients. We believe that our approach deepens our relationships and leads to additional revenue opportunities. We also target new clients by showcasing our engineering, design and innovation capabilities along with our deep understanding of digital journeys, emerging technologies and related market trends.

Our clients include primarily medium- to large-sized companies based in the United States, Europe, Asia and Latin America operating in a broad range of industries including Media and Entertainment, Professional Services, Technology and Telecommunications, Travel and Hospitality, Banks, Financial Services and Insurance, and Consumer, Retail and Manufacturing. We believe clients choose us based on our ability to understand their business and help them drive revenues, as well as our innovative and high value-added business proposals, tailored Studio-based solutions, and our reputation for high quality execution. We have been able to grow with and retain our clients by merging their industry knowledge with our expertise in the latest market trends to deliver tangible business value.

We typically enter into a master services agreement (or MSA) with our clients, which provides a framework for services and a statement of work (or SOW) to define the scope, timing, pricing terms and performance criteria of each individual engagement under the MSA. We generate 45% of our revenue from long-term projects with terms greater than 24 months.

During 2019, 2018 and 2017, our ten largest clients based on revenues accounted for 39.5%, 44.0% and 41.9% of our revenues, respectively. Our top client for the years ended December 31, 2019, 2018 and 2017, Walt Disney Parks and Resorts Online, accounted for 11.2%, 11.3% and 10.2% of our revenues, respectively.

The following table sets forth the amount and percentage of our revenues for the years presented by client location:

|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands, except percentages) |
By Geography |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 496,353 |  |  |  | 75.3 | % |  | $ | 407,090 |  |  |  | 77.9 | % |  | $ | 325,614 |  |  |  | 78.8 | %
Europe |  |  | 46,784 |  |  |  | 7.1 | % |  |  | 46,240 |  |  |  | 8.9 | % |  |  | 38,484 |  |  |  | 9.3 | %
Asia |  |  | 4,653 |  |  |  | 0.7 | % |  |  | 3,067 |  |  |  | 0.6 | % |  |  | 700 |  |  |  | 0.2 | %
Latin America and other |  |  | 111,535 |  |  |  | 16.9 | % |  |  | 65,913 |  |  |  | 12.6 | % |  |  | 48,641 |  |  |  | 11.8 | %
Revenues |  | $ | 659,325 |  |  |  | 100.0 | % |  | $ | 522,310 |  |  |  | 100.0 | % |  | $ | 413,439 |  |  |  | 100.0 | %

The following table shows the distribution of our clients by revenues for the years presented:

|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Over $5 Million |  |  | 26 |  |  |  | 21 |  |  |  | 18 |
$1 - $5 Million |  |  | 81 |  |  |  | 69 |  |  |  | 64 |
$0.5 - $1 Million |  |  | 53 |  |  |  | 39 |  |  |  | 45 |
$0.1 - $0.5 Million |  |  | 191 |  |  |  | 86 |  |  |  | 82 |
Less than $0.1 Million |  |  | 471 |  |  |  | 158 |  |  |  | 147 |
Total Clients |  |  | 822 |  |  |  | 373 |  |  |  | 356 |

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Sales and Marketing

Our growth strategy is based on four pillars: (i) leveraging our broad expertise; (ii) growing within existing clients; (iii) acquiring new clients; and (iv) pursuing strategic acquisitions. Our expertise and Studio approach help us expand the portfolio and practices we offer to our clients. Our acquisitions are pursued with the aim of fulfilling strategic goals, such as growing into a new geography (e.g., Nextive, TerraForum, BlueStar Peru, Clarice and SmallFootprint) or the expansion of specializations (e.g. Accendra, Openware, Huddle, Dynaflows, WAE, L4, Difier, Ratio, PointSource, Avanxo, Belatrix and BiLive).

Under our multi-pronged, integrated sales and marketing strategy, our senior management, sales executives, sales managers, account managers and engagement managers work collaboratively to target, acquire and retain new clients and expand our work for existing clients. Our sales and marketing team, currently comprised of 125 sales and marketing personnel, has broad geographic coverage with commercial offices located in Buenos Aires, Bogotá, Montevideo, São Paulo, London, Madrid, Boston, New York, Miami, Houston, Raleigh, Winston Salem, Dallas, Seattle and San Francisco.

Beyond leveraging our broad expertise, our sales strategy is driven by three fundamentals: retain, develop and acquire ("RDA"). The retention ("R") component is focused on maintaining our wallet share with existing accounts through flawless execution on our engagements. The development ("D") component emphasizes developing existing client relationships by significantly expanding our wallet share and capturing business from our competitors. The acquisition ("A") component targets new client accounts. Through our RDA strategy, as well as marketing and branding events, we are able to acquire new or expand existing engagements in our large and growing addressable market.

New Clients

We seek to create relationships with strategic clients through existing client referrals or through our multi-tiered approach. Our approach begins by identifying industries and geographic locations with solid growth potential. Once potential clients are identified, we seek to engage the market-facing management personnel of those companies instead of their IT divisions, which allows us to get a better understanding of the prospect's business model before engaging with its IT personnel. The focus on an enterprise's revenue drivers allows us to highlight the value of our services in meeting our client's business needs, thereby differentiating us.

Our account sales teams are made up of sales executives and sales managers, and follow specific guidelines for managing opportunities when contacting potential new clients. Before a sales team approaches a prospective client, we gather significant intelligence and insight into the client's potential needs, creating a specific value proposition for discussion during the engagement process. Additional opportunities resulting from the planned targeted engagement are gathered and tracked. Once an appropriate opportunity has been identified and confirmed with the client, our sales team performs account and competition mapping and enlists internal industry and subject matter experts as well as pre-sales engineers from all of the participating Studios. We then generate proposals to present to and negotiate with the client. Once we have secured the engagement, our sales executives work closely with the Globant leadership team, partners and subject matter experts from our Studios to ensure that we exceed our new client's expectations.

From time to time, we use ideation sessions and discovery engagements in our pre-sales process. During the discovery engagements we meet with clients to discuss their goals and develop creative solutions. The discovery engagement sessions help us discover our clients' main objectives, even if those objectives are not explicitly stated. These sessions are critical in helping us to offer solutions that will adapt to our clients' needs and wishes. This allows us to showcase our expertise in emerging technologies to the prospective client while also allowing us to generate a significant number of possible future client opportunities.

Existing Clients

Once we have established the client relationship, we are focused on driving future growth through increased client loyalty and retention. We leverage our historical successes with existing clients and our relationships with our clients' key decision-makers to cross-sell additional services, thereby expanding the scope of our engagements to other departments within our clients' organizations. We seek to increase our revenues from existing clients through our account managers, technical directors, program managers, leadership team, Studio partners, and subject matter experts.

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Since 2016, we introduced a new model that intends to reshape our go-to-market strategy to scale our company in the coming years, called 50 Squared. The main goal of this approach is to focus our team on the top 50 high potential accounts that have the capacity to grow exponentially over time. To do so, we have appointed our most senior people from Sales, Technology and Operations to lead these teams. This account focus has become the most important pillar of our go-to-market strategy and every account within Globant now has the goal to become part of this program.

We undertake periodic reviews to identify existing clients that we believe are of strategic importance based on, among other things, the amount of revenue we generate from the client, as well as the growth potential and brand recognition that the client provides.

Marketing - Stay Relevant

To fully implement a digital and cognitive transformation, we also help our customers stay relevant within their industries and audiences by providing helpful information and initiatives to understand their users’ environment, competitors and behavior. With research, SME gatherings, webinars, workshops and conferences, our thought leaders offer valuable insights to help organizations create valuable and emotional experiences for the audience.

As of December 31, 2019, our marketing department, Stay Relevant, is based in Argentina, Europe, India and the United States. This team promotes our brand through a variety of channels, including the following:

| · | Blog - The blog http://stayrelevant.globant.com/is a great way to explore content on the latest trends and best practices in the different industries we work with.

| · | Sentinel Report - the goal of the sentinel report is to provide insightful evidence of consumer behavior and market trends that ignite strategic thinking.

| · | Webinars - Our webinars explore different trends and technologies in depth showcasing views from experts in the field.

| · | CONVERGE - Our series of events that bring together some of the best creative minds in the industry for one amazing day of igniting stories, inventive ideas, learning experiences, and "wow" technology showcase that enable attendees to re-think the new ways they do business. They exist in full day format, such as CONVERGE New York, CONVERGE Buenos Aires, CONVERGE Madrid, CONVERGE Bogota, CONVERGE Mexico and CONVERGE Medellin and in short format, such as CONVERGEx London.

| · | Videos and other communications channels - We develop different types of communication pieces to convey trends and other information that support our views of the future.

| · | Events - We host events catered to many audiences, from small events for specific guests or partners to large events that welcome the community in full. Each event looks to bring exciting speakers and networking possibilities.

| · | Books - Our experts have written the following books, “Embracing the Power of AI. A gentle CXO Guide” will help you demystify deep learning, machine learning, and artificial intelligence―and embrace the augmented intelligence revolution ahead.“The Never Ending Digital Journey”provides readers with the concepts and steps needed to create successful user experiences. The authors look ahead and explore digital scenarios of the future.

Competition

The markets in which we compete are changing rapidly. We face competition from both global IT services providers as well as those based in the United States. We believe that the principal competitive factors in our business include: the ability to innovate; technical expertise and industry knowledge; end-to-end solution offerings; reputation and track record for high-quality and on-time delivery of work; effective employee recruiting; training and retention; responsiveness to clients' business needs; scale; financial stability; and price.

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We face competition primarily from:

| · | large global consulting and outsourcing firms, such as Accenture Interactive, Sapient, Thoughtworks and Epam;

| · | digital agencies and design firms such as Sapient, Razorfish, RGA and Ideo;

| · | traditional technology outsourcing IT services providers, such as Cognizant Technology Solutions, GlobalLogic, Aricent, Infosys Technologies, Mindtree HCL, Tata, Wipro and Luxoft; and

| · | in-house product development departments of our clients and potential clients.

We believe that our focus on creating software that appeals and connect emotionally with millions of consumers positions us well to compete effectively in the future. However, some of our present and potential competitors may have substantially greater financial, marketing or technical resources; may be able to respond more quickly to emerging technologies or processes and changes in client demands; may be able to devote greater resources towards the development, promotion and sale of their services than we can; and may make strategic acquisitions or establish cooperative relationships among themselves or with third parties that increase their ability to address the needs of our clients.

Intellectual Property

Our intellectual property rights are important to our business. We rely on a combination of intellectual property laws, trade secrets, confidentiality procedures and contractual provisions to protect the investment we make in research and development. We require our employees, independent contractors, vendors and clients to enter into written confidentiality agreements upon the commencement of their relationships with us.

We customarily enter into nondisclosure agreements with our clients with respect to the use of their software systems and platforms. Our clients usually own the intellectual property in the software solutions we deliver. Furthermore, we usually grant a perpetual, worldwide, royalty-free, nonexclusive, transferable and non-revocable license to our clients to use our preexisting intellectual property, but only to the extent necessary in order to use the software solutions we deliver.

We have developed a number of proprietary internal tools that we use to manage our projects, build applications in specific software technologies, and assess software vulnerability. These tools include Glow, Nails, and our Service Over Platforms (SoP).

Our registered intellectual property consists of the trademark "Globant" (which is registered in twelve jurisdictions, including the United States and Argentina), certain other trademarks related to our service offerings and products, and three software patents granted in the United States in favor of our United States subsidiary Globant, LLC. We do not believe that any individual registered intellectual property right, other than our rights in our name and logo, is material to our business.

We have two pending patents, filed before the US Patent and Trademark Office during 2019, related to Natural Language Search Engine with a Predictive Writing Tool for Coding, and Natural Language Driven Transaction System.

Facilities and Infrastructure

As of December 31, 2019, we provided our services through a network of 56 offices in 37 cities throughout seventeen countries. Our delivery locations are in United States (San Francisco, New York, Seattle, Raleigh, Chicago and Dallas), Argentina (Buenos Aires, Tandil, Rosario, Tucumán, Córdoba, Resistencia, Bahía Blanca, Mendoza, Mar del Plata and La Plata), Uruguay (Montevideo), Colombia (Bogotá and Medellín), Brazil (São Paulo), Peru (Lima), Chile (Santiago), México (Guadalajara and México City), India (Pune and Bangalore), Spain (Madrid), Belarus (Minsk), Romania (Cluj) and United Kingdom (London). We also have client management locations in the United States (Houston, San Francisco, New York, Winston-Salem, Redwood City and Miami), Brazil (São Paulo), Colombia (Bogotá), Uruguay (Montevideo), Argentina (Buenos Aires), France (Paris) and the United Kingdom (London). The main administrative offices of our principal subsidiary (which also include a delivery center) are located in Buenos Aires. Our principal executive office is located in Luxembourg. All of our facilities (with the exceptions of Tucumán and Bahía Blanca) are leased. We also have three offices under construction in Buenos Aires, Tandil and Medellin.

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The table below breaks down our locations by country and city and provides the aggregate square footage of our locations in each city as of December 31, 2019.

Country |  | City |  | Number of Offices |  | Square Feet
Argentina |  | Bahía Blanca |  | 1 |  | 6,986 |
Argentina |  | Buenos Aires |  | 4 |  | 120,276 |
Argentina |  | Córdoba |  | 2 |  | 37,200 |
Argentina |  | La Plata |  | 1 |  | 17,222 |
Argentina |  | Mar del Plata |  | 1 |  | 20,451 |
Argentina |  | Mendoza |  | 3 |  | 30,139 |
Argentina |  | Resistencia |  | 1 |  | 9,688 |
Argentina |  | Rosario |  | 2 |  | 20,678 |
Argentina |  | Tandil |  | 2 |  | 11,765 |
Argentina |  | Tucumán |  | 1 |  | 21,689 |
Brazil |  | Sao Paulo |  | 2 |  | 12,712 |
Chile |  | Santiago |  | 1 |  | 8,245 |
Colombia |  | Bogotá |  | 5 |  | 174,623 |
Colombia |  | Medellín |  | 2 |  | 91,170 |
France |  | Paris |  | 1 |  | 323 |
India |  | Bangalore |  | 1 |  | 4,273 |
India |  | Pune |  | 1 |  | 129,877 |
UK |  | London |  | 1 |  | 2,756 |
Mexico |  | Mexico City |  | 3 |  | 94,992 |
Mexico |  | Guadalajara |  | 1 |  | 3,606 |
Peru |  | Lima |  | 4 |  | 42,098 |
Spain |  | Madrid |  | 1 |  | 6,986 |
Spain |  | Barcelona |  | 1 |  | 15 |
United States |  | New York |  | 1 |  | 7,707 |
United States |  | San Francisco |  | 1 |  | 4,844 |
United States |  | Seattle |  | 1 |  | 25,489 |
United States |  | Miami |  | 1 |  | 151 |
United States |  | Dallas |  | 1 |  | 6,771 |
United States |  | Chicago |  | 1 |  | 2,691 |
United States |  | Houston |  | 1 |  | 108 |
United States |  | Raleigh |  | 1 |  | 27,480 |
United States |  | Redwood City |  | 1 |  | 388 |
United States |  | Winston-Salem |  | 1 |  | 3,531 |
Luxembourg |  | Luxembourg |  | 1 |  | 150 |
Uruguay |  | Montevideo |  | 1 |  | 26,974 |
Belarus |  | Minsk |  | 1 |  | 7,621 |
Romania |  | Cluj-Napoca |  | 1 |  | 8,396 |
Total |  |  |  | 56 |  | 990,071 |

Regulatory Overview

Due to the industry and geographic diversity of our operations and services, our operations are subject to a variety of rules and regulations, and several Latin America countries, the United States, Europe and India federal and state agencies regulate various aspects of our business. See "Risk Factors — Risks Relating to Our Business and Industry — Our business results of operations and financial condition may be adversely affected by the various conflicting and/or onerous legal and regulatory requirements imposed on us by the countries where we operate". If we are not in compliance with applicable legal requirements, we may be subject to civil or criminal penalties and other remedial measures, which could adversely affect our business, financial condition and results of operations."

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We benefit from certain tax incentives promulgated by the Argentine, Uruguayan, Indian and Belarus governments. See "— Our Delivery Model — Government Support and Incentives."

Argentine Taxation

The following is a summary of the material Argentine tax considerations relating to our operations in Argentina and it is based upon laws, regulations, decrees, rulings, income tax conventions (treaties), administrative practice and judicial decisions in effect as of the date of this annual report. Legislative, judicial or administrative changes or interpretations may, however, be forthcoming. Any such changes or interpretations could affect the tax consequences to us, possibly on a retroactive basis, and could alter or modify the statements and conclusions set forth herein. This summary does not purport to be a legal opinion or to address all tax aspects that may be relevant to our operations in Argentina.

Laws No. 27,430 and No. 27,541, enacted by the Argentine Congress on December 27, 2017 and December 21, 2019 respectively, made relevant amendments to the Argentine federal tax regime. Such amendments reached, among other laws, the Argentinean Income Tax Law (the “ITL”). As a result, references to ITL and other tax laws refer to laws in force according to such amendments.

Software Promotion Law

The Software Promotion Law (No. 25,922) sets forth a promotional regime for the software industry that remained in effect until December 31, 2019.

Argentine Ministry of Economy approved our subsidiaries as beneficiaries of the Software Promotion Law as following: (i) on October 10, 2006: IAFH Global S.A., (ii) on April 13, 2007: Sistemas Globales S.A., and (iii) on April 29, 2008: BSF S.A. For further discussion of the Software Promotion Law, see "Business Overview — Our Delivery Model — Government Support and Incentives".

Knowledge based Economy Law

On May 22, 2019, the Argentine Congress enacted Law No. 27,506 ("Ley de Economía del Conocimiento"), which provides a promotional regime for the Knowledge Economy ("Knowledge based Economy Law"). The Knowledge based Economy Law will be valid from January 1, 2020 until December 31, 2029 and aims to promote economic activities that apply knowledge and digitization of information, supported by advances in science and technology, to obtain goods and services and improve processes.

The Knowledge based Economy Law promotes many activities, among others: software, computer and digital services; audiovisual production and post-production; biotechnology, neurotechnology and genetic engineering; geological and prospecting services and others related with electronic and communications; professional services as long as they are exported; nanotechnology and nanoscience; aerospace and satellite industry; nuclear industrial engineering; artificial intelligence, robotic and industrial internet, the internet of things, augmented and virtual reality.

This promotional regime establishes several tax benefits and social security benefits, among which we outline the decrease of the corporate income tax rate to 15%.

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The beneficiaries of the Software Promotion Law must declare their intention to be transferred to the Knowledge based Economy Law, until December 31, 2019. Sistemas Globales S.A. and IAFH S.A. filed their provisional applications to be incorporated in the National Registry of Beneficiaries of the regime for the Promotion of the Knowledge Economy on November 12, 2019, and BSF S.A. on December 3, 2019. Both applications are treated as provisional, and the companies must fill a definitive application before June 30, 2020.

Currently, the Knowledge based Economy Law is subject to additional regulation by the enforcement authority. In addition, the Argentine Executive Power is considering a bill to modify the Knowledge based Economy Law. For further discussion of the Knowledge based Economy Law, see "Business Overview — Our Delivery Model — Government Support and Incentives".

Income Tax

The Argentine Income Tax Law No. 20,628, as amended ("ITL"), establishes a federal tax on the worldwide income of Argentine resident individuals, legal entities incorporated in Argentina and Argentine branches of foreign entities. On the income earned by Argentine residents from activities carried out abroad, any payment of foreign taxes can be taken as a credit against payment of the applicable Argentine tax. However, the credit may only be applied to the extent that the foreign tax does not exceed the Argentine tax. Income tax is payable on the net income made in a given fiscal year. Losses incurred during any fiscal year may be carried forward and set off against taxable income obtained during the following five fiscal years.

Non-Argentine residents and legal entities without a permanent establishment in Argentina (“Foreign Beneficiaries”) are taxed only on income derived from Argentine sources. Based on the ITL, income will be considered as sourced in Argentina when it is made from assets located, placed or used in Argentina, or from the performance of any act or activity in Argentina that produces an economic benefit, or from events occurring in Argentina

Until the enactment of Law No. 27,430 in December 2017, the ITL set forth that Argentine resident companies and branches of non-Argentine entities were taxed at corporate level on their worldwide income at a rate of 35% on net profits and dividends distributions were made on a tax-free basis. Law No. 27,430 sets forth the progressive reduction of the corporate tax rate from 35% to 30% applicable to the fiscal periods starting from January 1, 2018 until December 31, 2019, and to 25% applicable to the fiscal periods starting on January 1, 2020. However, it also establishes that dividends or other profits distributed to Argentine resident individuals and Foreign Beneficiaries are subject to taxation at 7% and 13%, depending on the fiscal year in which the profits generating the dividends to be distributed were obtained. Therefore, as of January 1, 2018, income tax on Argentine resident companies and branches of non-Argentine entities applied in two stages: (i) a first stage charged on the corporate level (at a tax rate of 30% or 25%, depending on the fiscal period involved, as explained above); and (ii) a second stage charged on the shareholder or owner level - when being an Argentine resident individual or a Foreign Beneficiary (at a tax rate of 7% or 13%, according to the fiscal period from which the distributed profit derived).

On December 23, 2019, the Argentine Government enacted the Ley de Solidaridad Social y Reactivación Productiva No. 27,541 (the "Law on Social Solidarity and Productive Reactivation " or the "Social Solidarity Law") which declared a public emergency in economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters, and also delegated legislative powers to the National Executive Power, until December 31, 2020. According to the Social Solidarity Law, the corporate income and dividend tax rates for tax years commencing on or after January 1, 2020 through December 31, 2020 are 30% and 7%, respectively. Consequently, the effectiveness of the 25% and 13% tax rates have been delayed until tax years commencing after December 31, 2020.

Argentine resident individuals are taxed on a sliding scale from 5% to 35%, depending on their net income obtained during the fiscal year. However, income obtained from the disposal (capital gains) or ownership (interest) of certain securities, are taxed at different rates or exempted according to the amendments introduced by Law No. 27,430 and Law No. 27,541.

In fact, income derived from the transfer of shares, representative securities and deposit certificates shares and any type of corporate participations, including certain mutual funds shares and rights over trusts and similar contracts, digital currencies, securities, bonds and other securities, is subject to tax at a rate of 15% on the net income unless exemption mentioned above apply.

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In addition, the disposal of government securities, corporate notes, debt securities, shares in certain mutual funds and certain digital currencies will be taxed at a 15% or 5% depending on they are issued in foreign currency or with adjustment clause or not, respectively. Finally, interest derived from the ownership of securities is taxed for Argentine individuals according to the sliding scale we mentioned above, from 5% to 35%, unless one of the exemptions we mention below apply.

Argentine resident individuals’ profit derived from disposal of shares, securities, deposit certificates shares or corporate participations, governmental bonds, negotiable obligations among other instruments is exempted from income tax provided that such operations are carried out through stock exchanges or markets authorized by the Argentine Securities Commission (“CNV”, after is acronym in Spanish) and other regulatory conditions are complied with.

Moreover, interest arising from account deposits, special savings accounts, fixed-term deposits in national currency and third party deposits or other forms of fundraising public funds, made in institutions subject to the legal regime of financial institutions (Law No. 21,526), are exempt from the income tax, according to the new subsection h) of Section 26 of the ITL. The exemption is not applicable to interest from deposits with an adjustment clause. Interest and gains deriving from negotiable obligations, certain investment funds and public bonds are exempt.

Foreign Beneficiaries are subject to withholding tax on any income or gain deemed by the ITL to derive from an Argentine source. To determine the effective withholding rate, the 35% corporate rate is applied on a presumed net income provided by the ITL that varies depending on the type of income. As general principle, such presumed net income does not allow any proof on the contrary. By exception and for certain types of income, the ITL allows Foreign Beneficiaries to opt to apply a 35% rate to the real gain obtained in the transaction.

Income derived from the disposition of shares, securities, deposit certificates shares and any type of corporate participations of an Argentine company obtained by Foreign Beneficiaries are subject to income tax, at the following tax rates: (i) if the seller is located in a so called “cooperative jurisdiction” and the funds are sent from such a jurisdiction, 15% on the net gain or 13.5% on the gross amount of the transaction, at the option of the seller; or (ii) if the seller is located in a non-cooperative jurisdiction or the funds are sent from such a jurisdiction, 35% on the net gain or 31.5% on the gross amount of the transaction, at the option of the seller. In addition, disposal of government securities, corporate notes, debt securities, shares in certain mutual funds and certain digital currencies will be taxed at a 13,5% on the gross amount of the transaction (or 15% on the net gain) or 4,5% on the gross amount of the transaction (or 5% on the net gain), depending on whether they are issued in foreign currency or with adjustment clause or not, respectively. If the seller is located in a non-cooperative jurisdiction or the funds are sent from such a jurisdiction, 35% on the net gain or 31.5% on the gross amount of the transaction, at the option of the seller. Moreover, interests, other returns or any gain derived from the ownership of government securities, corporate notes, debt securities, shares in mutual funds, digital currencies and other assets would be subject to corporate tax rate of 35% according to the latest amendments introduced by Law No. 27,541 on the presumed net income applicable depending on the type of security, unless exemption mentioned hereunder applies.

The ITL provides an exemption applicable to any income obtained by Foreign Beneficiaries, derived from the disposal (capital gains) and/or ownership (interest) of shares, public bonds, negotiable obligations, certain securities related to financial trust and mutual funds, ADRs, etc. Such exemption would be applicable to the extent that (a) Foreign Beneficiaries do not reside in and the funds are not sent from non-cooperative jurisdictions and (b) the mentioned securities are traded through and/or listed on stock exchanges or markets authorized by the CNV and other regulatory conditions are complied with of shares provided that such operations are carried out through stock exchanges or markets authorized by the CNV.

Cross-border royalty payments to Foreign Beneficiaries are subject to withholding at an effective rate of 21%, 28% or 31.5% depending on (a) the kind of right which use or exploitation the royalty is remunerating and/or (b) whether transfer of technology is involved or not and/or (c) whether such technology is obtainable in Argentina or not and/or (d) whether the relevant agreement is registered before Instituto Nacional de Propiedad Intelectual (“INPI” after its Spanish acronym), the Argentine organism in charge of registration any intellectual property or not.

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Moreover, payments related to software licenses are in general subject to a 31.5% tax withholding rate.

In addition, interest payments are generally subject to withholding at a rate of 15.05% if the lender is a foreign banking or financial institution that is supervised by the respective central bank or equivalent organism and is located in a jurisdiction which is not considered a nil or low-tax jurisdiction or in a jurisdiction that is party to an exchange of information treaty with Argentina and, as a result of the application of its internal regulations, cannot refuse to disclose information to the respective tax authorities on the basis of bank or stock secrecy rules. In all other cases, effective rate of 35% will apply.

A Convention for the Avoidance of Double Taxation (“DTT”) signed between Argentina and the country of residence of the Foreign Beneficiary may provide certain reductions in the domestic rates applicable to Foreign Beneficiaries obtaining Argentine-source income (such as interest, dividends, royalties, capital gains, etc.). The following jurisdictions have DTTs currently in force with Argentina: Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, Mexico, Norway, Russia, Spain, Sweden, Switzerland, The Netherlands, United Arab Emirates and the United Kingdom. Moreover, on year 2018 and 2019 the Executive Power of Argentina signed DTTs with Qatar, Turkey, China, Japan and Luxembourg but they are pending of approval by the Argentine Congress. Please note there is no DTT currently in force with the United States of America.

Finally, ITL establishes the taxation of indirect transfers of assets located in Argentina. If a foreign beneficiary transfers shares, quotas, participations and other rights representative of the capital or equity of an entity incorporated, domiciled or located abroad, the resulting income will be considered as Argentine-source income as long as the following conditions prevail: (i) the value of the shares, participations or rights of the foreign entity, at the time of sale or in any of the 12 previous months, represent, at least, 30% of the value of the assets that the entity owns directly or indirectly in Argentina; and (ii) the sold shares, participations or rights of the foreign entity represent 10% of the equity of that entity, at the time of their disposal or in any of the 12 previous months. The non-resident may opt to pay 15% on the net gain or 13.5% over the gross amount of the transaction. However, the tax will not apply if the transfer is done within an economic group. The tax on indirect transfers will only apply to participations acquired after January 1, 2018.

Laws No. 27,430 and No. 27,468 established an integral inflation adjustment tax mechanism. The mechanism is triggered when the variation of the Consumer Price Index (IPC) supplied by the National Institute of Statistics and Censuses (INDEC), exceeds 55%, 30% and 15%, for tax years beginning on or after January 1, 2018, 2019 and 2020, respectively.

When companies apply the integral inflation adjustment tax mechanism, they must allocate one-sixth of any resulting negative or positive inflation adjustment to the tax year to which it corresponds, and the remaining fifth-sixth, in equal parts, to the following five tax years.

Tax on Presumed Minimum Income

This tax applied to assets of Argentine companies. The tax was only applicable if the total value of the assets is above 200,000 Argentine pesos at the end of the company's fiscal year, and is levied at a rate of 1% on the total value of such assets. The amount of the tax paid on presumed minimum income is allowed as a credit toward income tax. Furthermore, to the extent that this tax cannot be credited against normal corporate income tax, it may be carried forward as a credit for the following ten years. Shares and other capital participations in the stock capital of entities subject to the minimum presumed income tax are exempted from the tax on presumed income.

Law No 27,260, published in the Argentine government's official gazette on July 22, 2016, eliminates the Minimum Assumed Income Tax for fiscal years beginning on January 1, 2019.

Value-Added Tax

The value-added tax applies to the sale of goods, the provision of services and importation of goods. Under certain circumstances, services rendered outside of Argentina, which are effectively used or exploited in Argentina, are deemed to be rendered in Argentina and, therefore, subject to value-added tax. The current value-added tax general rate is 21%. Certain sales and imports of goods, such as computers and other hardware, are, however, subject to value-added tax at a lower tax rate of 10.5%. The sale of the shares held in Argentine or foreign companies is not subject to value-added tax.

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Services rendered in Argentina, which are effectively used or exploited abroad, qualify as “export services” and are not subject to VAT. The effective utilization or exploitation is verified with the immediate utilization or the first act of disposal of the service by the recipient even when, if appropriate, the latter intends such service for consume.

Law No. 27,346 published in the Argentine government's official gazette on December 27, 2016, modifies the value-added tax law and creates the figure of substitute taxpayer for the payment of the tax corresponding to foreign residents who render services in Argentina.

Substitute taxpayers will assess and pay for value-added tax corresponding to the act, even in the cases in which it is impossible to withhold that tax from the foreign resident. Also, the tax paid will be considered as a tax credit if in favor of the substitute taxpayer.

Tax on Debits and Credits in Bank Accounts

This tax applies to debits and credits from and to Argentine bank accounts and to other transactions that, due to their special nature and characteristics, are similar or could be used in lieu of a bank account. There are certain limited exceptions to the application of this tax. The general tax rate is 0.6% applicable on each debit and/or credit; however there are increased rates of 1.2% and reduced rates of 0.075%. According to Decree 409/2018, the owners of bank accounts on which the tax is levied at the 0.6% or 1.2% rate may compute 33% of the amounts paid under this tax as a payment on account of the income tax, tax on presumed minimum income and/or the special contribution on cooperative capital. The amount not computed cannot be subject, under any circumstances, to compensation with other taxes borne by the taxpayer or requests for reimbursement or transfer in favor of third parties, and may be transferred, until exhaustion, to other fiscal periods of the aforementioned taxes.

Personal Assets Tax

Personal Assets Tax Law, as amended, states that all individuals domiciled in Argentina are subject to a tax on their worldwide assets; while, individuals not domiciled in Argentina are only liable for this tax on their assets in Argentina. Shares, other equity participations and securities are only deemed to be located in Argentina when issued by an entity domiciled in Argentina. The tax on shares and other equity participations in local companies is paid by the local company itself. The applicable rate was 0.25% on the company’s net worth. Pursuant to the Personal Assets Tax Law, an Argentine company is entitled to seek reimbursement of such tax paid from the shareholders, including by withholding and/or foreclosing on the shares, or by withholding dividends. The current DDTs signed by Argentina do not provide an exemption on this tax.

Under the Social Solidarity Law, the tax rate applicable to shares or participations in the capital of companies governed by the Argentine Corporations Law was increased from the former 0.25% to a 0.50% of the pro-rata equity value.

In addition, with respect to Argentine residents, the rate for personal assets tax was increased according to a progressive scheme which varies between 0.50% to 1.25% on the overall amount of the assets exceeding the tax allowance located in Argentina. For assets located outside Argentina, the tax scheme provides for tax rates between 0.70% to 2.25% on the overall amount of the assets exceeding the tax allowance located outside Argentina; provided that if financial assets for an aggregate amount equal to at least 5% of all assets located outside Argentina are repatriated to Argentina on or before March 31, each year, all assets located outside Argentine will then be subject to the rates described above for the assets located in Argentina. In both cases, there tax rates are applicable as from 2019.

Law No. 27,260 introduced benefits for compliant taxpayers that include the exemption of personal assets tax. Our Argentine subsidiaries applied to and were accepted by the AFIP to be eligible of the exemption of personal assets tax in December 2016 and January 2017.

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Tax on Dividends

Law No. 27,430 introduced the following changes to the taxation of distribution of dividends from Argentine companies, for fiscal years beginning on or after January 1, 2018:

| • | Dividends from profits obtained before fiscal year 2018 are not subject to any income tax withholding except for the ''Equalization Tax''. The Equalization Tax is applicable when the dividends distributed are higher than the ''net accumulated taxable income'' of the immediate previous fiscal period from when the distribution is made. The Law repeals the Equalization Tax for distributions made with income accrued from January 1, 2018.

| • | Dividends from profits obtained during fiscal years 2018 and 2019 on Argentine shares paid to Argentine resident individuals and/or non-residents, or Foreign Beneficiaries, are subject to a 7% income tax withholding on the amount of such dividends, or the Dividend Tax.

| • | The Tax Rate on dividends from profits obtained during fiscal year 2020 and onward increased to 13%. This rate may be reduced by application of a DTT, provided certain conditions are complied with.

The Social Solidarity Law extended the application of 7% tax rate for 2020. The tax rate on dividends from profits obtained during year 2021 and onwards is 13%.

Duty on exported services

On December 4, 2018, Argentina approved the budget bill for 2019 by Law 27,467. The Law amends the Customs Code to allow for duties to be applied to the exportation of services (and not only goods). In addition, the Executive Power was allowed to impose export duties of up to 30% until December 31, 2020. However, in the cases of services and goods that were not subject to export duties before September 2, 2018, the maximum rate is 12%.

On January 2, 2019, the Argentine Executive Power issued Decree No. 1201/2018 establishes an export duty on exports of services at a rate of 12% with a maximum limit of Argentine pesos 4 per U.S. dollar of the amount arising from the invoice or equivalent document.

On December 28, 2019, Decree 99/2019 was published in the Official Gazette to extend the application of duties on export of services until December 31, 2021 with a rate of 5% without limit. The new rate is in force from January 1, 2020.

A service is considered “exported” when it is rendered from Argentina but it is effectively used or exploited off shore. The effective utilization or exploitation is verified with the immediate utilization or the first act of disposal of the service by the recipient even when, if appropriate, the latter intends such service for consume.

Tax for an inclusive and solidary Argentina

Law No. 27,541 established an emergency tax (Impuesto para una Argentina Inclusiva y Solidaria "PAIS") for the term of five years that is applicable on certain FX transactions, purchases of goods and services in foreign currency and international passenger transport.

The tax is determined by applying the rate of 30% on each of the transactions.

Turnover Tax

Turnover tax is a local tax levied on gross income. Each of the provinces and the City of Buenos Aires apply different tax rates. The tax is levied on the amount of gross income resulting from business activities carried on within the respective provincial jurisdictions. The provinces have signed an agreement to avoid the double taxation of activities performed in more than one province (Convenio Multilateral del 18 de agosto de 1977). Under this agreement, gross income is allocated between the different provinces applying a formula based on income obtained and expenses incurred in each province. In the Province of Buenos Aires, we have received an exemption from the payment of the turnover tax for the period from 2011 through December 2019 for Sistemas Globales S.A. and for IAFH Global S.A.

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Provincial Tax Advance Payment Regimes Applicable to Local Bank Accounts

Certain provincial tax authorities have established advance payment regimes regarding the turnover tax that are, in general, applicable to credits generated in bank accounts opened with financial institutions governed by the Argentine Financial Institutions Law. These regimes apply to local tax payers which are included in a list distributed —usually on a monthly basis— by the provincial tax authorities to the financial institutions aforementioned.

Tax rates applicable depend on the regulations issued by each provincial tax authority, in a range that, currently, could amount up to 5%. For tax payers subject to these advance payment regimes, any payment applicable qualifies as an advance payment of the turnover tax.

Stamp Tax

Stamp tax is a local tax that is levied based on the formal execution of public or private instruments. Documents subject to stamp tax include, among others, all types of contracts, notarial deeds and promissory notes. Each province and the City of Buenos Aires has its own stamp tax legislation. Stamp tax rates vary according to the jurisdiction and agreement involved. In general, stamp tax rates vary from 1% to 4% and are applied based on the economic value of the instrument. In the Province of Buenos Aires, the Argentinian companies that are benefited from the turnover tax exemption, are also exempt from the stamp tax.

Free Good Transmission Tax

The Province of Buenos Aires established this tax in 2009. According to Law 14,200, all debts accrued up to December 31, 2010 have been exempted from this tax. This tax is levied on any wealth increases resulting from free good or asset transmission (i.e. a donation, inheritance, etc.), provided the beneficiary (individual or company) is domiciled in the Province of Buenos Aires or the goods or assets are located in the Province of Buenos Aires. Moreover, according to this tax, shares and other securities representing capital stock, an equity interest or the equivalent which, at the time of transmission, are located in another jurisdiction (i.e., not in the Province of Buenos Aires) or were issued by entities or companies domiciled in another jurisdiction, are deemed to be situated in the Province of Buenos Aires in proportion to the assets that such entities or companies have in the Province of Buenos Aires. This tax will only be applicable if the benefit obtained by the individual or the company exceeds 322,800 Argentine pesos. In the case of parents, children and spouses, the threshold amount is increased up to 1,344,000 Argentine pesos. The tax rates are progressive and vary from 1.60% to 8.78%.

The tax may become applicable in the event that our Argentine subsidiaries receive any free transmission of goods or assets located within the Province of Buenos Aires. If either of the subsidiaries changes its domicile to the Province of Buenos Aires the tax will be levied upon any free transmission of goods or assets received by that subsidiary, wherever the goods or assets are located.

Municipal Taxes

Municipalities may establish certain municipal taxes, provided they are not analogous with the national taxes, and they match an effective and individualized service provisioned by the local government. It should be noted that in many cases, the taxable income considered for the municipal tax will be the same as that for the turnover tax, though limited to the amount that belongs to the province where the municipality is located as per the agreement to avoid double taxation (Convenio Multilateral del 18 de agosto de 1977).

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Incoming Funds from Nil or Low Tax Jurisdictions

According to the legal presumption under Article 18.1 of Law No.11,683 and its amendments, incoming funds from jurisdictions with low or no taxation are deemed an unjustified increase in net worth for the Argentine party, regardless of the nature of the operation involved. Unjustified increases in net worth are subject to the following taxes:

(a) income tax at a 35% rate on 110% of the amount of the transfer; and

(b) value added tax at a 21% rate on 110% of the amount of the transfer.

The Argentine tax resident may rebut such legal presumption by proving before the Argentine Tax Authority that the funds arise from activities effectively performed by the Argentine taxpayer or a third party in such jurisdictions, or that such funds have been previously declared.

According to the ITL, Low or Nil Tax Jurisdiction to mean any country, jurisdiction dominium, territory, associated state or special tax regime in which the maximum corporate income tax rate is lower than 60% of the income tax rate established in section 69 a) of the ITL. Therefore, to avoid being regarded as a low tax jurisdiction, the maximum corporate income tax rate of a given jurisdiction must be equal or higher than 15%. For purposes of determining whether a jurisdiction is a low-tax or no-tax jurisdiction, the regulatory Decree 1170/2018 clarifies that the total tax rate imposed in that jurisdiction must be taken into account, regardless of which government unit (e.g., federal, state, municipal or city) imposes the tax. The decree also provides that a “preferential tax regime” is one that deviates from the general corporate tax system in the subject jurisdiction and results in a lower effective tax rate.

As of the date of this annual report, there no transactions executed that would qualify under this legal presumption.

Colombian Taxation

The following is a summary of the material Colombian tax considerations relating to our operations in Colombia and it is based upon laws, regulations, decrees, rulings, income tax conventions (treaties), administrative practice and judicial decisions in effect as of the date of this annual report. Legislative, judicial or administrative changes or interpretations may, however, be forthcoming. Any such changes or interpretations could affect the tax consequences to us, possibly on a retroactive basis, and could alter or modify the statements and conclusions set forth herein. This summary does not purport to be a legal opinion or to address all tax aspects that may be relevant to our operations in Colombia.

On December 28, 2018, Colombia's government enacted Law No. 1,943, which established significant, wide-ranging tax reform, affecting direct and indirect taxation and impacting individuals, corporations and non-profits.

On October 16, 2019, the Colombian Constitutional Court declared Law 1,943 unconstitutional because of procedural flaws in Colombian Congress's approval process. However, the Court decided that the tax reform will remain in effect until the end of 2019, giving Congress time to approve a new tax law that affirms the 2018 tax reform or introduce new measures that would amend the Colombian tax laws.

On December 27, 2019, the Colombian Congress enacted Law No. 2,010. This tax reform replaced Law No. 1,943.

Corporate income tax.

National corporations, branches of foreign corporation and permanent establishment are taxed on worldwide income. National corporations are corporations that have their principal domicile in Colombia or are organized under Colombian law or that during the respective tax year or period have their effective place of management in Colombia (holding board meetings in Colombia is not enough to qualify as a national company).

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The standard corporate income tax rate is 33%. In addition, an income tax surtax of 4% has applied to taxable income in excess of COP800 million until taxable periods ending December 31, 2019. Law No 2,010 introduced a reduction of the corporate income tax rate of 31% in year 2020, 31% in year 2021 and 30% from year 2022 and onwards.

A reduced corporate income tax rate of 20% applies to legal entities qualified as Industrial Users of Goods and/or Services in a free-trade zone. Commercial Users in a free-trade zone are subject to the general corporate income tax rate. A special reduced rate of 9% applies to certain activities that in the past had some tax benefits or exemption, such as certain services in new or refurbished hotels, eco-tourism activities and some leasing agreements with respect to housing, as well as for publishers of scientific and cultural content.

Capital gains are subject to tax at a corporate income tax rate of 10%. It is assumed that the following items are considered capital gains: (a) Gains on the transfer of fixed assets owned for more than two years and (b) Gains resulting from the receipt of liquidation proceeds of corporations in excess of capital contributed if the corporation existed for at least two years.

Taxation on dividends

On December 28, 2016, the Colombian Congress enacted Law No. 1,819 introducing the taxation for distributions of dividends. Distribution to nonresidents are subject to dividends tax at a rate of 10%. The dividends tax rate for resident individuals is 0%, 5% or 10%, depending on the amount of the distribution. No dividend tax applies to distributions to resident companies. The dividends tax applies to the distribution of profits generated in 2017 and onwards. In addition, if the dividend distribution is made out of profits that were not taxed at the entity level, the distribution to nonresidents is subject to a 35% withholding tax (recapture tax). In this case, the 10% dividends tax applies to the distributed amount after it is reduced by the 35% tax. A 20% withholding tax is imposed on dividends paid to residents (including companies and individuals) out of profits not taxed at the corporate level if the taxpayer is required to file an income tax return. If the profits subject to tax at the corporate level in a given year are higher than the commercial profits of that year, the difference can be carried back for two years or carried forward for five years to offset the profits of such periods, in order to reduce or eliminate the amount of the distribution subject to the 35% withholding tax (or the 20% withholding tax on payments to residents). This carryforward or carryback should not reduce the amount of the distribution to nonresidents subject to the dividends tax of 10% (or the 5% or 10% dividends tax applicable for distributions to resident individuals).

Additionally, a 7.5% income tax rate is introduced on dividends distributed between resident companies, which applies on the first distribution, with a credit for the tax passed on to the ultimate shareholder (resident individual or non-resident entity or individual) and an exemption from the tax for distributions between registered economic group members.

Presumptive income.

Under the Colombian tax law, the tax base for corporate income tax purposes is the higher of actual taxable income or minimum presumptive income, which is equal to 3.5% of the net equity as of December 31 of the preceding tax year. Under Law No. 1,943 and Law No. 2,010, the presumptive income tax rate is reduced from 3.5% to 1.5% for years 2019 and 2020 and is abolished from year 2021.

Tax on indirect transfer of shares.

Law No. 1,943 and Law No. 2,010 introduced a new tax calculated over the profits derived from the indirect transfer of shares in Colombian entities and rights or assets located in Colombia through the transfer of shares, participations or rights of foreign entities are taxed in Colombia as if the underlying Colombian asset had been directly transferred. Where the seller fails to report the deemed income arising on the indirect transfer as net income or capital gains on the income tax return the “subordinate” Colombian company is jointly and severally liable for the tax payable, as well as any associated interest and penalties. The purchaser also is jointly and severally liable if it becomes aware that the transaction constitutes an abuse for tax purposes. These provisions do not apply where the underlying Colombian assets (i) are shares that are listed on a stock exchange or that are not more than 20% owned by a single beneficial owner or (ii) represent less than 20% of both the book value and the commercial value of the total assets held by the foreign entity being transferred.

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Equity tax

Law No. 1,943 and Law No. 2,010 establishes a new equity tax on Colombian resident individuals’ worldwide net worth that will apply for years 2019, 2020, and 2021. Nonresident individuals will be taxed only on their Colombian assets. Nonresident entities will have to pay this tax on their assets owned in Colombia, such as real estate, yachts, artwork, boats, planes, and rights over mines or oil wells.

In calculating this tax, nonresident entities should not consider shares in Colombian companies, accounts receivable from Colombian debtors, certain portfolio investments and financial lease agreements. For this tax to apply, the net equity of the taxpayer must be at least COP 5.000 million as of January 1, 2019.

The equity tax rate is 1%.

Foreign Exchange Controls

The following is a summary of the material foreign exchange control considerations relating to our operations in Argentina, Colombia and India, and it is based upon laws, regulations, decrees, rulings, administrative practice and judicial decisions in effect as of the date of this annual report. Legislative, judicial or administrative changes or interpretations may, however, be forthcoming. Any such changes or interpretations could affect us and could alter or modify the statements and conclusions set forth herein. This summary does not purport to be a legal opinion or to address all foreign exchange controls aspects that may be relevant to our operations in such jurisdictions.

Argentina

By Decree No. 609/2019 of the Argentine Executive Power and Communication “A” 6770 of the Argentine Central Bank, both dated September 1, 2019, a rigid foreign exchange controls regime was reinstated until December 31, 2019, which has been extended without time limitation by Decree No. 91/2019 issued on December 28, 2019 by the Argentine Executive Power and Communication “A” 6862 issued by the Argentine Central Bank on January 15, 2020. Pursuant to these measures, as further amended and complemented, and other additional measures adopted by the Argentine Central Bank, as of the date of this annual report, among others:

| (a) | It is required the prior authorization of the Central Bank for the access to the FX Market for the purchase of foreign currency:

| • | For portfolio investment purposes for more than $200 per calendar month by individuals;

| • | For portfolio investment purposes by legal entities, local governments, funds and trusts;

| • | By non-Argentine residents, except for certain exemptions;

| • | For the payment of dividends and transfer of earnings out of Argentina, except that no such prior authorization is required for the payment of profits and dividends as from January 17, 2020 in an amount that (including the amount of the payment being made at the time of the access) does not exceed 30% of the value of new capital contributions of foreign direct investments made to the Argentine company duly capitalized and registered before the Registry of Commerce (or pending such registration) and the proceeds of which have been transferred to Argentina and sold for Argentine pesos through the FX Market;

| • | For the pre-payment of principal and interest on foreign financial indebtedness with an anticipation of more than three business days in advance to the scheduled maturity dates, unless certain conditions are met;

| • | For the pre-payment of indebtedness for the import of goods and services, except for certain exemptions;

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| • | For the payment of indebtedness for the import of goods past due before August 31, 2019 or at sight with related foreign parties in excess of $2,000,000 per calendar month; and

| • | For the payment of services with related foreign parties, except for certain exemptions.

| (b) | The access to the FX Market for the purchase of foreign currency for any of the payments described above is subject to the compliance with the foreign indebtedness information regime before the Central Bank.

| (c) | The proceeds of the disbursements of foreign financial loans incurred since September 1, 2019 must be transferred into Argentina and converted into Argentine Pesos through the FX Market in order to the Argentine resident debtor have access to the FX Market for the payment of principal and interests under such foreign financial loan on their scheduled maturity.

| (d) | It is prohibited the access to the FX market for the purchase of foreign currency for the payment of local debts and other obligations incurred in foreign currency between Argentine residents originated as from September 1, 2019, except, among others, in the case of obligations instrumented by means of public registries or deeds as of August 30, 2019.

| (e) | The proceeds from the collections of foreign currency by Argentine residents out of Argentina for the export of the following goods since September 2, 2019 are subject to mandatory transfer into Argentina and conversion into Argentine pesos through the FX Market, within the terms described in each case, computed from the shipment date:

| • | 15 consecutive days for crops and soybean oil;

| • | 30 consecutive days for hydrocarbons and derivatives;

| • | 60 consecutive days for exports between related parties not including the goods described above and for metal ores and precious metals;

| • | 180 consecutive days for all other goods; and

| • | 365 consecutive days for small exports under the EXPORTA SIMPLE program for medium and small companies with annual FOB exports of less than $600,000 and individual exports of less than $15,000 each.

Regardless of the applicable maximum terms described above, upon collection of the export receivables, the proceeds thereof are subject to the mandatory repatriation within the 5 consecutive days computed from the date of payment or collection.

| (f) | The proceeds from the collection of foreign currency by Argentine residents out of Argentina for the export of services are subject to mandatory Repatriation within the 5 consecutive days computed from the date they are received.

| (g) | As a general rule, Argentine residents may access the FX Market for the payment of imports of goods. Different requirements apply for goods with customs entry registration and goods with pending customs entry registration. The Argentine importer may access the FX Market to pay imports of goods with customs entry registration registered in the import payment tracking system (“SEPAIMPO”, after its Spanish acronym), provided that certain requirements are met, including, among others, the payment is not made before the scheduled maturity date. Payments must be made to the foreign supplier. Goods with pending customs entry registration are subject to a special follow-up regime.

Law No. 19,359 (revised text pursuant to Decree No. 480/95 and complementary regulations) establishes penalties for the infringement of any foreign exchange regulations (the “Criminal Exchange Regime”). Penalties include fines of up to a tenfold increase in the amount of the infringing transaction, temporary suspensions, disqualification for up to ten years preventing the infringing party from acting as importer, exporter and/or as foreign exchange institution, or even prison in event of recidivism.

For additional information regarding all current foreign exchange restrictions and exchange control regulations in Argentina, investors should consult their legal advisors and read the applicable rules mentioned herein, as well as any amendments and complementary regulations, which are available at the Argentine Central Bank's website: www.bcra.gob.ar

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Colombia

Under Colombian foreign exchange regulations, payments in foreign currency related to certain foreign exchange transactions must be conducted through the commercial exchange market, by means of an authorized financial intermediary, and declaring the payment to the Colombian Central Bank. This mechanism applies to payments in connection with, among others, imports and exports of goods, foreign loans and related financing costs, investment of foreign capital and the remittances of profits thereon, investment in foreign securities and assets and endorsements and guarantees in foreign currency. Transactions through the commercial exchange market are made at market rates freely negotiated with the authorized intermediaries.

In addition, the Colombian Central Bank may intervene in the foreign exchange market at its own discretion at any time and may, under certain circumstances, take actions that limit the availability of foreign currency to private sector companies. Notwithstanding the foregoing, the Colombian Central Bank has never taken such action since the present foreign exchange regime was implemented in 1991.

India

The prevailing foreign exchange laws in India, more specifically, Section 8 of the Foreign Exchange Management Act, 1999, requires an Indian company to take all reasonable steps to realize and repatriate into India all foreign currency earned by the company outside India, within such time periods and in the manner specified by the Reserve Bank of India (the "RBI"). The RBI has promulgated guidelines that require Indian companies to realize and repatriate such foreign currency to India, inter alia by way of remittance into a foreign currency account such as an Exchange Earners Foreign Currency ("EEFC") account maintained with an authorized dealer in India. Remittance into an EEFC account is subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into rupees on or before the last day of the succeeding calendar month, after adjusting for utilization of the balances for approved purposes or forward commitments.

C. Organizational Structure

On December 10, 2012, we incorporated our company, Globant S.A., as a société anonyme under the laws of the Grand Duchy of Luxembourg, as the holding company for our business. Prior to the incorporation in Luxembourg, our company was incorporated in Spain as a sociedad anónima, which we refer to as “Globant Spain” or “Spain Holdco”. As a result of the incorporation of our company in Luxembourg and certain related share transfers and other transactions, Globant Spain became a wholly-owned subsidiary of our company.

The following chart is a summary of our principal subsidiaries as of February 13, 2020. You may find complete information about all of our subsidiaries and their respective holdings in Exhibit 8.1.

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Seasonality

See “Operating and Financial Review and Prospects — Operating Results — Factors Affecting Our Results of Operations.”

D. Property, Plant and Equipment

See “—Business Overview.”

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report. Our consolidated financial statements have been prepared in accordance with IFRS. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Key Information—Risk Factors" and elsewhere in this annual report.

Overview

See "Information on the Company — History and Development of the Company" and "Information on the Company — Business Overview — Overview".

A. Operating Results

Factors Affecting Our Results of Operations

In the last few years, the technology industry has undergone a significant transformation due to two massive and disruptive technology revolutions happening at the same time. The digital and the cognitive revolutions are affecting how companies connect with consumers and employees as well as providing opportunities to make huge gains in efficiency. Today's users move fast and are keen to interact with their digital ecosystem anywhere and anytime, in a painless, fast, relevant, smart and restriction-free way. They demand personalized, seamless and frictionless experiences that will simplify their lives. We are also facing an abundance of demand for more intelligent and human-like behavior and technology on the market. These revolutions are leveraging new technologies that didn’t exist or weren’t mature enough until a few years ago, such as AI, UX, Mobile, Cloud and VR.

We believe that the most significant factors affecting our results of operations include:

| • | market demand for integrated engineering, design and innovation technology services relating to emerging technologies and related market trends;

| • | economic conditions in the industries and countries in which our clients operate and their impact on our clients' spending on technology services;

| • | our ability to continue to innovate and remain at the forefront of emerging technologies and related market trends;

| • | expansion of our service offerings and success in cross-selling new services to our clients;

| • | our ability to obtain new clients, increase penetration levels with our existing clients and continue to add value for our existing clients so as to create long-term relationships;

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| • | the availability of, and our ability to attract, retain and efficiently utilize, skilled IT professionals in Latin America, India, Europe and the United States;

| • | operating costs in countries where we operate;

| • | capital expenditures related to the opening of new delivery centers and client management locations and improvement of existing offices;

| • | our ability to increase our presence onsite at client locations;

| • | the effect of wage inflation in countries where we operate and the variability in foreign exchange rates, especially relative changes in exchange rates between the U.S. dollar and the Argentine peso, Uruguayan peso, Mexican peso, Colombian peso and Indian rupees; and

| • | our ability to identify, integrate and effectively manage businesses that we may acquire.

Our results of operations in any given period are directly affected by the following additional company-specific factors:

| • | Pricing of and margin on our services and revenue mix. For time-and-materials contracts, the hourly rates we charge for our Globers are a key factor impacting our gross profit margins and profitability. Hourly rates vary by complexity of the project and the mix of staffing. The margin on our services is impacted by the increase in our costs in providing those services, which is influenced by wage inflation and other factors. As a client relationship matures and deepens, we seek to maximize our revenues and profitability by expanding the scope of services offered to that client and winning higher profit margin assignments. During the three-year period ended December 31, 2019, we increased our revenues attributable to sales of technology solutions (primarily through our primarily through our Scalable Platforms, Agile Delivery, Continuous Evolution and UI Engineering Studios), however, our gross profit margin oscillate in 38.5%, 39.0% and 36.3% for the years ended December 31, 2019, 2018 and 2017, and our adjusted gross profit margin oscillate in 40.4%, 40.6% and 38.8% for the years ended December 31, 2019, 2018 and 2017, respectively, since it was affected by foreign exchange headwinds combined with some wage inflation in certain of the countries in which we operate.

| • | Our ability to deepen and expand the portfolio of services we offer while maintaining our high standard of quality. The breadth and depth of the services we offer impacts our ability to grow revenues from new and existing clients. Through research and development, targeted hiring and strategic acquisitions, we have invested in broadening and deepening the domains of expertise of our Studios. Our future growth and success depend significantly on our ability to maintain the expertise of each of our Studios and to continue to innovate and to anticipate the needs of our clients and rapidly develop and maintain the expertise of each of our Studios, including relevant domain knowledge and technological capabilities required to meet those client needs, while maintaining our high standard of quality.

| • | Recruitment, retention and management of IT professionals. Our ability to recruit, retain and manage our IT professionals may have an effect on our gross profit margin and our results of operations. Our IT professional headcount was 11,021 as of December 31, 2019, 7,821 as of December 31, 2018 and 6,279 as of December 31, 2017. We manage employee headcount and utilization based on ongoing assessments of our project pipeline and requirements for professional capabilities. An unanticipated termination of a significant project could cause us to experience lower employee utilization resulting from a higher than expected number of idle IT professionals. Our ability to effectively utilize our employees is typically improved by longer-term client relationships due to increased predictability of client needs over the course of the relationships.

| • | Evolution of client base. In recent years, as we have expanded significantly in the technology services industry; we have diversified our client base and reduced client concentration. Revenues attributable to our top ten clients increased by 32.5% from 2017 to 2018 and 13.3% from 2018 to 2019. Over the same period, we have increased our revenues from existing clients by expanding the scope and size of our engagements. The number of clients that each accounted for over $5.0 million of our annual revenues amounted to 26 in 2019, 21 in 2018 and 18 in 2017, and the number of clients that each accounted for at least $1.0 million of our annual revenues increased to 107 in 2019, from 90 in 2018 and 82 in 2017.

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| • | Investments in our delivery platform. We have grown our network of locations to 56 as of December 31, 2019, located in 37 cities throughout seventeen countries (United States (San Francisco, New York, Seattle, Raleigh, Chicago and Dallas), Argentina (Buenos Aires, Tandil, Rosario, Tucumán, Córdoba, Resistencia, Bahía Blanca, Mendoza, Mar del Plata and La Plata), Uruguay (Montevideo), Colombia (Bogotá and Medellín), Brazil (São Paulo), Peru (Lima), Chile (Santiago), México (Guadalajara and México City), India (Pune and Bangalore), Spain (Madrid), Belarus (Minsk), Romania (Cluj) and United Kingdom (London)). We also have client management locations in the United States (Houston, San Francisco, New York, Winston-Salem, Redwood City and Miami), Brazil (São Paulo), Colombia (Bogotá), Uruguay (Montevideo), Argentina (Buenos Aires), France (Paris) and the United Kingdom (London). that are close to the main offices of key clients. Our integrated global delivery platform allows us to deliver our services through a blend of onsite and offsite methods. We have pursued a decentralization strategy in building our network of delivery centers, recognizing the benefits of expanding into other cities in Argentina and other countries in Latin America, including the ability to attract and retain highly skilled IT professionals in increasing scale. Our ability to effectively utilize our robust delivery platform could significantly affect our results of operations in the future.

| • | Seasonality. Our business is seasonal and as a result, our revenues and profitability fluctuate from quarter to quarter. Our revenues tend to be higher in the third and fourth quarters of each year compared to the first and second quarters of each year due to seasonal factors. During the first quarter of each year, which includes summer months in the southern hemisphere, there is a general slowdown in business activities and a reduced number of working days for our IT professionals based in Argentina, Uruguay, Brazil, Peru, Chile and Colombia, which results in fewer hours being billed on client projects and therefore lower revenues being recognized on those projects. In addition, some of the reduction in the number of working days for our IT professionals in the first or second quarter of the year is due to the Easter holiday. Depending on whether the Easter holiday falls in March or April of a given year, the effect on our revenues and profitability due to the Easter holiday can appear either in the first or second quarter of that year. Finally, we implement annual salary increases in the second and fourth quarters of each year. Our revenues are traditionally higher, and our margins tend to increase, in the third and fourth quarters of each year, when utilization of our IT professionals is at its highest levels.

| • | Net effect of inflation in Argentina and variability in the U.S. dollar and Argentine peso exchange rate. Because a portion of our operations is conducted from Argentina, our results of operations are subject to the net effect of inflation in Argentina and the variability in exchange rate between the U.S. dollar and the Argentine peso. The impact of inflation on our salary costs, or wage inflation, and thus on our statement of profit or loss and other comprehensive income varies depending on the fluctuation in exchange rates between the Argentine peso and the U.S. dollar. In an environment where the Argentine peso is weakening against the U.S. dollar, our functional currency in which a substantial portion of our revenues are denominated, the impact of wage inflation on our results of operations will decrease, whereas in an environment where the Argentine peso is strengthening against the U.S. dollar, the impact of wage inflation will increase. During the year ended December 31, 2019, the Argentine peso experienced a 59.02% devaluation from 37.60 Argentine pesos per U.S. dollar to 59.79 Argentine pesos per U.S. dollar and INDEC reported in 2019 an inflation rate of 53.8%. The combination of this devaluation and the inflation rate is not expected to have a significant impact on our revenues because a substantial portion of our sales are denominated in U.S. dollars. The devaluation, net of the impact of the inflation rate in the same period, has resulted in an increase in our operating costs, as a portion of our operating costs are primarily denominated in Argentine pesos. See "Quantitative and Qualitative Disclosures about Market Risk — Foreign Exchange Risk" and "Quantitative and Qualitative Disclosures about Market Risk — Wage Inflation Risk."

Our results of operations are expected to benefit from government policies and regulations designed to foster the software industry in Argentina, primarily under the Software Promotion Law. For further discussion of the Software Promotion Law, see "Business Overview — Our Delivery Model — Government Support and Incentives."

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Certain Income Statement Line Items

Revenues

Revenues are derived primarily from providing technology services to our clients, which are medium- to large-sized companies based in the United States, Europe and Latin America. For the year ended December 31, 2019, revenues increased by 26.2% to $659.3 million from $522.3 million for the year ended December 31, 2018. For the year ended December 31, 2018, revenues increased by 26.3% to $522.3 million from $413.4 million for the year ended December 31, 2017. Between 2017 and 2019, we experienced rapid growth in demand for our services and significantly expanded our business.

We perform our services primarily under time-and-material contracts and, to a lesser extent, fixed-price contracts. Revenues from our time-and-material contracts represented 82.5%, 82.6% and 91.1% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. Revenues from our fixed-price contracts represented 16.1%, 17.4% and 8.9% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. Revenues from our subscription resales contracts represented 1.3% for the year ended December 31, 2019. The remaining portion of our revenues in each year was derived from other types of contracts.

We discuss below the breakdown of our revenues by client location, industry vertical and client concentration. Revenues consist of technology services revenues and reimbursable expenses, which primarily include travel and out-of-pocket costs that are billable to clients.

Revenues by Client Location

Our revenues are sourced from three main geographic markets: North America (primarily the United States), Europe (primarily Spain and the United Kingdom) and Latin America (primarily Argentina, Chile, Mexico and Colombia). We present our revenues by client location based on the location of the specific client site that we serve, irrespective of the location of the headquarters of the client or the location of the delivery center where the work is performed. For the year ended December 31, 2019, we had 822 clients.

The following table sets forth revenues by client location by amount and as a percentage of our revenues for the years indicated:

|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands, except percentages) |
By Geography |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 496,353 |  |  |  | 75.3 | % |  | $ | 407,090 |  |  |  | 77.9 | % |  | $ | 325,614 |  |  |  | 78.8 | %
Europe |  |  | 46,784 |  |  |  | 7.1 | % |  |  | 46,240 |  |  |  | 8.9 | % |  |  | 38,484 |  |  |  | 9.3 | %
Asia |  |  | 4,653 |  |  |  | 0.7 | % |  |  | 3,067 |  |  |  | 0.6 | % |  |  | 700 |  |  |  | 0.2 | %
Latin America and other |  |  | 111,535 |  |  |  | 16.9 | % |  |  | 65,913 |  |  |  | 12.6 | % |  |  | 48,641 |  |  |  | 11.8 | %
Revenues |  | $ | 659,325 |  |  |  | 100.0 | % |  | $ | 522,310 |  |  |  | 100.0 | % |  | $ | 413,439 |  |  | $ | 100.0 | %

Revenues by Industry Vertical

We are a provider of technology services to enterprises in a range of industry verticals including media and entertainment, professional services, technology and telecommunications, travel and hospitality, banks, financial services and insurance and consumer, retail and manufacturing, among others. The following table sets forth our revenues by industry vertical by amount and as a percentage of our revenues for the periods indicated:

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|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands, except percentages) |
By Industry Vertical |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Media and Entertainment |  | $ | 156,292 |  |  |  | 23.7 | % |  | $ | 133,093 |  |  |  | 25.5 | % |  | $ | 99,640 |  |  |  | 24.1 | %
Travel & Hospitality |  |  | 92,773 |  |  |  | 14.1 | % |  |  | 89,212 |  |  |  | 17.1 | % |  |  | 68,400 |  |  |  | 16.5 | %
Banks, Financial Services and Insurance |  |  | 143,788 |  |  |  | 21.8 | % |  |  | 114,439 |  |  |  | 21.9 | % |  |  | 94,994 |  |  |  | 23.0 | %
Technology & Telecommunications |  |  | 88,183 |  |  |  | 13.4 | % |  |  | 67,310 |  |  |  | 12.9 | % |  |  | 60,648 |  |  |  | 14.7 | %
Professional Services |  |  | 73,282 |  |  |  | 11.1 | % |  |  | 52,318 |  |  |  | 10.0 | % |  |  | 40,660 |  |  |  | 9.8 | %
Consumer, Retail & Manufacturing |  |  | 85,698 |  |  |  | 13.0 | % |  |  | 54,087 |  |  |  | 10.4 | % |  |  | 36,025 |  |  |  | 8.7 | %
Other Verticals |  |  | 19,309 |  |  |  | 2.9 | % |  |  | 11,851 |  |  |  | 2.2 | % |  |  | 13,072 |  |  |  | 3.3 | %
Total |  | $ | 659,325 |  |  |  | 100.0 | % |  | $ | 522,310 |  |  |  | 100.0 | % |  | $ | 413,439 |  |  | $ | 100.0 | %

Revenues by Client Concentration

We have increased our revenues by expanding the scope and size of our engagements, and we have grown our key client base primarily through our business development efforts and referrals from our existing clients.

The following table sets forth revenues contributed by our largest client, top five clients, top ten clients and top twenty clients by amount and as a percentage of our revenues for the years indicated:

|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands, except percentages) |
Client concentration |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Top client |  | $ | 73,772 |  |  |  | 11.2 | % |  | $ | 58,786 |  |  |  | 11.3 | % |  | $ | 42,049 |  |  |  | 10.2 | %
Top five clients |  |  | 171,928 |  |  |  | 26.1 | % |  |  | 167,341 |  |  |  | 32.0 | % |  |  | 119,431 |  |  |  | 28.9 | %
Top ten clients |  |  | 260,145 |  |  |  | 39.5 | % |  |  | 229,646 |  |  |  | 44.0 | % |  |  | 173,333 |  |  |  | 41.9 | %
Top twenty clients |  |  | 350,074 |  |  |  | 53.1 | % |  |  | 301,774 |  |  |  | 57.8 | % |  |  | 228,922 |  |  |  | 55.4 | %

Our top ten customers for the year ended December 31, 2019 have been working with us for, on average, seven years.

Our focus on delivering quality to our clients is reflected in the fact that existing clients from 2018 and 2017 contributed 91.3% and 81.6% of our revenues in 2019, respectively. Our existing clients from 2017 contributed 95.5% of our revenues in 2018. As evidence of the increase in scope of engagement within our client base, the number of clients that each accounted for over $5.0 million of our annual revenues increased (26 in 2019, 21 in 2018 and 18 in 2017) and the number of clients that each accounted for at least $1.0 million of our annual revenues increased to 107 in 2019, 90 in 2018 and 82 in 2017. The following table shows the distribution of our clients by revenues for the year presented:

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|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Over $5 Million |  |  | 26 |  |  |  | 21 |  |  |  | 18 |
$1 - $5 Million |  |  | 81 |  |  |  | 69 |  |  |  | 64 |
$0.5 - $1 Million |  |  | 53 |  |  |  | 39 |  |  |  | 45 |
$0.1 - $0.5 Million |  |  | 191 |  |  |  | 86 |  |  |  | 82 |
Less than $0.1 Million |  |  | 471 |  |  |  | 158 |  |  |  | 147 |
Total Clients |  |  | 822 |  |  |  | 373 |  |  |  | 356 |

The volume of work we perform for specific clients is likely to vary from year to year, as we are typically not any client's exclusive external technology services provider, and a major client in one year may not contribute the same amount or percentage of our revenues in any subsequent year.

Operating Expenses

Cost of Revenues

The principal components of our cost of revenues are salaries and travel costs related to the provision of services. Included in salaries are base salary, incentive-based compensation, employee benefits costs and social security taxes. Salaries of our IT professionals are allocated to cost of revenues regardless of whether they are actually performing services during a given period. Up to 70% of the amounts paid by our Argentine subsidiaries for certain social security taxes in respect of base and incentive compensation of our IT professionals is credited back to those subsidiaries under the Software Promotion Law, reducing the effective cost of social security taxes from approximately 19.0% to approximately 10.0% of the base and incentive compensation on which those contributions are calculated. For further discussion of the Software Promotion Law, see "— Income Tax Expense" below and note 3.7.1.1 to our audited consolidated financial statements for the year ended December 31, 2019.

Also included in cost of revenues is the portion of depreciation and amortization expense attributable to the portion of our property and equipment and intangible assets utilized in the delivery of services to our clients.

Our cost of revenues has increased in recent years in line with the growth in our revenues and reflects the expansion of our operations in Argentina, Uruguay, Colombia, Peru, Mexico, India and the United States primarily due to increases in salary costs, an increase in the number of our IT professionals and the opening of new delivery centers. We expect that as our revenues grow, our cost of revenues will increase. Our goal is to increase revenue per head and thereby increase our gross profit margin.

Selling, General and Administrative Expenses

Selling, general and administrative expenses represent expenses associated with promoting and selling our services and include such items as salary of our senior management, administrative personnel and sales and marketing personnel, infrastructure costs, legal and other professional services expenses, travel costs and other taxes. Included in salaries are base salary, incentive-based compensation, employee benefits costs and social security taxes. The credit of up to 70% for certain social security taxes paid by our Argentine subsidiaries that is provided under the Software Promotion Law as described under "— Cost of Revenues" above also extends to payments of such social security taxes in respect of salaries of personnel included in our selling, general and administrative expenses, reducing the effective cost of social security taxes as described above.

Also included in selling, general, and administrative expenses is the portion of depreciation and amortization expense attributable to the portion of our property and equipment and intangible assets utilized in our sales and administration functions.

Our selling, general and administrative expenses have increased primarily as a result of our expanding operations and the build-out of our senior and mid-level management teams to support our growth. We expect our selling, general and administrative expenses to continue to increase in absolute terms as our business expands. However, as a result of our management and infrastructure investments, we believe our platform is capable of supporting the expansion of our business without a proportionate increase in our selling, general and administrative expenses, resulting in gains in operating leverage.

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Depreciation and Amortization Expense (included in "Cost of Revenues" and "Selling, General and Administrative Expenses")

Depreciation and amortization expense consists primarily of depreciation of our property and equipment (primarily leasehold improvements, servers and other equipment), depreciation of right-of-use assets (primarily office spaces and office equipment) and amortization of our intangible assets, (mainly software licenses, acquired intangible assets and internal developments). We expect that depreciation and amortization expense will continue to increase as we open more delivery centers and client management locations.

Net impairment losses on financial assets

Net impairment losses on financial assets includes impairment of trade receivables and impairment of tax credits, net of recoveries. Impairment of trade receivables represents an allowance for bad debts for expected credit losses resulting from substantial doubt about the recoverability of such credits. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition. During the years ended December 31, 2019 and 2018, we recorded a loss of $0.3 and $3.4, respectively, related to the recognition of the allowance for bad debts. For the year ended December 31, 2017, we recorded a gain of $0.01 related to a recovery of the allowance for bad debts.

Impairment of tax credits represents an allowance for impairment of VAT credits for estimated losses resulting from substantial doubt about the recoverability of such credits. This allowance was determined by estimating future uses of this VAT credit. During the years ended December 31, 2018 and 2017 we recorded a loss of $0.05 and $1.6, respectively, related to the recognition of the allowance for impairment of VAT credits after considering new facts and circumstances that occurred during those periods. In 2019, we recovered the amount of $0.05 which are related with the tax credits originated in the software promotion regime.

Under Argentina's Law No. 25,922 (Ley de Promoción de la Industria de Software), as amended by Law No. 26,692 and Decree No. 95/2018 (the "Software Promotion Law"), our operating subsidiaries in Argentina receive a tax credit of up to 70% of amounts paid for certain social security taxes (contributions) that may be offset against value-added tax and income tax liabilities.

The Software Promotion Law remained in effect until December 31, 2019. Law No. 27,506 (Ley de Economía del conocimiento), published in the Argentine Official Gazette on June 10, 2019, creates a promotion regime for knowledge economy-related business (the "Knowledge based Economy Law") which is applicable to our subsidiaries in Argentina from January 1, 2020 and will be valid until December 31, 2029.

According to the Knowledge based Economy Law, the tax credits available as of December 31, 2019 can be used against value-added tax and income tax liabilities during the subsequent years or can be transferred.

Other operating (expenses) income, net

Other operating (expenses) income, net includes an impairment of intangible assets. For the years ended December 31, 2019, 2018 and 2017, we recorded a loss of $0.7 million, $0.3 million and $4.7 million, respectively, related to the remeasurement of our internal developments and intangible assets acquired in business combinations, based on our evaluation of projected lower future cash flows from the related customer relationships.

Finance Income

Finance income consists of foreign exchange gain on monetary assets, liabilities denominated in currencies other than the U.S. dollar and interest gains on time deposits, bills issued by the Treasury of the Argentine Republic (LETEs and LECAPs), bills issued by the Treasury Department of the U.S. (Treasury bills), foreign exchange forward contracts and future contracts, and mutual funds.

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Finance Expense

Finance expense consists of foreign exchange loss on monetary assets, liabilities denominated in currencies other than the U.S. dollar and interest expense on borrowings, loss arising for foreign exchange forward contracts and future contracts, and other investments, foreign exchange loss, other interest and other finance expenses.

Income Tax Expense

As a global company, we are required to provide for corporate income taxes in each of the jurisdictions in which we operate. We have secured special tax benefits in Argentina, Uruguay, India and Belarus, as described below. As a result, our income tax expense is low in comparison to profit before income tax expense due to the benefit related to profit before income tax expense earned in those lower tax jurisdictions. Changes in the geographic mix, income tax regulations or estimated level of annual pre-tax income can also affect our overall effective income tax rate.

Under the Software Promotion Law, Argentine companies that are engaged in the design, development and production of software benefit from a 60% reduction in the corporate income tax rate and a tax credit of up to 70% of amounts paid for certain social security taxes that can be applied to offset certain national tax liabilities.

Software Promotion Law was in force until December 31, 2019.

Moreover, the Law No. 27,506 (Ley de Economía del conocimiento), published in the Argentine Official Gazette on June 10, 2019, creates a promotion regime for knowledge economy-related business (the "Knowledge based Economy Law"), which is applicable to our subsidiaries in Argentina from January 1, 2020 and will be valid until December 31, 2029. The Regime decreases the corporate income tax rate to 15% and also has benefits related with social security taxes (contributions).

For further discussion of the Software Promotion Law and the Knowledge based Economy Law, see "Business Overview — Our Delivery Model — Government Support and Incentives".

On December 29, 2017, the Argentine government enacted Law No. 27,430, a comprehensive tax reform that became effective on January 1, 2018. Specifically, Law No. 27.430 introduced amendments to income tax (both at corporate and individual levels), value added tax ("VAT"), tax procedural law, criminal tax law, social security contributions, excise tax, tax on fuels and tax on the transfer of real estate.

The law decreased the corporate income tax rate from 35% to 30% for fiscal years commencing on or after January 1, 2018 through December 31, 2019, and to 25% for fiscal years commencing after December 31, 2019.

On December 23, 2019, the Argentine Government enacted the Ley de Solidaridad Social y Reactivación Productiva No. 27,541 (the "Law on Social Solidarity and Productive Reactivation " or the "Social Solidarity Law") which declared a public emergency in economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters, and also delegated legislative powers to the National Executive Power, until December 31, 2020. According to the Social Solidarity Law, the corporate income and dividend tax rates for tax years commencing on or after January 1, 2020 through December 31, 2020 are 30% and 7%, respectively. Consequently, the effectiveness of the 25% and 13% tax rates have been delayed until tax years commencing after December 31, 2020.

The operations of the Argentine subsidiaries are one of the most significant source of profit before income tax. For further information of the taxation in Argentina, see "Business Overview — Regulatory Overview — Argentine Taxation ".

Our subsidiary in Uruguay, which is domiciled in a tax-free zone, benefits from a 0% income tax rate and an exemption from value-added tax. The subsidiary located outside the tax-free zone has an exemption from income tax and value-added tax applicable to the exports of software development services. For further discussion of the Uruguayan Incentives, see "Business Overview — Our Delivery Model — Government Support and Incentives".

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Until December 31, 2017, our subsidiary in Colombia was subject to federal corporate income tax of 34% and a surcharge of 6% calculated on net income before income tax. For fiscal year 2018, the income tax rate was 33% and surcharge rate was 4%. On December 28, 2018, Colombia’s 2019 finance bill was enacted as Law 1,943. The Law gradually reduce the corporate tax rates and eliminate the surcharge from January 1, 2019 and onwards. On October 16, 2019 the latest tax reform enacted by the Colombian congress, Law No 1,943, was revoked due to procedural defects. It was replaced by the Law No 2010, published on December 27, 2019, and includes the same provisions as the former. For further discussion of the Colombian Incentives, see "Business Overview — Our Delivery Model — Regulatory Overview"

Our U.S. subsidiary, Globant LLC, is subject to U.S. federal income tax at the rate of 21%. On December 22, 2017, the United States enacted legislation referred to as the Tax Cuts and Jobs Act ("2017 Tax Act"), which instituted fundamental changes to the taxation of multinational corporations. The 2017 Tax Act includes significant changes to the U.S. corporate income tax system, including a federal corporate rate reduction from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, changes regarding net operating loss carryforwards, and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. Furthermore, as part of the transition to the new tax system, a one-time transition tax was imposed on a U.S. shareholder's historical undistributed earnings of foreign affiliates. The 2017 Tax Act introduces various other changes to the Internal Revenue Code.

The 2017 Tax Act also introduces base erosion provisions for U.S corporations that are part of a multinational group. For fiscal years beginning after December 31, 2017, a U.S. corporation is potentially subject to tax under the BEAT, if the controlled group of which it is a part has sufficient gross receipts and derives a sufficient level of "base erosion tax benefits.".

On December 13, 2018, the Internal Revenue Service (“IRS”) published a proposed regulation that provide guidance regarding the BEAT application for public comments. The final document was published in the Federal Register on December 2, 2019.

As of the date of this annual report, certain provisions of the 2017 Tax Act may not currently apply to us, including those designed to (i) tax GILTI; (ii) establish a deduction for FDII; (iii) eliminate the intercompany payment deduction under BEAT; and (iv) establish new limitations on certain executive compensation. Unless otherwise discussed, potential investors in our common shares should consult their own tax advisors regarding the effect of the 2017 Tax Act on ownership of our common shares.

Our subsidiaries in England are subject to corporate income tax at the rate of 19%, which will be reduced to 17% starting from April 1, 2020.

On September 29, 2014, Law No. 20,780 was published in the Chilean government's official gazette. This law introduced significant changes to the Chilean taxation system and strengthened the powers of the Chilean tax authority to control and prevent tax avoidance. Effective January 1, 2017, Law No. 20,780 created two different corporate tax regimes: the Attributed Income Regime (Sistema de Renta Atribuida) and the Semi-Integrated Regime (Sistema Parcialmente Integrado)​. Under the Attributed Income Regime, shareholders are taxed on an accrual basis, with a rate of 25% imposed at the operating entity level, plus an additional withholding income tax of 35% for nonresident shareholders. Under this regime, profits are attributed to the shareholders, irrespective of whether a distribution is actually made. Under the Semi-Integrated Regime, shareholders are taxed on a cash basis (when profits are distributed), at a rate of 25.5% for 2017 and 27% for 2018, imposed at the operating entity level, plus an additional withholding income tax of 35% when profits are actually distributed. Under this regime, the corporate rate is creditable against the 35% withholding income tax, but 35% of such credit is required to be paid to the Chilean Treasury, so, in practice, only 65% of the corporate rate is creditable. However, investors from countries with which Chile has signed the Double Tax Treaty as of January 1, 2017 would be entitled to use the 100% of the foreign tax credit, even if at that time the agreement was not yet in force. Under such circumstances, the full tax credit would be applicable until December 31, 2019 if at that time the relevant tax treaty had not yet entered into force. The Semi-Integrated Regime applies to Sistemas Globales Chile. Beginning on January 1, 2017, the corporate income tax rate applicable to Sistemas Globales Chile was 25.5% and for 2018 the rate is 27%.

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Our subsidiary Globant Brasil Consultoría Ltda. (formerly Terraforum Consultoría Ltda.), applies the taxable income method called “Lucro real”. Under this method, taxable income is based upon a percentage of profit accrued by the Company, adjusted according to the add-backs and exclusions provided in the relevant tax law. The rate applicable to the taxable income derived from the subsidiary’s activity is 24% plus 10% if the net income before income tax is higher than 240,000 Reais for the years 2017 and onwards.

On December 31, 2014, Peru enacted Law No 30,296, which made several changes to the Peruvian tax regime. Among other changes, the law decreases corporate income tax rates, effective January 1, 2015, as follows: fiscal year 2015 and 2016, 28%, fiscal year 2017 and 2018, 27%, fiscal year 2019, 26%. The Peruvian Congress on October 6, 2016, issued Law No. 30.506, which provides the Peruvian government the power to legislate regarding matters affecting economic growth, formal compliance, and national security for a 90-day period. Pursuant to the power granted, the Peruvian government issued Legislative Decree No. 1261 on December 10, 2016, which increases the corporate income tax rate, effective January 1, 2017, for fiscal year 2017 onward to 29.5%.​

Our subsidiaries in Mexico are subject to corporate income tax at the rate of 30%.

Our Indian subsidiary, Globant India Private Limited, is primarily export-oriented and is eligible for certain income tax holiday benefits granted by the government of India for export activities conducted within Special Economic Zones, or SEZs. The services provided by our Pune development center are eligible for a deduction of 100% of the profits or gains derived from the export of services for the first five years from the financial year in which the center commenced the provision of services - August 2017- and 50% of such profits or gains for the five years thereafter. Certain tax benefits are also available for a further five years subject to the center meeting defined conditions. Indian profits ineligible for SEZ benefits are subject to corporate income tax at the rate of 34.61%. In addition, all Indian profits, including those generated within SEZs, are subject to the Minimum Alternative Tax (MAT), at the current rate of approximately 21.34%, including surcharges.

Our subsidiary located in Belarus is resident of the High Technology Park (“HTP”). HTP residents are exempted from corporate tax and VAT.

Our subsidiary in Rumania is subject to income tax at the rate of 16%.

The subsidiary located in Canada is subject to federal income tax at the rate of 15%. The rate is increased by the state income tax rate which is 11% in the case of the state of British Columbia where the subsidiary is incorporated.

The corporate tax rate in France for most companies is 33.33%. The Finance Bill for 2017 contains provisions for the progressive reduction of the corporate income tax rate from the33.33% rate to 28% over the period 2017 to 2020. Also, there is a reduced tax rate of 15% for companies whose turnover does not exceed EUR 7,63 million, but only for the first EUR 38,120 of taxable income. In 2019 the reduced rate will be applicable to small and medium-size enterprises. To qualified as a small and medium-size enterprise, a company must employ less than 250 employees and have an annual turnover not exceeding EUR 50 millions. According to the Finance Bill, our subsidiary located in France is subject to tax at a rate of 28% during 2018. The rate applies for the first EUR 500.000.

Results of Operations

The following table sets forth a summary of our consolidated results of operations by amount and as a percentage of our revenues for the periods indicated. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

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|  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands, except percentages) |
Consolidated Statements of profit or loss and other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues (1) |  | $ | 659,325 |  |  |  | 100.0 | % |  | $ | 522,310 |  |  |  | 100.0 | % |  | $ | 413,439 |  |  |  | 100.0 | %
Cost of revenues (2) |  |  | (405,164 | ) |  |  | (61.5 | )% |  |  | (318,554 | ) |  |  | (61.0 | )% |  |  | (263,171 | ) |  |  | (63.7 | )%
Gross profit |  |  | 254,161 |  |  |  | 38.5 | % |  |  | 203,756 |  |  |  | 39.0 | % |  |  | 150,268 |  |  |  | 36.3 | %
Selling, general and administrative expenses (3) |  |  | (172,478 | ) |  |  | (26.2 | )% |  |  | (133,187 | ) |  |  | (25.5 | )% |  |  | (110,813 | ) |  |  | (26.8 | )%
Net impairment losses on financial assets (4) |  |  | (228 | ) |  |  | — | % |  |  | (3,469 | ) |  |  | (0.7 | )% |  |  | (1,581 | ) |  |  | (0.4 | )%
Other operating expense, net (5) |  |  | (720 | ) |  |  | (0.1 | )% |  |  | (306 | ) |  |  | (0.1 | )% |  |  | (4,708 | ) |  |  | (1.1 | )%
Profit from operations |  |  | 80,735 |  |  |  | 12.2 | % |  |  | 66,794 |  |  |  | 12.8 | % |  |  | 33,166 |  |  |  | 8.0 | %
Gain on transactions with bonds (6) |  |  | 1,569 |  |  |  | 0.2 | % |  |  | — |  |  |  | — | % |  |  | — |  |  |  | — | %
Finance income |  |  | 13,643 |  |  |  | 2.1 | % |  |  | 11,418 |  |  |  | 2.2 | % |  |  | 7,956 |  |  |  | 1.9 | %
Finance expense |  |  | (26,801 | ) |  |  | (4.1 | )% |  |  | (16,968 | ) |  |  | (3.2 | )% |  |  | (11,036 | ) |  |  | (2.7 | )%
Finance (expense) income, net (7) |  |  | (13,158 | ) |  |  | (2.0 | )% |  |  | (5,550 | ) |  |  | (1.1 | )% |  |  | (3,080 | ) |  |  | (0.7 | )%
Share of results of investment in associates (8) |  |  | (224 | ) |  |  | — | % |  |  | — |  |  |  | — | % |  |  | — |  |  |  | — | %
Other income and expenses, net (9) |  |  | 110 |  |  |  | — | % |  |  | 6,220 |  |  |  | 1.2 | % |  |  | 8,458 |  |  |  | 2.0 | %
Profit before income tax |  |  | 69,032 |  |  |  | 10.5 | % |  |  | 67,464 |  |  |  | 12.9 | % |  |  | 38,544 |  |  |  | 9.3 | %
Income tax (10) |  |  | (15,017 | ) |  |  | (2.3 | )% |  |  | (15,868 | ) |  |  | (3.0 | )% |  |  | (8,081 | ) |  |  | (2.0 | )%
Net income for the year |  | $ | 54,015 |  |  |  | 8.2 | % |  | $ | 51,596 |  |  |  | 9.9 | % |  | $ | 30,463 |  |  |  | 7.4 | %

| (1) | Includes transactions with related parties of $1,419, $5,937 and $5,590 for the years ended December 31, 2019, 2018 and 2017, respectively.

| (2) | Includes depreciation and amortization expense of $7,350, $4,022 and $4,339 for the years ended December 31, 2019, 2018 and 2017, respectively. Also includes share based compensation for $4,976, $4,248 and $5,666 for the years ended December 31, 2019, 2018 and 2017, respectively.

| (3) | Includes depreciation and amortization expense of $16,905, $16,521 and $11,789 for the years ended December 31, 2019, 2018 and 2017, respectively. Also includes share based compensation of $14,912, $8,665 and $8,798 for the years ended December 31, 2019, 2018 and 2017, respectively.

| (4) | Includes a loss of $275 and $3,421 and a gain of $5 on impairment of trade receivables for the years ended December 31, 2019, 2018 and 2017, respectively. Includes a recovery of impairment of tax credits of 47 for 2019, an impairment loss of tax credits of 48 and 1,586 for 2018 and 2017, respectively

| (5) | Includes an impairment of intangibles assets of $720, $306 and $4,708 for the years ended December 31, 2019, 2018, and 2017, respectively.

| (6) | Includes a gain of $1,569 from transactions with Argentine sovereign bonds denominated in U.S. dollars acquired in the U.S. market with cash received from repayments of intercompany loans for the year ended December 31, 2019.

| (7) | Includes foreign exchange loss, net, of $8,841, $7,437 and $2,729 for the years ended December 31, 2019, 2018 and 2017, respectively.

| (8) | Includes a loss of $224 related to our share of the loss from our investment in Acamica, described in note 11.2 to our audited consolidated financial statements.

| (9) | Includes as of December 31,2019, 2018 and 2017 a loss of $85, a gain of $6,700 and $6,735, respectively, on remeasurement of the contingent consideration of Avanxo, Pointsource, Clarice, L4, WAE and Ratio. Includes as of December 31, 2018 and 2017 a gain of $1,611 and $1,726, respectively, related to the remeasurement at fair value of the call and put option over non-controlling interest in Dynaflows. In 2018 includes the derecognition of the call option over non-controlling interest of 455. In 2018 includes the loss of 1,038 related to the settlement agreed with WAE former owners. In 2018 includes the impairment of the investment in Collokia of 800.

| (10) | Includes deferred tax gains of $4,310, $7,456 and $5,972 for the years ended December 31, 2019, 2018 and 2017, respectively.

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2019 Compared to 2018

Revenues

Revenues were $659.3 million for 2019, representing an increase of $137 million, or 26.2%, from $522.3 million for 2018.

Revenues from North America increased by $89.3 million, or 21.9%, to $496.4 million for 2019 from $407.1 million for 2018. Revenues from Latin America and other countries increased by $45.6 million, or 69.2%, to $111.5 million for 2019 from $65.9 million for 2018. Revenues from Europe increased by $0.6 million, or 1.3%, to $46.8 million for 2019 from $46.2 million for 2018. Revenues from Asia increased by $1.5 million, or 48.4%, to $4.6 million for 2019 from $3.1 million for 2018.

Revenues from technology and telecommunications clients increased by $20.9 million, or 31.1%, to $88.2 million for 2019 from $67.3 million for 2018. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand in digital content, consumer experience services and the cross-selling capabilities of our Studios. Revenues from media and entertainment clients increased by $23.2 million, or 17.4%, to $156.3 million for 2019 from $133.1 million for 2018. The increase in revenues from clients in this industry vertical was primarily attributable to a higher demand for our digital content solutions, mobile applications, and consumer experience practices. Revenues from professional services clients increased by $21.0 million, or 40.2%, to $73.3 million for 2019 from $52.3 million for 2018. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand for services related to process automation, digital content and consumer experience solutions. Revenues from consumer, retail and manufacturing clients increased by $31.6 million, or 58.4%, to $85.7 million for 2019 from $54.1 million for 2018. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand for services related to scalable platforms solutions, consulting practices, and big data, supported by the cross-selling capabilities of our Studios. Revenues from banks, financial services and insurance clients increased by $29.4 million, or 25.7%, to $143.8 million for 2019 from $114.4 million for 2018. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand for services related to scalable platforms, cloud and mobile. Revenues from travel and hospitality clients increased by $3.6 million, or 4.0%, to $92.8 million for 2019 from $89.2 million for 2018. This increase is primarily attributable to large increase in demand for consumer experience and automated testing services. Revenues from clients in other verticals decreased by $7.3 million, or 61.3%, to $19.2 million for 2019 from $11.9 million for 2018.

Revenues from our top ten clients in 2019 increased by $30.5 million, or 13.3%, to $260.1 million for 2019 from $229.6 million for 2018, reflecting our ability to increase the scope of our engagement with our main customers. Revenues from our largest client for 2019, Walt Disney Parks and Resorts Online, increased by $15.0 million, or 25.5%, to $73.8 million for 2019 from $58.8 million for 2018.

Cost of Revenues

Cost of revenues was $405.2 million for 2019, representing an increase of $86.6 million, or 27.2%, from $318.6 million for 2018. The increase was primarily attributable to the net addition of 3,200 IT professionals since December 31, 2018, an increase of 40.9%, to satisfy growing demand for our services, which translated into an increase in salaries. Cost of revenues as a percentage of revenues increased to 61.5% for 2019 from 61.0% for 2018.

Salaries, employee benefits, social security taxes and share based compensation, the main component of cost of revenues, increased by $74.2 million, or 24.9% to $371.6 million for 2019 from $297.4 million for 2018. Salaries, employee benefits and social security taxes include a $5.0 million share-based compensation expense in 2019 and $4.2 million share-based compensation expense in 2018.

Depreciation and amortization expense was $7.4 million and $4.0 million for 2019 and 2018. The increase is mainly due to the depreciation of computer equipment acquired to satisfy growing demand for our services, and is also explained by the depreciation and amortization expense from Avanxo and Belatrix, which were acquired on February 1, 2019 and August 9, 2019, respectively.

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Travel and housing was $17.1 and $6.6 million for 2019 and 2018. The increase is mainly due to travel and housing expense from Avanxo and Belatrix, which were acquired on February 1, 2019 and August 9, 2019, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expense was $172.5 million for 2019, representing an increase of $39.3 million, or 29.5%, from $133.2 million for 2018. The increase was primarily attributable to $27.5 million increase in salaries, employee benefits, social security taxes and share based compensation related to the addition of a number of senior sales executives in our main market, the United States; a $11.9 million decrease in rental expenses which was offset by an increase of $15.0 million in depreciation and amortization, resulting in a net effect of $3.1 mainly explained by the adoption of IFRS 16 (refer to note 2.1 to our audited consolidated financial statements). The adoption of IFRS 16 resulted in some expenses that were previously recognized as rental expenses being reclassified to depreciation and amortization expenses. In addition, there was a $10.1 million increase in taxes mainly related to the export duties in Argentina. Selling, general and administrative expenses as a percentage of revenues increased to 26.2% for 2019 from 25.5% for 2018. Share-based compensation expense within selling, general and administrative expenses accounted for $14.9 million, or 2.3%, as a percentage of revenues for 2019, and $8.7 million, or 1.7%, as a percentage of revenues for 2018.

Impairment on financial assets

During the year ended December 31, 2019 and 2018, we recorded a loss for impairment of financial assets of $0.2 and $3.5. The decrease was primarily attributable to the recognition of an impairment of $3.4 resulting from substantial doubt about the recoverability of the some trade receivables in 2018.

Other operating expenses, net

Other operating expenses was $0.7 million for 2019. The loss was due to the recognition of an impairment of intangibles assets.

Gain on transaction with bonds

Gain on transactions with bonds was $1.6 million for 2019. We did not engage in these types of transactions during 2018.

Finance Income

Finance income for 2019 was $13.6 million compared to $11.4 million for 2018, mainly resulting from foreign exchange gains of $7.5 million as compared to $6.9 million in 2018, and gains from short-term investments, primarily related to gains from financial assets measured at fair value through profit and loss, of $5.0 million as compared to $4.1 million in 2018.

Finance Expense

Finance expense increased to $26.8 million for 2019 from $17.0 million for 2018, primarily reflecting a foreign exchange loss of $16.4 million mainly related to the impact of the weakening of some Latin American currencies against the U.S. dollar on our monetary assets, denominated in such currencies, a loss of $3.8 million primarily related to gains from financial assets measured at fair value through profit and loss, and interest expense of $5.1 million. Other financial expenses totaled $1.5 million.

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Other Income and Expenses, Net

Other income and expenses, net decreased to a gain of $0.1 million for 2019 from a gain of $6.2 million for 2018. Our 2019 and 2018 results includes a loss of $0.1 and a gain of $6.7 on the remeasurement of contingent consideration related to the acquisition of L4, Ratio and PointSource, a loss of $1.0 for 2018 related to the settlement agreed with WAE former owners, a gain of $1.6 million for 2018 related to the remeasurement at fair value of the call and put option over our non-controlling interest in Dynaflows, and a loss of $0.8 and $0.5 related to the impairment of the Collokia investment and to derecognition of the call option of Dynaflows, respectively, for the year ended December 31, 2018.

Income Tax

Income tax expense amounted to $15.0 million for 2019, an decrease of $0.9 million from a $15.9 million income tax expense for 2018. The decrease in income tax expense was driven by the impact of the devaluation of the Latin American currency and also by the effect of the inflation adjustment mechanism for tax purposes. Our effective tax rate (calculated as income tax gain or expense divided by the profit before income tax) decreased to 21.8% for 2019 from 23.5% for 2018, principally explained by the impact of the weakness of some Latin American currencies against U.S. Dollars and also balanced distribution of gains and costs across the company.

Net Income for the Year

As a result of the foregoing, we had a net income of $54.0 million for 2019, compared to $51.6 million for 2018.

2018 Compared to 2017

Revenues

Revenues were $522.3 million for 2018, representing an increase of $108.9 million, or 26.3%, from $413.4 million for 2017.

Revenues from North America increased by $81.5 million, or 25.0%, to $407.1 million for 2018 from $325.6 million for 2017. Revenues from Latin America and other countries increased by $17.3 million, or 35.6%, to $65.9 million for 2018 from $48.6 million for 2017. Revenues from Europe increased by $7.7 million, or 20.0%, to $46.2 million for 2018 from $38.5 million for 2017. Revenues from Asia increased by $2.4 million, or 342.9%, to $3.1 million for 2018 from $0.7 million for 2017.

Revenues from technology and telecommunications clients increased by $6.7 million, or 11.1%, to $67.3 million for 2018 from $60.6 for 2017. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand in digital content, consumer experience services and the cross-selling capabilities of our Studios. Revenues from media and entertainment clients increased by $33.5 million, or 33.6%, to $133.1 million for 2018 from $99.6 million for 2017. The increase in revenues from clients in this industry vertical was primarily attributable to a higher demand for our digital content solutions, mobile applications, and consumer experience practices. Revenues from professional services clients increased by $11.6 million, or 28.5%, to $52.3 million for 2018 from $40.7 million for 2017. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand for services related to process automation, digital content and consumer experience solutions. Revenues from consumer, retail and manufacturing clients increased by $18.1 million, or 50.3%, to $54.1 million for 2018 from $36.0 million for 2017. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand for services related to scalable platforms, consulting practices, and big data, supported by the cross-selling capabilities of our Studios. Revenues from banks, financial services and insurance clients increased by $19.4 million, or 20.4%, to $114.4 million for 2018 from $95.0 million for 2017. The increase in revenues from clients in this industry vertical was primarily attributable to higher demand for services related to scalable platforms, cloud and mobile. Revenues from travel and hospitality clients increased by $20.8 million, or 30.4% to $89.2 million for 2018 from $68.4 million for 2017. This increase is primarily attributable to large increase in demand for consumer experience and automated testing services. Revenues from clients in other verticals decreased by $1.2 million, or 9.2%, to $11.9 million for 2018 from $13.1 million for 2017.

Revenues from our top ten clients in 2018 increased by $56.3 million, or 32.5%, to $229.6 million for 2018 from $173.3 million in 2017, reflecting our ability to increase the scope of our engagement with our main customers. Revenues from our largest client for 2018, Walt Disney Parks and Resorts Online, increased by $16.8 million, or 40.0%, to $58.8 million for 2018 from $42.0 million for 2017.

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Cost of Revenues

Cost of revenues was $318.6 million for 2018, representing an increase of $55.4 million, or 21.0%, from $263.2 million for 2017. The increase was primarily attributable to the net addition of 1,542 IT professionals since December 31, 2017, an increase of 24.6%, to satisfy growing demand for our services, which translated into an increase in salaries. Cost of revenues as a percentage of revenues decreased to 61.0% for 2018 from 63.7% for 2017. The decrease was primarily attributable to cost efficiencies, lower salaries in terms of US. dollars derived from the devaluation of the Argentina peso and, to a lesser extent, of the Colombian peso in 2018.

Salaries, employee benefits, social security taxes and share based compensation, the main component of cost of revenues, increased by $52.7 million, or 21.5% to $297.4 million for 2018 from $244.7 million for 2017. Salaries, employee benefits and social security taxes include a $4.2 million share-based compensation expense in 2018 and $5.7 million share-based compensation expense in 2017.

Depreciation and amortization expense included in the cost of revenues was $4.0 million and $4.3 million for 2018 and 2017.

Travel and housing was $6.6 million for 2018 and 2017.

Selling, General and Administrative Expenses

Selling, general and administrative expense was $133.2 million for 2018, representing an increase of $22.4 million, or 20.2%, from $110.8 million for 2017. The increase was primarily attributable to a $5.7 million increase in salaries, employee benefits, social security taxes and share based compensation related to the addition of a number of senior sales executives in our main market, the United States; a $4.7 million increase in depreciation and amortization expense; a $3.3 million increase in office and rental expenses related to the opening of the new delivery centers. In addition, there was a $3.9 million increase in professional fees including audit and other professional services. Selling, general and administrative expenses as a percentage of revenues decreased to 25.5% for 2018 from 26.8% for 2017. Share-based compensation expense within selling, general and administrative expenses accounted for $8.7 million, or 1.7%, as a percentage of revenues for 2018, and $8.8 million, or 2.1%, as a percentage of revenues for 2017.

Impairment on financial assets

During the year ended December 31, 2018 and 2017, we recorded a loss for impairment of financial assets of $3.5 million and $1.6 million, respectively. The increase was primarily attributable to the recognition of an impairment of $3.4 resulting from substantial doubt about the recoverability of some trade receivables. For 2017 the loss of $1.6 was due to the recognition of an impairment of tax credits.

Other operating expenses, net

Other operating expenses was $0.3 million for 2018. The loss was due to the recognition of an impairment of intangibles assets.

Finance Income

Finance income for 2018 was $11.4 million compared to $8.0 million for 2017, mainly resulting from foreign exchange gains of $6.9 million as compared to $6.3 million in 2017 and gains from short-term investments, primarily related to gains from financial assets measured at fair value through profit and loss, of $4.1 million as compared to $1.2 million in 2017.

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Finance Expense

Finance expense increased to $17.0 million for 2018 from $11.0 million for 2017, primarily reflecting a foreign exchange loss of $14.3 million mainly related to the impact of the weakening of some Latin American currencies against the U.S. dollar on our monetary assets denominated in such currencies, a loss of $1.1 million primarily related to gains from financial assets measured at fair value through profit and loss, and interest expense of $0.7 million. Other financial expenses totaled $0.9 million.

Other Income, Net

Other income and expenses, net decreased to a gain of $6.2 million for 2018 from a gain of $8.5 million for 2017. Our 2018 and 2017 results include a gain of $6.7 million on the remeasurement of contingent consideration related to the acquisition of Clarice, WAE, L4, Ratio, PointSource and WAE, a gain of $1.6 million and $1.7 million for 2018 and 2017 related to the remeasurement at the fair value of the call and put option over our non-controlling interest in Dynaflows), and a loss of $0.8 and $0.5 related to the impairment of the Collokia investment and to the derecognition of the call option of Dynaflows, respectively, for the year ended in December 31, 2018.

Income Tax

Income tax expense amounted to $15.9 million for 2018, an increase of $7.8 million from a $8.1 million income tax expense for 2017. The increase in income tax expense was driven mainly by the increase in our profit from operations and the devaluation of the Argentine peso that generated taxable finance gains in our Argentinian subsidiaries. Our effective tax rate (calculated as income tax gain or expense divided by the profit before income tax) increased to 23.5% for 2018 from 21.0% for 2017, principally explained by the impact of the weakness of some Latin American currencies against U.S. Dollars.

Net Income for the Year

As a result of the foregoing, we had a net income of $51.6 million for 2018, compared to $30.5 million for 2017.

B. Liquidity and Capital Resources

Liquidity and Capital Resources

Capital Resources

Our primary sources of liquidity are cash flows from operating activities. For the year 2019, we derived 92.2% of our revenues from clients in North America and Latin America pursuant to contracts that are entered into by our subsidiaries located in the United States, Argentina, Chile, Mexico and Colombia.

Our primary cash needs are for capital expenditures (consisting of additions to property and equipment and to intangible assets) and working capital. From time to time we also require cash to fund acquisitions of businesses.

Our primary working capital requirements are to finance our payroll-related liabilities during the period from delivery of our services through invoicing and collection of trade receivables from clients.

We incur capital expenditures to open new delivery centers, for improvements to existing delivery centers, for infrastructure-related investments and to acquire software licenses.

We will continue to invest in our subsidiaries. In the event of any repatriation of funds or declaration of dividends from our subsidiaries, there will be a tax effect because dividends from certain foreign subsidiaries are subject to taxes. See "Information on the Company — Business Overview — Regulatory Overview — Argentine Taxation — Tax on Dividends" and " "Information on the Company — Business Overview — Regulatory Overview — Argentine Taxation — Income Tax".

The following table sets forth our historical capital expenditures for the years ended December 31, 2019, 2018 and 2017:

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|  | Year ended December 31, |
|  | 2019(***) |  |  | 2018(**) |  |  | 2017(*) |
|  | (In thousands) |
Capital expenditures |  | $ | 27,776 |  |  | $ | 28,506 |  |  | $ | 26,314 |

| * | Excludes impact of Ratio and PointSource acquisitions for the year ended December 31, 2017.

| ** | Excludes impact of SmallFootprint acquisition for the year ended December 31, 2018.

| *** | Excludes impact of Avanxo, Belatrix and BI Live acquisitions for the year ended December 31, 2019.

Investments |

During 2017, we invested $26.3 million in capital expenditures, primarily to establish our delivery centers in La Plata and Tandil, Argentina, Madrid, Spain, Bogotá and Medellín, Colombia and New York, U.S., and $8.8 million invested in internal developments and acquired licenses.

During 2018, we invested $28.5 million in capital expenditures, primarily to complete our works on our delivery centers in La Plata, Argentina and Medellín and Bogotá, Colombia, and to establish our delivery centers in Mexico City, Mexico, Bangalore, India, and Seattle, U.S., and invested $9.6 million invested in internal developments and acquired licenses.

During 2019, we invested $27.8 million in capital expenditures primarily made to complete our works on our delivery centers in Medellín and Bogotá, Colombia,Tandil, Argentina, and Pune, India, and computer equipments for our delivery centers in Argentina, Mexico and Colombia. Additionally, we invested $11.4 million in internal developments and acquired licenses.

Acquisitions

On February 28, 2017, we acquired 100% of shares of Ratio Cypress, LLC. Ratio offers design, development and quality assurance services necessary to build and manage robust digital products and video streaming solutions for major media companies. The aggregate purchase price amounted to $9.5 million, of which $3.7 million is payable on a deferred basis and subject to the occurrence of certain targets.

On June 1, 2017, we acquired 100% of shares of PointSource. PointSource offers digital solutions to its customers which include design, digital strategy, development and marketing services. The aggregate purchase price amounted to $28.6 million, of which $13.1 million is payable on a deferred basis and subject to the occurrence of certain targets.

On October 15, 2018, we signed an asset purchase ("APA") agreement to acquire, the business of Small Footprint Inc., a corporation organized and existing under the laws of North Carolina, United States, including the acquisition of its wholly owned subsidiary in Romania, Small Footprint, LLC. Small Footprint, U.S. and Romania, are engaged in the business of providing outsourced service of consulting, designing, developing and implementing custom software applications, digital product, websites, technologies and strategies for the purpose of digital transformation. The aggregate purchase price under the APA amounted to $7.4 million.

On January 17, 2019, we entered into a share purchase agreement with the shareholders of Avanxo (Bermuda) Limited, pursuant to which we agreed to purchase all of Avanxo’s share capital subject to the terms and conditions set forth in the share purchase agreement. Avanxo is a cloud consulting and implementation company headquartered in Bermuda, with operations in Brazil, Mexico, Colombia, Peru, Argentina and the United States. The transaction closed on February 1, 2019. The aggregate purchase price under the share purchase agreement amounted to $44.5 million.

On August 9, 2019, we entered into an equity purchase agreement with the equityholders of Belatrix Global Corporation S.A., a Spanish stock company, pursuant to which we purchased all of the outstanding equity interests in Belatrix and its subsidiaries. The transaction was simultaneously signed and closed. Belatrix is a software and applications development company with operations in Argentina, Peru, Colombia and the United States. The aggregate purchase price under the SPA amounted to $64.5 million.

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On October 16, 2019, we entered into an purchase agreement with the equity holders of BI Live S.R.L., an Argentine company, pursuant to which we purchased certain assets, rights and obligations of BI Live. The transaction closed on November 8, 2019. The aggregate purchase price under this agreement amounted to $3.4 million.

As of December 31, 2019, we had cash and cash equivalents and investments of $82.5 million.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated:

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Net cash provided by operating activities |  |  | 79,709 |  |  |  | 67,197 |  |  |  | 42,989 |
Net cash used in investing activities |  |  | (151,558 | ) |  |  | (46,117 | ) |  |  | (57,534 | )
Net cash provided by financing activities |  |  | 56,712 |  |  |  | 4,094 |  |  |  | 16,598 |
Effect of exchange rate changes on cash and cash equivalents |  |  | 252 |  |  |  | (93 | ) |  |  | (60 | )
Cash and cash equivalents at beginning of the year |  |  | 77,606 |  |  |  | 52,525 |  |  |  | 50,532 |
Cash and cash equivalents at end of the year |  |  | 62,721 |  |  |  | 77,606 |  |  |  | 52,525 |
Net (decrease) increase in Cash and cash equivalents at end of year |  |  | (14,885 | ) |  |  | 25,081 |  |  |  | 1,993 |

Operating Activities

Net cash provided by operating activities was generated primarily by profits before taxes adjusted for non-cash items, including depreciation and amortization expense, shared-based compensation expense and the effect of working capital changes.

Net cash provided by operating activities was $79.7 million for the year ended December 31, 2019 as compared to net cash provided in operating activities of $67.2 million for the year ended December 31, 2018. This increase of $12.5 million in net cash provided by operating activities was primarily attributable to a $32.6 million increase in profit before income tax expense adjusted for non-cash-items, a $17.5 million decrease in working capital and a 2.5 million increase in income tax payments, net of reimbursements.

Changes in working capital in the year ended December 31, 2019 consisted primarily of a $38.9 million increase in trade receivables, a $8.4 million increase in other receivables, a $7.2 million increase in trade payables, a $2.1 million increase in tax liabilities, and $8.8 million increase in payroll and social security taxes payable. The $38.9 million increase in trade receivables reflects our revenue growth. The $8.4 million increase in other receivables was mainly related to the increase in prepaid expenses and advances to suppliers. Payroll and social security taxes payable increased to $72.3 million as of December 31, 2019 from $58.5 million as of December 31, 2018, primarily as a result of the growth in our headcount in line with our expansion.

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Net cash provided by operating activities was $67.2 million for the year ended December 31, 2018, as compared to net cash provided by operating activities of $43.0 million for the year ended December 31, 2017. This increase of $24.2 million in net cash provided by operating activities was primarily attributable to a $33.6 million increase in profit before income tax expenses adjusted for non-cash items, a $7.3 million decrease in working capital and a $2.1 million increase in income tax payments, net of reimbursements.

Changes in working capital in the year ended December 31, 2018 consisted primarily of a $36.4 million increase in trade receivables, a $10.6 million increase in other receivables, a $2.5 million increase in trade payables, and increase in utilization of provision for contingencies of $1.1 million, a $0.9 million increase in tax liabilities, and $21.9 million increase in payroll and social security taxes payable. The $36.4 million increase in trade receivables reflects our revenue growth. The $10.6 million increase was mainly related to the increase in prepaid expenses and advances to suppliers. Payroll and social security taxes payable increased to $58.5 million as of December 31, 2018 from $40.5 million as of December 31, 2017, primarily as a result of the growth in our headcount in line with our expansion.

Investing Activities

Net cash of $151.6 million was used in investing activities for the year ended December 31, 2019 as compared to $46.1 million of net cash used in investing activities during the year ended December 31, 2018. During the year ended December 31, 2019, we invested in mutual funds and sovereign bonds, which generated an outflow of $8.4 million, we invested $31.9 million in fixed and intangible assets and $106.3 million in acquisition-related transactions, and we made payments of $0.7 million related to forward contracts.

Net cash of $46.1 million was used in investing activities for the year ended December 31, 2018, as compared to $57.5 million of net cash used in investing activities during the year ended December 31, 2017. During the year ended December 31, 2018, we invested in mutual funds and sovereign bonds, which generated an outflow of $1.0 million, we invested $28.7 million in fixed and intangible assets and $18.4 million in acquisition-related transactions, and we obtained proceeds of $2.4 million from forward contracts.

Financing Activities

Net cash of $56.7 million was provided by financing activities for the year ended December 31, 2019, as compared to $4.1 million of net cash provided by financing activities for the year ended December 31, 2018. During the year ended December 31, 2019, we received $15.8 million for the issuance of shares under our share-based compensation plan, $7.8 million proceeds from subscription agreements and net proceeds from borrowings of $49.0 million. Additionally, during the year ended December 31, 2019 we paid $15.8 million of lease liabilities related to the adoption of IFRS 16 (refer to note 2.1 to our audited consolidated financial statements). In 2018 such payments were included as changes in working capital in operating activities.

Net cash of $4.1 million was provided by financing activities for the year ended December 31, 2018 as compared to $16.6 million of net cash provided by financing activities for the year ended December 31, 2017. During the year ended December 31, 2018, we received $7.0 million for the issuance of shares under our share-based compensation plan, $3.2 proceeds from subscription agreement and paid borrowing for $6.0 million.

Future Capital Requirements

We believe that our existing cash and cash equivalents and cash flows from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months. In addition, as of December 31, 2019, IAFH Global S.A. had recognized an aggregate of $0.564 million in value-added tax credits. We expect to monetize the value of those value-added tax credits by way of cash reimbursement from AFIP during 2019.

Our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors. If our cash and cash equivalents and operating cash flow are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. If we issue equity securities in order to raise additional funds, substantial dilution to existing shareholders may occur. If we raise cash through the issuance of indebtedness, we may be subject to additional contractual restrictions on our business. We cannot assure you that we would be able to raise additional funds on favorable terms or at all.

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In November 2018, Globant LLC, our U.S. subsidiary (the “Borrower”) entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with the financial institutions listed therein, as lenders, and HSBC Bank USA, N.A., as administrative agent, issuing bank and swingline lender. As of December 31, 2019, $50.4 million was outstanding under the A&R Credit Agreement.

On February 6, 2020, the Borrower, entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”), by and among certain financial institutions listed therein, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. Under the Second A&R Credit Agreement, which amends and restates the existing A&R Credit Agreement, dated as of November 1, 2018, the Borrower may borrow (i) up to $100 million in up to four borrowings on or prior to August 6, 2021 under a delayed-draw term loan facility and (ii) up to $250 million under a revolving credit facility. In addition, the Borrower may request increases of the maximum amount available under the revolving facility in an aggregate amount not to exceed $100 million. The maturity date of each of the facilities is February 5, 2025. Pursuant to the terms of the Second A&R Credit Agreement, interest on the loans extended thereunder shall accrue at a rate per annum equal to either (i) LIBOR plus 1.50%, or (ii) LIBOR plus 1.75%, determined based on the Borrower’s Maximum Total Leverage Ratio (as defined in the Second A&R Credit Agreement). The Borrower’s obligations under the Second A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of the Borrower’s now owned and after-acquired assets. The Second A&R Credit Agreement also contains certain customary negative and affirmative covenants, which compliance may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

Appropriation of Retained earnings under Subsidiaries' local Laws and restrictions on distribution of dividends by certain Subsidiaries

The ability of certain of our subsidiaries to pay dividends to us is subject to their having satisfied requirements under local law to set aside a portion of their net income in each year to legal reserves, as well as subject to certain tax restrictions, as described below.

In accordance with Argentine and Uruguayan Law, our Argentine and Uruguayan subsidiaries must appropriate at least 5% of net income for the year to a legal reserve, until such reserve equals 20% of their respective share capital amounts. As of December 31, 2019, the legal reserve amounted to $0.8 million for our Argentine subsidiaries, Sistemas Globales S.A, IAFH Global S.A, BSF S.A and Globers S.A, and as of that date was fully constituted. Dynaflows S.A, Globant Ventures S.A.S and Avanxo S.A, did not have a legal reserve as of December 31,2019. As of December 31, 2019, the legal reserve amounted to $0.04 million for Sistemas Globales Uruguay S.A and as of that date was fully constituted. Our Uruguayan subsidiary, Difier S.A, did not have a legal reserve as of December 31, 2019.

On December 29, 2017, Argentine Law No. 27,430 amending the income tax law was enacted. According to the amendments, for fiscal years beginning on or after January 1, 2018 the distribution of dividends is now subject to a 7% withholding for 2018 and 2019 and 13% withholding for 2020 onwards. The Equalization Tax, which levied distributions made out of previously untaxed income, was eliminated.

On December 23, 2019, the Argentine Government enacted the Ley de Solidaridad Social y Reactivación Productiva No. 27,541 (the "Law on Social Solidarity and Productive Reactivation " or the "Social Solidarity Law") which declared a public emergency in economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters, and also delegated legislative powers to the National Executive Power, until December 31, 2020. According to the Social Solidarity Law, the corporate income and dividend tax rates for tax years commencing on or after January 1, 2020 through December 31, 2020 are 30% and 7%, respectively. Consequently, the effectiveness of the 25% and 13% tax rates have been delayed until tax years commencing after December 31, 2020.

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On December 23, 2013, the Argentine government adopted a new double taxation treaty with Spain, which applied retroactively from January 1, 2013. According this treaty, the tax applicable on dividends distributed by our Argentine Subsidiaries to the Spain Holdco, is limited to10% on the gross amount of dividends distributed.

According to the ByLaws of Sistemas Colombia S.A.S. and Belatrix Colombia, our Colombian subsidiaries must appropriate at least 10% of the net income of the year to a legal reserve until such reserve equal 50% of its share capital. As of December 31, 2019, there was a legal reserve of $0.3 million that was fully constituted by Sistemas Colombia S.A.S and there was a legal reserve of $0.003 constituted by Belatrix Colombia S.A.S. Regarding Avanxo Colombia, the Colombian branch of Avanxo (Bermuda) Limited, there is no requirement for the Colombian branch to allocate profits for the creation of a legal reserve and, therefore, as of December 31, 2019, there was no legal reserve constituted.

Colombia Law No. 1,819 and No. 2,019, published on December 29, 2016 and December 27, 2019, respectively, introduced a withholding tax of 5% on dividend distributions to non-resident. This new fiscal obligation is not applicable to our shareholder due to the tax treaty agreement between Colombia and Spain, entered in force on October 28, 2008.

Under Spanish law, our Spanish subsidiaries must appropriate 10% of its standalone profit to a legal reserve until such reserve equals to 20% of their respective share capital amount. As of December 31, 2019, the legal reserve was partially constituted and amounted to $8.2 million for all Spanish subsidiaries.

In accordance with Brazilian Law, there is no requirement for limited liability companies to allocate profits for the creation of a legal reserve. Our Brazilian subsidiaries, Globant Brasil Consultorias Ltda and Orizonta Consutoria de Negocios e Tecnologia Da Informacao Ltda did not have a legal reserve as of December 31, 2019. On the other hand, for Avanxo Brasil Tecnologia Da Informacao Ltda there was a legal reserve of $0.06 million constituted as of December 31, 2019.

Under Luxembourg law, at least 5% of our net profit per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve subsequently falls below the 10% threshold, at least 5% of net profit must be allocated toward the reserve. If the legal reserve exceeds 10% of our issued share capital, the legal reserve may be reduced in proportion so that it does not exceed 10% of our issued share capital. The legal reserve is not available for distribution. As of December 31, 2019, the legal reserve amounted to $0.5 million.

As for the restrictions on the distribution of dividends paid by the company to the holders of our common shares are as a rule subject to a 15% withholding tax in Luxembourg, unless a reduced withholding tax rate applies pursuant to an applicable double tax treaty or an exemption pursuant to the application of the participation exemption, and, to the extent withholding tax applies, we are responsible for withholding amounts corresponding to such taxation at its source.

In accordance with Peru corporate law, our Peruvian subsidiaries must reserve at least 10% of its net income of the year to a legal reserve, until such reserve equals 20% of its respective amount capital stock. As of December 31, 2019, the legal reserve amounted to $0.1 million for Belatrix Peru SAC which is fully constituted and $0.05 million for Globant Peru SAC that is partially constituted. Regarding Avanxo Sucursal del Peru, the Peruvian branch of Avanxo (Bermuda) Limited, there is no requirement for the Peruvian branch to allocate profits for the creation of a legal reserve and, therefore, as of December 31, 2019, there was no legal reserve constituted.

In Bermuda there is no requirement for our Bermuda subsidiary to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

According to Mexican Law, our Mexican subsidiaries must appropriate at least 5% of net income of the year to a legal reserve, until such reserve equals the fifth portion of their respective share capital amounts. As of December 31, 2019, the legal reserve amounted to $0.1 million for our Mexican subsidiaries Global Systems Outsourcing S. de R.L. de C.V. and $0.04 million for Avanxo Mexico S.A.P.I de C.V, regarding Avanxo Servicios S.A. de C.V. there was no legal reserve constituted as of December 31, 2019.

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Regarding India Law, the Companies Act, 2013 does not mandate any fixed quantum of profits to be transferred or allocated to the reserves of a company. Despite there is no mandatory provision, as of December 31, 2019, our Indian subsidiary's general reserve amounted to $0.017 million.

In accordance with Indian law, our Indian subsidiary must set off all losses incurred by it (including carried over losses from the previous financial year) and make a provision for depreciation (including depreciation for the previous year if it was not already provided for) against the profits earned by it prior to declaring any dividends. Since the declaration of dividends under Indian law is discretionary, our Indian subsidiary is not required to allocate a specific portion of its annual profits to a designated legal reserve for purposes of declaring dividends.

In the United Kingdom there is no requirement for our UK´s subsidiaries to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted by our UK´s subsidiaries.

In Chile there is no requirement for the Chilean subsidiary of the company to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

According to French law, a minimum of 5% of the profit of the year must be allocated to a reserve account named "legal reserve", until such reserve amounts 10% of the share capital of our French subsidiary. As of December 31, 2019, there was no legal reserve constituted.

In accordance with the law of Belarus, our Belorussian subsidiary must allocate an amount up to 25% of annual payroll to a reserve fund for salaries. The source for creating this fund is the profit remaining at the disposal of our subsidiary after paying taxes and other obligatory payments. As of December 31, 2019, there was no legal reserve constituted.

In the United States there is no requirement for our U.S. subsidiary to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

According to Romanian Companies Law, our Romanian subsidiary has the obligation to allocate each year at least 5% of its profit to a reserve fund, until the value of the fund is at least 20% of the Romanian Company's share capital. As of December 31, 2019, the reserve fund of the company was of Romanian Leu ("RON") 58.

In Canada there is no requirement for our Canada's subsidiary to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

In the United Arab Emirates there is no requirement for the Software Product Creation's branch office in Dubai to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

In addition, with respect to our Argentine subsidiaries, although the transfer of funds abroad by local companies in order to pay annual dividends to foreign shareholders does not require formal approval by the Argentine Central Bank, in the past, the decrease in availability of U.S. Dollars in Argentina had led the Argentine government to impose informal restrictions on local companies and individuals for purchasing foreign currency for the purpose of making payments abroad, such as dividends. Even when the current Argentine administration has lifted most of the foreign exchange restrictions providing greater flexibility and access to the foreign exchange market, the imposition of future exchange restrictions could impair or prevent the conversion of anticipated dividends or distributions payable to us by those subsidiaries from Argentine pesos into U.S. dollars. For further information on these exchange controls, see "Risk Factors — Risks Related to Operating in Latin America — Argentina — The imposition in the future of restrictions on transfers of foreign currency and the repatriation of capital from Argentina may impair our ability to receive dividends and distributions from, and the proceeds of any sale of, our assets in Argentina." and "Information on the Company — Business Overview — Regulatory Overview — Foreign Exchange Controls."

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Equity Compensation Arrangements

On July 3, 2014, our board of directors and shareholders approved and adopted the 2014 Equity Incentive Plan, which was amended by our board of directors to increase the number of common shares that may be issued as stock awards from 1,666,667 to 3,666,667 on May 9, 2016, and from 3,666,667 to 5,666,667 on February 13, 2019.

Under the terms of our 2014 Equity Incentive Plan, from its adoption until the date of this annual report, we have granted to members of our senior management and certain other employees 30,000 stock awards, options to purchase 2,270,059 common shares and 1,073,645 restricted stock units net of any cancelled and/or forfeited awards. Most of the options and the restricted stock units under the plan were granted with a vesting period of four years, 25% of the options becoming exercisable on each anniversary of the grant date. Share-based compensation expense for awards of equity instruments is determined based on the fair value of the awards at the grant date. Each of our employee share options is exercisable for one of our common shares, and each of our restricted stock units will be settled, automatically upon its vesting, with one of our common shares. No amounts are paid or payable by the recipient on receipt of an option or restricted stock units. Neither the options nor the restricted stock units carry rights to dividends or voting rights. Options may be exercised at any time from the date of vesting to the date of their expiration (ten years after the grant date).

Share-based compensation expense for awards of equity instruments to employees is determined based on the grant-date fair value of the awards. Fair value is calculated using the Black-Scholes option pricing model.

There were 2,320,710, 2,322,305 and 1,676,498 outstanding stock options and restricted stock units as of December 31, 2019, 2018 and 2017, respectively. For 2019, 2018 and 2017, we recorded $19.9 million, $12.9 million and $14.5 million of share-based compensation expense related to these share option and restricted stock unit agreements, respectively.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with IFRS, which require us to make judgments, estimates and assumptions about (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the end of each reporting period and (iii) the reported amounts of revenues and expenses during each reporting period. We evaluate these estimates and assumptions based on historical experience, knowledge and assessment of current business and other conditions, and expectations regarding the future based on available information and reasonable assumptions, which together form a basis for making judgments about matters not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.

Some of our accounting policies require higher degrees of judgment than others in their application. When reviewing our consolidated financial statements, you should consider (i) our selection of critical accounting policies, (ii) the judgment and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions. We consider the policies discussed below to be critical to an understanding of our consolidated financial statements as their application places significant demands on the judgment of our management.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. We believe that the following critical accounting policies are the most sensitive and require more significant estimates and assumptions used in the preparation of our consolidated financial statements. You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report.

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Revenue Recognition

In accounting for fixed-price contracts we apply the input or output methods depending on the nature of the project and the agreement with the customer, recognizing revenue on the basis of our efforts to the satisfaction of the performance obligation relative to the total expected inputs to the satisfaction of the performance obligation, or recognizing revenue on the basis of direct measurements of the value to the customer of the services transferred to date relative to the remaining services promised under the contract, respectively. Each method is applied according to the characteristics of each contract and client .

These methods are followed where reasonably dependable estimates of revenues and costs can be made. Fixed-price projects generally correspond to short-term contracts. Some fixed-price contracts are recurring contracts that establish a fixed amount per month and do not require to apply significant judgment in accounting for those types of contracts. In consequence, the use of estimates is only applicable for those contracts that are on-going at the year end and that are not recurring.

Reviews to these estimates may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified. If the estimates indicate that a contract loss will be incurred, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated costs of the contract exceed the estimated total revenues that will be generated by the contract and are included in cost of revenues in the consolidated statement of income and other comprehensive income. Contract losses for the periods presented in these consolidated financial statements were immaterial.

Goodwill impairment analysis

Goodwill is measured as the excess of the cost of an acquisition over the sum of the amounts assigned to tangible and intangible assets acquired less liabilities assumed. The determination of the fair value of the tangible and intangible assets involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

We evaluate goodwill for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. When determining the fair value of our cash generating unit, we utilize both the market and income approach.We first determine the value of the unit using the market approach. For the purposes of the calculation, we consider the value of the shares in the market. In addition, we utilize the income approach, using discounted cash flows. The income approach considers various assumptions including increase in headcount, headcount utilization rate, income from each country and revenue per employee, income tax rates and discount rates. The assumptions we considered as of December 31, 2019 are the following: projected cash flows for the following five years, the average growth rate considered was 22.0% and the rate used to discount cash flows was 9.5%. The long-term rate used to extrapolate cash flows beyond the projected period was 3%.

Any adverse changes in key assumptions about the businesses and its prospects or an adverse change in market conditions may cause a change in the estimation of fair value and could result in an impairment charge. Based upon our evaluation of goodwill, no impairments were recognized during 2019, 2018 and 2017.

Income taxes

Determining the consolidated provision for income tax expense, deferred income tax assets and liabilities, requires significant judgment. The provision for income taxes is calculated over our net income and is inclusive of federal, local and state taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences in each of the jurisdictions where we operate of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be reversed. Changes to enacted tax rates would result in either increases or decreases in the provision for income taxes in the period of changes.

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The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized. This assessment requires judgments, estimates, and assumptions by our management. In evaluating our ability to utilize deferred tax assets, we consider all available positive and negative evidence, including the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable. Our judgments regarding future taxable income are based on expectations of market conditions and other facts and circumstances. Any adverse change to the underlying facts or our estimates and assumptions could require that we reduce the carrying amount of its net deferred tax assets.

We evaluate the uncertain tax position, such determination requires the use of significant judgment in evaluating the tax positions and assessing the timing and amounts of deductible and taxable items.

Impairment of financial assets

We measure expected credit losses ("ECLs") using reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive.

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.

As of December 31, 2019, 2018 and 2017, we recorded an impairment of trade receivables for an amount of $0.3 million, $3.4 million and a recovery of $0.01 million, respectively, using a provision matrix based on our historical credit loss experience, adjusted for factors that are specific to debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

As of December 31, 2018 and 2017, we recorded an impairment of tax credits for an amount of $0.05 million and $1.6 million, respectively, based on assumptions about expected credit losses. We use judgment in making these assumptions based on existing regulatory conditions as well as forward looking estimates. The tax credits included in the allowance for impairment are mainly related to Argentine taxation. We estimated the future VAT credit and VAT debit that comes from domestic purchases and sales, respectively. Since exports are zero-rated, any excess portion of the credit not used against any VAT debit is reimbursable to us, through a special VAT recovery regime. However, according to VAT recovery rules, there are certain limitations on the amount that may be reimbursed and we considered any VAT credit that cannot be reimbursed to be an impairment.

Share-based compensation plan

Under our share-based compensation plan for employees is measured based on fair value of our shares at the grant date and recognized as compensation expense on a straight-line basis over the requisite service period with a corresponding impact reflected in additional paid-in capital.

Determining the fair value of the share-based awards at the grant date requires judgments. We calculated the fair value of each option award on the grant date using the Black-Scholes option pricing model. The Black-Scholes model requires the input of highly subjective assumptions, including the fair value of our shares, expected volatility, expected term, risk-free interest rate and dividend yield.

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Fair value of the shares: For our 2014 Equity Incentive Plan, the fair value of the shares is based on the quoted market price of our shares at the grant date. For our 2012 Equity Incentive Plan, as our shares were not publicly traded, the fair value was determined using the market approach technique based on the value per share of private placements. We had gone in the past through a series of private placements in which new shares have been issued. We understood that the price paid for those new shares was a fair value of those shares at the time of the placement. In January 2012, Globant España S.A. had a capital contribution from a new shareholder, which included cash plus share options granted to the new shareholder, therefore, we considered that amount to reflect the fair value of their shares. The fair value of the shares related to this private placement resulted from the following formula: cash minus fair value of share options granted to new shareholder divided by number of newly issued shares. The fair value of the share options granted to the new shareholder was determined using the same variables and methodologies as the share options granted to the employees. After our reorganization in December 2012, shares of Globant S.A (Luxembourg) were sold by existing shareholders in a private placement to WPP. The fair value of the shares related to this private placement results from the total amount paid by WPP to the existing shareholders.

Expected volatility: Since January 1, 2018, the expected volatility of our shares is calculated by using the average share price volatility of our shares since January 1, 2016 to the date of grant. Before 2018, as we did not have sufficient trading history for the purpose of valuing our share options, the expected volatility of our shares was estimated by using the average historic price volatility of the NASDAQ 100 Telecommunication Index.

Expected term: The expected life of options represents the period of time the granted options are expected to be outstanding.

Risk free rate: The risk-free rate for periods within the contractual life of the option is based on the U.S. Federal Treasury yield curve with maturities similar to the expected term of the options.

Dividend yield: We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

Recoverability of internally generated intangible assets

During the year, we considered the recoverability of the internally generated intangible asset that is included in our consolidated financial statements as of December 31, 2019 and 2018 with a carrying amount of $9.4 and $7.9, respectively.

We conducted a detailed recoverability analysis, considering both revenue from customers in the case of assets sold to third parties and internal usage for those assets that are used internally. As a result of this analysis, we recognized an impairment of $0.7 and $0.3 as of December 31, 2019 and 2018, respectively. In 2017 no impairment losses were recorded. The impairment was recognized as a result of our evaluation of such internal developments, upon which we projected lower future cash flows from the related intangible assets.

Fair value measurement and valuation processes

Certain assets and liabilities are measured at fair value for financial reporting purposes.

In estimating the fair value of an asset or a liability, we use market-observable data to the extent it is available. Where Level 1 inputs are not available, we estimate the fair value of an asset or a liability by converting future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount. If necessary, we engage third party qualified valuers to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 28.8 to the Consolidated Financial Statements included in this annual report.

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Useful lives of property, equipment and intangible assets

We review the estimated useful lives of property, equipment and intangible assets at the end of each reporting period. We determined that the useful lives of the assets included as property, equipment and intangible assets are in accordance with their expected lives.

Provision for contingencies

Provisions are recognized when we have a present obligation (legal or constructive) as a result of a past event, it is probable that we will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Recoverability of intangible assets acquired in business combinations, other than goodwill

We evaluate intangible assets acquired in business combinations for impairment at least annually or more frequently when there is an indication that the asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs of disposal and value in use. The determination of the fair value of intangible assets acquired in business combinations involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. When determining the fair value, we utilize the income approach using discounted cash flow.

A total amount of $4.7 million of impairment loss related to the intangible assets acquired in business combinations was recognized as of December 31, 2017 and is included as other operating expenses. The impairment was recognized as a result of our evaluation of such intangible assets, upon which we projected lower future cash flows from the related customer relationships. In 2019 and 2018 no impairment losses were recorded.

Application of New and Revised International Financial Reporting Standards

| • | Adoption of new and revised standards

We adopted all of the new and revised standards and interpretations issued by the IASB that are relevant to our operations and that are mandatorily effective at December 31, 2019. The impact of the new and revised standards and interpretations mentioned on our consolidated financial statements is described as follows.

We initially adopted IFRS 16 Leases on January 1, 2019. We elected the practical expedient to not restate comparative information and we have recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings at January 1, 2019.

We have lease contracts for office spaces. Before the adoption of IFRS 16, in an operating lease, the leased property was not capitalized and the lease payments were recognized as rent expense in profit or loss on a straight–line basis over the lease term. Any prepaid rent and accrued rent were recognized under Other receivables and Trade and other payables, respectively.

On adoption of IFRS 16, we recognized lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases. These lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities recognized on January 1, 2019, was 6.14%.

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Operating lease commitments disclosed as at December 31, 2018 |  |  | 55,222 |
Discounted using the lessee's incremental borrowing rate of at the date of initial application |  |  | 46,887 |
Lease liability recognized as at January 1, 2019 |  |  | 46,887 |

The associated right-of-use assets were measured on a retrospective basis as if IFRS 16 had always been applied.

The net impact on retained earnings on January 1, 2019, was a decrease of 1,972.

The effect of adoption IFRS 16 as at January 1, 2019 (increase/(decrease)) is as follows:

Assets |  |  |  |
Right-of-use assets |  |  | 46,567 |
Prepayments |  |  | (1,652 | )
Liabilities |  |  |  |
Lease liabilities |  |  | 46,887 |
Total adjustment on equity: |  |  |  |
Retained earnings |  |  | (1,972 | )

In applying IFRS 16 for the first time, we have used the following practical expedients permitted by the standard:

| • | the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;

| • | reliance on previous assessments on whether leases are onerous;

| • | the accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019, as short-term leases; and

| • | the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.

We also elected to not reassess whether a contract is, or contains a lease at the date of the initial application. Instead, for contracts entered into before the transition date we relied on our assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.

As a practical expedient, IFRS 16 permits a lessee not to separate non–lease components, and instead account for any lease and associated non-lease components as a single arrangement. We have not used this practical expedient.

From January 1, 2019, leases are recognized as a right-of-use asset and a corresponding lease liability at the commencement date of the lease. Each payment is allocated between the liability and a finance cost. The finance cost is charged to profit or loss over the lease term so as to produce a constant period rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the lease term on a straight-line basis.

We have also adopted the following standards and interpretation that became applicable for annual periods commencing on or after January 1, 2019:

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IFRIC 23 | Uncertainty over Income Tax Treatments

Amendments to IFRS 3 and 11 and IAS 12 and 23 | Annual improvements 2015-2017 Cycle

Amendment to IAS 28 | Long-term Interests in Associates and Joint Ventures

Amendment to IFRS 9 | Prepayment Features with Negative Compensation

Amendments to IAS 19 | Plan Amendment, Curtailment or Settlement

Those standards did not have any impact on our accounting policies and did not require retrospective adjustments, except for IFRIC 23 "Uncertainty over Income Tax Treatments" which required a retrospective analysis to conclude that there is a possibility that a loss may have been incurred of 1,768 related to the fiscal years 2014 to 2019. As of December 31, 2019 these matter may be subject to inspection by the tax authority and claims may be asserted in the future.

| • | New accounting pronouncements

We have not applied the following new and revised IFRSs that have been issued but are not yet mandatorily effective:

Amendments to References to the Conceptual Framework in IFRS Standards1

| Amendment to IFRS 3 | Definition of a business2
| Amendment to IAS 1 and IAS 8 | Definition of material1
| Amendments to IFRS 9, IAS 39 and IFRS 7 | Interest Rate Benchmark Reform1
| Amendments to IAS 1 | Classification of Liabilities as Current or Non-Current 3

1Effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

2Effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period. Earlier application is permitted.

3Effective for annual reporting periods beginning on or after January 1, 2022 and are to be applied retrospectively. Earlier application is permitted.

| • | On March 29, 2018, the IASB issued the Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework. Our management does not anticipate that the application of these amendments will have a material impact on our consolidated financial statements. The amendments are effective for annual periods beginning on or after January 1, 2020.

| • | On October 22, 2018, the IASB has issued 'Definition of a Business (Amendments to IFRS 3)' aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets.

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. The aforementioned changes:

| ◦ | clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

| ◦ | narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;

| ◦ | add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;

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| ◦ | remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs;

| ◦ | and add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Our management does not anticipate that the application of this amendment will have a material impact on our consolidated financial statements. This amendment is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period. Earlier application is permitted. We have not opted for early application.

| • | On October 31, 2018, the IASB has issued 'Definition of Material (Amendments to IAS 1 and IAS 8)' to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves.

The changes in Definition of Material (Amendments to IAS 1 and IAS 8) all relate to a revised definition of 'material' which is quoted as follows from the final amendments: "Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity". Three new aspects of the new definition should especially be noted:

| ◦ | Obscuring. The existing definition only focused on omitting or misstating information, however, the accounting board concluded that obscuring material information with information that can be omitted can have a similar effect. Although the term obscuring is new in the definition, it was already part of IAS 1 (IAS 1.30A).

| ◦ | Could reasonably be expected to influence. The existing definition referred to 'could influence' which the accounting board felt might be understood as requiring too much information as almost anything ‘could’ influence the decisions of some users even if the possibility is remote.

| ◦ | Primary users. The existing definition referred only to 'users' which again the accounting board feared might be understood too broadly as requiring to consider all possible users of financial statements when deciding what information to disclose.

| • | On September 26, 2019, IASB has issued 'Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)' as a first reaction to the potential effects the IBOR reform could have on financial reporting.

The amendments deal with issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative interest rate and address the implications for specific hedge accounting requirements.

The changes in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7):

| ◦ | modify specific hedge accounting requirements so that entities would apply those hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform;

| ◦ | are mandatory for all hedging relationships that are directly affected by the interest rate benchmark reform;

| ◦ | are not intended to provide relief from any other consequences arising from interest rate benchmark reform (if a hedging relationship no longer meets the requirements for hedge accounting for reasons other than those specified by the amendments, discontinuation of hedge accounting is required); and

| ◦ | require specific disclosures about the extent to which the entities' hedging relationships are affected by the amendments.

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Our management does not anticipate that the application of these amendments will have a material impact on our consolidated financial statements. These amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted. We have not opted for early application.

| • | On January 23, 2020, IASB has issued 'Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)' providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.

The amendments in Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) affect only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:

| ◦ | clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;

| ◦ | clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and

| ◦ | make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

Our management does not anticipate that the application of these amendment will have a material impact on our consolidated financial statements. These amendments are effective for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted. We have not opted for early application.

C. Research and Development, Patents and Licenses, etc.

See “Business Overview — Intellectual Property.”

D. Trend Information

See "— Operating Results — Factors Affecting Our Results of Operations."

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E. Off-Balance Sheet Arrangements

As of and for the three years ended December 31, 2019, we were not party to any off-balance sheet arrangements.

F. Tabular Disclosure of Contractual Obligations

Set forth below is information concerning our fixed and determinable contractual obligations as of December 31, 2019 and the effect such obligations are expected to have on our liquidity and cash flows.

|  | Payments due by period (in thousands) |
|  | Total |  |  | Less than 1 year |  |  | 1-3 years |  |  | 3-5 years |
Borrowings |  | $ | 50,924 |  |  | $ | 736 |  |  | $ | 188 |  |  |  | 50,000 |
Interest to be paid on borrowings |  | $ | 462 |  |  | $ | 462 |  |  |  | — |  |  |  | — |
Lease liabilities |  | $ | 74,981 |  |  | $ | 20,002 |  |  | $ | 26,815 |  |  | $ | 28,164 |
Other financial liabilities (1) |  | $ | 10,554 |  |  | $ | 8,937 |  |  | $ | 1,617 |  |  |  | — |
Total |  | $ | 136,921 |  |  | $ | 30,137 |  |  | $ | 28,620 |  |  | $ | 78,164 |

| (1) | Relates to Clarice, Ratio, PointSource, Avanxo, Belatrix and BI Live acquisitions. See note 25 to our audited consolidated financial statements.

G. Safe harbor

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Cautionary Statements Regarding Forward-Looking Statements.”

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Directors

The table below sets forth information concerning our directors as of February 13, 2020.

Name |  | Position |  | Age |  | Date of Appointment |  | Current Term Expiring at Annual Meeting of Shareholders to Be Held in Year
Martín Migoya |  | Chairman of the Board and Chief Executive Officer |  | 52 |  | June 20, 2018 |  | 2021
Martín Gonzalo Umaran |  | Director and Chief of Staff |  | 51 |  | May 8, 2017 |  | 2020
Guibert Andrés Englebienne |  | Director and Chief Technology Officer |  | 53 |  | May 8, 2017 |  | 2020
Francisco Álvarez-Demalde |  | Director |  | 41 |  | May 31, 2019 |  | 2022
Mario Eduardo Vázquez |  | Director |  | 84 |  | May 31, 2019 |  | 2022
Philip A. Odeen |  | Director |  | 84 |  | June 20, 2018 |  | 2021
Marcos Galperin |  | Director |  | 48 |  | May 31, 2019 |  | 2022
Linda Rottenberg |  | Director |  | 51 |  | May 8, 2017 |  | 2020
Richard Haythornthwaite |  | Director |  | 63 |  | May 31, 2019 |  | 2021

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Directors may be re-elected for one or more further four-year terms. Directors appointed to fill vacancies remain in office until the next general meeting of shareholders.

Globant S.A. was incorporated in Luxembourg on December 10, 2012. References to the terms of service or appointment of our directors and senior management in the following biographies include their service to our predecessor companies, which were organized in Spain.

Martín Migoya

Mr. Migoya has served as Chairman of our board of directors and Chief Executive Officer since 2005. Prior to co-founding Globant, he worked as a trainee and technology project coordinator at Repsol-YPF, a consultant at Origin BV Holland and a business development director at Tallion. He founded our company together with Messrs. Englebienne, Nocetti and Umaran in 2003. Mr. Migoya is frequently invited to lecture at various conventions and at universities like MIT and Harvard, and has been a judge at the Endeavor Entrepreneurs panel and at La Red Innova. Mr. Migoya was selected as an Endeavor Entrepreneur in 2005 and won a Konex Award as one of the most innovative entrepreneurs of 2008. He was selected as an Argentine Creative Individual of 2009 ( Círculo de Creativos de la Argentina ) and received the Security Award as one of the most distinguished Argentine businessmen of 2009. He also received in 2009 the America Economía Magazine’s “Excellence Award”, which is given to entrepreneurs and executives that contribute to the growth of Latin American businesses. In 2011, Latin Trade recognized Mr. Migoya as Emerging CEO of the Year. In 2013, Mr. Migoya received the “Entrepreneur of the Year Award” from Ernst & Young. He is a member of the Young President’s Organization and a board member of Endeavor Argentina. Mr. Migoya holds a degree in electronic engineering from Universidad Nacional de La Plata (UNLP) and a master’s degree in business administration, from the Universidad del Centro de Estudios Macroeconómicos de Argentina. We believe that Mr. Migoya is qualified to serve on our board of directors due to his intimate familiarity with our company and the perspective, experience, and operational expertise in the technology services industry that he has developed during his career and as our co-founder and Chief Executive Officer.

Martín Gonzalo Umaran

Mr. Umaran has served as a member of our board of directors since 2012 as well as Chief of Staff since 2013. As Globant’s Chief of Staff, Mr. Umaran is responsible for coordinating our back office activities, supporting executives in daily projects and acting as a liaison to our senior management. He is also responsible for our mergers and acquisitions process and for strategic initiatives. From 2005 to 2012, he served as Globant’s Chief Operations Officer and Chief Corporate Business Officer, in charge of managing our delivery teams and projects. Together with his three Globant co-founders, Mr. Umaran was selected as an Endeavor Entrepreneur in 2005. Mr. Umaran holds a degree in mechanical engineering from Universidad Nacional de La Plata (UNLP). We believe that Mr. Umaran is qualified to serve on our board of directors due to his intimate familiarity with our company and his perspective, experience, and operational expertise in the technology services industry that he has developed during his career as a co-founder of our company.

Guibert Andrés Englebienne

Mr. Englebienne has served as a member of our board of directors and as Chief Technology Officer since 2003. He is one of Globant’s co-founders. Prior to co-founding Globant, Mr. Englebienne worked as a scientific researcher at IBM and, later, as head of technology for CallNow.com Inc. As Globant’s Chief Technology Officer, Mr. Englebienne is the head of our Technology department and our Premier League, an elite team of Globers whose mission is to foster innovation by cross-pollinating their deep knowledge of emerging technologies and related market trends across our Studios and among our Globers. Together with his three Globant co-founders, Mr. Englebienne was selected as an Endeavor Entrepreneur in 2005. In addition to his responsibilities at Globant, Mr. Englebienne is President of Endeavor Argentina. In 2011, he was included in Globalization Today’s “Powerful 25” list. Mr. Englebienne holds a bachelor’s degree in Computer Science and Software Engineering from the Universidad Nacional del Centro de la Provincia de Buenos Aires in Argentina. We believe that Mr. Englebienne is qualified to serve on our board of directors due to his intimate familiarity with our company and his perspective, experience, and operational expertise in the technology services industry that he has developed during his career as a co-founder of our company.

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Francisco Álvarez-Demalde

Mr. Álvarez-Demalde has been a member of the board since 2007. He is a founder and general partner of Riverwood Capital, a leading growth-capital private equity firm focused on the global technology industry, and one of the largest early investors in Globant. From 2005 to 2007, he was an investment executive at Kohlberg Kravis Roberts & Co., where he focused on leveraged buyouts in the technology industry and other sectors. Mr. Álvarez-Demalde was also an investment professional at Eton Park Capital Management and with Goldman Sachs & Co. Mr. Álvarez-Demalde is a former and current director of several technology companies, including Alog Data Centers do Brasil, CloudBlue Technologies, Inc., LAVCA, Navent, Netshoes, among several others. Mr. Álvarez-Demalde earned a bachelor’s degree in economics from Universidad de San Andrés, Argentina, which included an exchange program at the Wharton School at the University of Pennsylvania. We believe that Mr. Álvarez-Demalde is qualified to serve on our board of directors due to his considerable business experience in the technology industry and his experience serving as a director of other companies.

Mario Eduardo Vázquez

Mr. Vázquez has served as a member of our board of directors and chairman of Globant’s audit committee since June 2012. From 2003 to 2006, he served as the Chief Executive Officer of Grupo Telefónica in Argentina. Mr. Vázquez worked in auditing for Arthur Andersen for 33 years until his retirement in 1993, including 23 years as a partner and general director in many of Globant’s markets, including Argentina, Chile, Uruguay, and Paraguay. As former partner and general director of Arthur Andersen, Mr. Vázquez has significant experience with U.S. GAAP accounting and in assessing internal control over financial reporting. Mr. Vázquez currently serves on the board of directors of MercadoLibre, Inc and is currently a member of the Audit Committee of both MercadoLibre, Inc and Despegar S.A. Also, Mr. Vazquez currently serves as member of the compensation committee of MercadoLibre, Inc where Mr. Galperin serves as chief executive officer. Mr. Vázquez served as a member of the board of directors of YPF, S.A. and as the president of the Audit Committee of YPF, S.A, until April 2012. He has also served as a member of the board of directors of Telefónica Argentina S.A., Telefónica Holding Argentina S.A., Telefónica Spain S.A., Banco Santander Rio S.A., Banco Supervielle Societe General S.A., and CMF Banco S.A., and as alternate member of the board of directors of Telefónica de Chile S.A. Mr. Vázquez received a degree in public accounting from the Universidad de Buenos Aires. We believe that Mr. Vázquez is qualified to serve on our board of directors due to his financial expertise and his experience serving as a director of other companies.

Philip A. Odeen

Mr. Odeen has served as a member of our board of directors since 2012. Mr. Odeen has also served as a director and proxy director of DRS Technologies, Inc. since 2013. From 2009 to 2013, Mr. Odeen served as the chairman of the board of directors and lead independent director of AES Corporation and as a director of AES Corporation from 2003 to 2013. From 2008 to 2013, Mr. Odeen served as the chairman of the board of directors of Convergys Corporation and as a director of Convergys Corporation from 2000 to 2013. Mr. Odeen has served as a director of QinetiQ North America, Inc. since 2006, Booz Allen Hamilton, Inc. since 2008 and ASC Signal Corporation since 2009. From 2006 to 2007, Mr. Odeen served as chairman of the board of directors of Avaya Corporation. He served on the board of directors of Reynolds and Reynolds Company from 2000 to 2007, and as its chairman from 2006 to 2007. Mr. Odeen was a director of Northrop Grumman from 2003 to 2008. Mr. Odeen retired as chairman and chief executive officer of TRW Inc. in December 2002. We believe that Mr. Odeen is qualified to serve on our board due to his experience in leadership and guidance of public and private companies as a result of his varied global business, governmental and non-profit and charitable organizational experience.

Marcos Galperin

Mr. Galperin has served as a member of our board of directors since July 2014. He is a co-founder of MercadoLibre, Inc. and has served as its chairman, president and chief executive officer since October 1999. Mr. Galperin is a board member of Endeavor Global, Inc., a non-profit organization that is leading the global movement to catalyze long term economic growth by selecting, mentoring and accelerating the best high impact entrepreneurs around the world. He is also a board member of the Stanford Graduate School of Business. Mr. Galperin received a master’s degree in business administration from Stanford University and graduated with honors from the Wharton School of the University of Pennsylvania. We believe that Mr. Galperin is qualified to serve on our board of directors due to his comprehensive knowledge and experience in the technology industry and experience serving as a director of other companies.

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Linda Rottenberg

Ms. Rottenberg has served as a member of our board of directors since 2017. She is the Co-Founder and Chief Executive Officer of Endeavor Global, Inc., a leader of the global high impact entrepreneurship movement, operating in 40 markets around the world. She also oversees Endeavor Catalyst Funds, which currently has over $220 million of assets under management, and coinvest in Endeavor Entrepreneurs to raise outside capital. Ms. Rottenberg serves as board director of a leading bandwidth infrastructure company (NYSE: ZAYO), and an online ordering platform (OLO). In her board capacity, she has served on two public company audit committees through SOX compliance and has helped companies achieve global expansion while maintaining an entrepreneurial culture. A graduate of Harvard College, and Yale Law School, Ms. Rottenberg has been named among TIME’s “Innovators for the 21st century’ and U.S. News and World Report’s “America’s Best Leaders”. In 2018, she received the Heinz Award in Technology, the Economy and Employment. We believe that Ms. Rottenberg is qualified to serve on our board of directors due to her knowledge and experience in the technology industry and experience serving as director of other companies.

Richard Haythornthwaite

Mr. Haythornthwaite has served as a member of our board of directors since February 2019. He is the global chairman of the NYSE-listed Mastercard Inc and an Advisory Partner to Moelis & Co. He is a co-founder and chairman of QIO Technologies, an industrial artificial intelligence company. He is also an investor in and chairman of ARC International, the global glass tableware manufacturer. He was previously the CEO of Invensys from 2001-2005 and Blue Circle Industries from 1999-2001 having joined as Director of Asia and Europe in 1997. He spent his early career in BP from 1978-1995 before moving to Premier Oil as Commercial Director from 1995 to 1997. He has served as on the boards of Network Rail and Centrica Plc. as chairman and Cookson, Lafarge, ICI and Land Securities as non-executive director. In the UK non-for-profit sector he is the current chair of the Creative Industries Federation and former chair of the Southbank Centre and Almeida Theatre. He was educated at MIT (Sloan Fellow) and The Queen’s College, Oxford (MA Geology). We believe that Mr. Haythornthwaite is qualified to serve on our board of directors due to his extensive business experience, risk management expertise and financial understanding.

Senior Management

As of February 13, 2020, our group senior management is made up of the following members:

Name |  | Position
Martín Migoya |  | Chief Executive Officer
Martín Gonzalo Umaran |  | Chief of Staff
Guibert Andrés Englebienne |  | Chief Technology Officer
Juan Ignacio Urthiague |  | Chief Financial Officer
Yanina Maria Conti |  | Chief Accounting Officer
Gustavo Barreiro |  | Chief Information Officer
Sol Mariel Noello |  | General Counsel
Wanda Weigert |  | Chief Brand Officer
Patricia Pomies |  | Chief Delivery Officer
Mercedes María Mac Pherson |  | Chief Talent & Diversity Officer

The business address of our group senior management is c/o Sistemas Globales S.A., Ing. Butty 240, 9th floor, Laminar Plaza Tower, C1101 AFB, Capital Federal, Argentina.

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The following is the biographical information of the members of our group senior management other than Messrs. Migoya, Umaran and Englebienne, whose biographical information is set forth in “— Directors.”

Juan Ignacio Urthiague

Mr. Uthiague has been our Chief Financial Officer since October 2018 and is in charge of corporate finance, treasury, accounting and tax, financial reporting, financial services and investor relations. Mr. Urthiague joined Globant in 2011, and was a key member in the company’s global expansion and transformation into a publicly listed company on the NYSE. Prior to his return to Globant, he spent 15 months outside the company serving as Chief Financial Officer Latam for OLX and as Chief Financial Officer for avantrip.com. Prior to joining Globant in 2011, Mr, Urthiague worked as Planning Manager for Amadeus IT Group in Spain and as Senior Credit Specialist in Merrill Lynch in Ireland and also held financial roles for companies like British American Tobacco, Ternium and IBM. Mr. Urthiague has a MSc. in Finance and Capital Markets from Dublin City University and Bachelor’s degree in Business Administration from the Universidad de Buenos Aires.

Yanina Maria Conti

Mrs. Conti has been our Chief Accounting Officer since 2017. From 2013 until 2017, she served as our SEC Reporting and Audit Manager. From 2004 to 2013, Mrs. Conti worked for Ernst & Young, auditing large public and private firms and gaining experience with IFRS accounting and audit procedures. As our Chief Accounting Officer, Mrs. Conti is in charge of accounting, tax, external audit and reporting. Mrs. Conti has a degree in public accounting and in business administration from the Universidad de Buenos Aires.

Gustavo Barreiro

Mr. Barreiro has been our Chief Information Officer since July 2012. From 2010 to July 2012, Mr. Barreiro served as our Executive Vice President, Delivery, managing our delivery partners, staffing, recruiting, project managers, and site managers. As Globant's Chief Information Officer, Mr. Barreiro is responsible for our infrastructure team (IT operations and information security), enterprise applications, and IT services. He holds a bachelor's degree in industrial engineering from the Universidad de Buenos Aires and a master's degree in business administration from the Instituto para el Desarollo Empresario Argentino (IDEA).

Sol Mariel Noello

Mrs. Noello has been our General Counsel since December 2018. She first joined Globant as Legal Counsel in 2011 and has been in charge of supervising the functions of Globant´s Legal department since February 2015, in the roles of Leader and of Manager of Globant´s Legal department. In such roles Mrs. Noello contributed to the growth of the area and the development of an internal legal support system, including the implementation of processes and controls related to the legal function within the company. Before joining Globant, Mrs. Noello worked at Tata Consultancy Services from 2009 to 2011, as Legal Officer in the company´s regional legal department for LATAM. Mrs. Noello holds a law degree from Universidad de Belgrano in Argentina and has completed a number of post-graduate courses in corporate law at Universidad Argentina de la Empresa.

Wanda Weigert

Mrs. Weigert has been our Chief Brand Officer since November 2018. From 2007 to 2018 she served as our Communications Manager and Director of Communications and Marketing. She joined Globant in 2005 and worked for two years in the Internet marketing department as a senior consultant. From 2002 to 2005, she worked at Jota Group, a publishing house where she was responsible for the development of corporate communications tools for different multinational customers. Mrs. Weigert created and supervises Globant’s communications department. As our Chief Brand Officer, she coordinates Globant’s relationships with the press throughout the globe. She is also responsible for developing both our internal and external communications strategies. Mrs. Weigert holds a bachelor’s degree in social communications from Universidad Austral and she completed her post-graduate studies in marketing at the Pontificia Universidad Católica Argentina “Santa Maria de los Buenos Aires."

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Patricia Pomies

Mrs. Pomies has been our Chief Delivery Officer since January 2017. In this role, Mrs. Pomies is in charge of our overall strategy related to quality of service and delivery. Mrs. Pomies first joined our company in 2012 and was previously a director of Europe, Middle East and Africa (EMEA) and on-line, insurance and travel (OIT), two of our main business units. As such, she was responsible for each unit’s business and operations, with particular focus on expanding the EU market. Mrs. Pomies was director at Educ.ar Portal from 2003 to 2013, a key initiative within Argentina’s Ministry of Education for principals, teachers, students and families to adopt information and communication technologies in education. Additionally, she was responsible for content production and tracking of “Equality Connect,” a program directly supported by the President of Argentina to distribute more than 3.5 million netbooks within the Argentine public education system. Mrs. Pomies has been a Professor of Social Communication at Maimonides University and Assistant Professor of Communication Sciences at the University of Buenos Aires.

Mercedes María MacPherson

Mercedes María MacPherson has been our Chief Talent & Diversity Officer since December 2019. She has been working in the human resources function for 17 years. During the last ten years at Globant, she has served as our Head of Talent Acquisition, Compensations, People Champions and People Latam Region. She previously worked as a Director and Recruiting Manager for Leviminond Group, where she was responsible for the startup of an recruitment process outsourcing business unit covering the Argentinian, Latin-American and U.S. markets. During that time, she led several recruiting projects working alongside the Ministry of Labor and several IT companies to recruit over 12,000 candidates nationwide in Argentina. She started her education at the University of Northern Colorado and ultimately majored in International Relations at Universidad del Salvador. Ms. MacPherson was also a teacher at Universidad de Palermo, where she taught the international program of Human Resources Management for the University of London.

B. Compensation

Compensation of Board of Directors and Senior Management

The total fixed and variable remuneration of our directors and senior management for the years ended December 31, 2019, 2018 and 2017 amounted to $6.9 million, $5.1 million and $4.5 million, respectively.

We adopted an equity incentive plan in connection with the completion of our initial public offering. See “— 2014 Equity Incentive Plan”. From the adoption of this plan until the date of this annual report we granted to members of our senior management and certain other employees 30,000 stock awards, options to purchase 2,270,059 common shares and 1,073,645 restricted stock units net of any cancelled and/or forfeited awards. In addition, we replaced our existing variable compensation arrangements with a new short-term incentive plan providing for the payment of bonuses based on the achievement of certain financial and operating performance measures.

2014 Equity Incentive Plan

On July 3, 2014, our board of directors and shareholders approved and adopted our 2014 Equity Incentive Plan, which was amended by our board of directors to increase the number of common shares that may be issued as stock awards from 1,666,667 to up to 3,666,667 on May 9, 2016, and from 3,666,667 to 5,666,667 on February 13, 2019. The following description of the plan is qualified in its entirety by the full text of the plan, which has been filed with the SEC as an exhibit to the registration statement previously filed in connection with our initial public offering and incorporated by reference herein.

Purpose. We believe that the plan will promote our long-term growth and profitability by (i) providing key people with incentives to improve shareholder value and to contribute to our growth and financial success through their future services, and (ii) enabling us to attract, retain and reward the best-available personnel.

Eligibility; Types of Awards. Selected employees, officers, directors and other individuals providing bona fide services to us or any of our affiliates, are eligible for awards under the plan. The administrator of the plan may also grant awards to individuals in connection with hiring, recruiting or otherwise before the date the individual first performs services; however, those awards will not become vested or exercisable before the date the individual first performs services. The plan provides for grants of stock options, stock appreciation rights, restricted or unrestricted stock awards, restricted stock units, performance awards and other stock-based awards, or any combination of the foregoing.

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Common Shares Subject to the Plan. The number of common shares that we may issue with respect to awards granted under the plan will not exceed an aggregate of 5,666,667 common shares. This limit will be adjusted to reflect any stock dividends, split ups, recapitalizations, mergers, consolidations, share exchanges, and similar transactions. If any award, or portion of an award, under the plan expires or terminates unexercised, becomes unexercisable, is settled in cash without delivery of common shares, or is forfeited or otherwise terminated or cancelled as to any common shares, the common shares subject to such award will thereafter be available for further awards under the plan. Common shares used to pay the exercise price of an award or tax obligations will not be available again for other awards under the plan.

Administration. The plan is administered by our compensation committee. The administrator has the full authority and discretion to administer the plan and to take any action that is necessary or advisable in connection with the administration of the plan, including without limitation the authority and discretion to interpret and construe any provision of the plan or any agreement or other documents relating to the plan. The administrator’s determinations will be final and conclusive.

Awards. The plan provides for grants of stock options, stock appreciation rights, restricted or unrestricted stock awards, restricted stock units, performance awards and other stock-based awards.

Stock Options. The plan allows the administrator to grant incentive stock options, as that term is defined in section 422 of the Internal Revenue Code, or non-statutory stock options. Only our employees or employees of our subsidiaries may receive incentive stock option awards. Options must have an exercise price that is at least equal to the fair market value of the underlying common shares on the date of grant and not lower than the par value of the underlying common shares. The option holder may pay the exercise price in cash or by check, by tendering common shares, by a combination of cash and common shares, or by any other means that the administrator approves. The options have a maximum term of ten years; however, the options will expire earlier if the optionee’s service relationship with the company terminates.

Stock Appreciation Rights. The plan allows the administrator to grant awards of stock appreciation rights which entitle the holder to receive a payment in cash, in common shares, or in a combination of both, having an aggregate value equal to the product of the excess of the fair market value on the exercise date of the underlying common shares over the base price of the common shares specified in the grant agreement, multiplied by the number of common shares specified in the award being exercised.

Stock Awards. The plan allows the administrator to grant awards denominated in common shares or other securities, stock equivalent units or restricted stock units, securities or debentures convertible into common shares or any combination of the foregoing, to eligible participants. Awards denominated in stock equivalent units will be credited to a bookkeeping reserve account solely for accounting purposes. The awards may be paid in cash, in common shares or in a combination of common shares or other securities and cash.

Performance Awards. The plan allows the administrator to grant performance awards including those intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the U.S. Internal Revenue Code. The administrator may establish performance goals relating to any of the following, as it may apply to an individual, one or more business units, divisions or subsidiaries, or on a company-wide basis, and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies: revenue; earnings before interest, taxes, depreciation and amortization (EBITDA); operating income; pre- or after-tax income; cash flow; cash flow per share; net earnings; earnings per share; price-to-earnings ratio; return on equity; return on invested capital; return on assets; growth in assets; share price performance; economic value added; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; relative performance to a group of companies comparable to the company, and strategic business criteria consisting of one or more objectives based on the company’s meeting specified goals relating to revenue, market penetration, business expansion, costs or acquisitions or divestitures. Performance targets may include minimum, maximum, intermediate and target levels of performance, with the size of the performance-based stock award or the lapse of restrictions with respect thereto based on the level attained.

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A performance target may be stated as an absolute value or as a value determined relative to prior performance, one or more indexes, budget, one or more peer group companies, any other standard selected by the administrator, or any combination thereof. The administrator shall be authorized to make adjustments in the method of calculating attainment of performance measures and performance targets in recognition of: (A) extraordinary or non-recurring items; (B) changes in tax laws; (C) changes in accounting policies; (D) charges related to restructured or discontinued operations; (E) restatement of prior period financial results; and (F) any other unusual, non-recurring gain or loss that is separately identified and quantified in our financial statements. Notwithstanding the foregoing, the administrator may, in its sole discretion, modify the performance results upon which awards are based under the plan to offset any unintended results arising from events not anticipated when the performance measures and performance targets were established.

Change in Control. In the event of any transaction resulting in a “change in control” of Globant S.A. (as defined in the plan), outstanding stock options and other awards that are payable in or convertible into our common shares will terminate upon the effective time of the change in control unless provision is made in connection with the transaction for the continuation, assumption, or substitution of the awards by the surviving or successor entity or its parent. In the event of such termination, the holders of stock options and other awards under the plan will be permitted immediately before the change in control to exercise or convert all portions of such stock options or awards that are exercisable or convertible or which become exercisable or convertible upon or prior to the effective time of the change in control.

Notwithstanding the foregoing, the vesting schedule of all of the outstanding stock options granted to certain senior executives will be accelerated in the event of a transaction resulting in a change in control if (i) no provision is made in connection with the transaction for the continuation or assumption of the relevant executive’s outstanding options by, or for the substitution of the equivalent awards of, the surviving or successor entity or a parent thereof, or (ii) the relevant executive is dismissed without cause within a two-year period following the change in control.

Amendment and Termination. No award will be granted under the plan after the close of business on the day before the tenth anniversary of the effective date of the plan. Our board of directors may amend or terminate the plan at any time. Shareholder approval is required to reprice underwater options.

Director Compensation

Only those directors who are considered to be independent directors under the corporate governance rules of the NYSE are eligible, subject to our shareholders’ approval, to receive compensation from us for their service on our board of directors. In this respect, independent members of our board of directors are eligible to receive cash and/or share based compensation for their services as directors, as well as reimbursement of reasonable and documented costs and expenses incurred by them in connection with attending any meetings of our board of directors or any committees thereof.

In 2019, we paid an aggregate cash compensation of $550,000 and we granted a total of 2,574 restricted stock units to certain independent members of our board of directors, all of which had been previously approved by our shareholders at our 2019 annual general meeting.

During 2020, the independent members of our board of directors will be eligible to receive cash compensation up to $100,000 each and to receive grants of equity awards in an amount up to $100,000 each, subject to the approval of our shareholders at our 2020 annual general meeting.

Members of our senior management who are members of our board of directors (Messrs. Migoya, Umaran and Englebienne) will not receive compensation from us for their service on our board of directors, but have received and will continue receiving cash compensation and share based compensation for their services as executive officers. See “— Compensation of Board of Directors and Senior Management.”

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Benefits upon Termination of Employment

Neither we nor our subsidiaries maintain any directors’ service contracts providing for benefits upon termination of service. On December 27, 2012, we entered into noncompetition agreements with our founders. Under such agreements, the founders agreed that during their employment with our company, and for a period of two years from the termination of such employment, they will not directly or indirectly perform any kind of activity or provide any service in other companies that provide the same kinds of services as those provided by us. In consideration of these noncompetition covenants, the founders will receive compensation equal to 24 times the highest monthly compensation paid to them during the 12-month period immediately preceding the date of termination of their employment. This compensation will be paid in two equal installments.

In 2016, our compensation committee approved an amendment to Martín Migoya’s noncompetition agreement to increase his compensation to 36 times the highest monthly compensation paid to him during the 12-month period immediately preceding the date of termination of his employment. In addition, our compensation committee approved an amendment each founder’s noncompetition agreement so that the compensation calculation will include the proportional amount of any variable annual cash compensation payable to each founder, at target amounts, and that each founder will be entitled to receive continued health coverage and life insurance after the termination of their employment and for a period of 36 months in the case of Martín Migoya and of 24 months in the case of Messrs Umaran, Englebienne and Nocetti.

In addition, our compensation committee approved the execution of a noncompetition agreement with Mr. Marsicovetere, our former Chief Operating Officer, Mr. Scannapieco and Ms. Pomies, under substantially similar terms and conditions to those applicable to those of Messrs. Umaran, Englebienne and Nocetti.

Pension, Retirement or Similar Benefits

We do not pay or set aside any amounts for pension, retirement or other similar benefits for our officers or directors.

C. Board Practices

Globant S.A. is managed by our board of directors which is vested with the broadest powers to take any actions necessary or useful to fulfill our corporate purpose with the exception of actions reserved by law or our articles of association to the general meeting of shareholders. Our articles of association provide that our board of directors must consist of at least seven members and no more than fifteen members. Our board of directors meets as often as company interests require.

A majority of the members of our board of directors present or represented at a board meeting constitutes a quorum, and resolutions are adopted by the simple majority vote of our board members present or represented. In the case of a tie, the chairman of our board shall have the deciding vote. Our board of directors may also make decisions by means of resolutions in writing signed by all directors.

Directors are elected by the general meeting of shareholders, and appointed for a period of up to four years; provided, however, that directors are elected on a staggered basis, with one-third of the directors being elected each year; and provided, further, that such term may be exceeded by a period up to the annual general meeting held following the fourth anniversary of the appointment, and each director will hold office until his or her successor is elected. The general shareholders’ meeting may remove one or more directors at any time, without cause and without prior notice by a resolution passed by simple majority vote. If our board of directors has a vacancy, such vacancy may be filled on a temporary basis by a person designated by the remaining members of our board of directors until the next general meeting of shareholders, which will resolve on a permanent appointment. Any director shall be eligible for re-election indefinitely.

Within the limits provided for by law and our articles of association, our board of directors may delegate to one or more directors or to any one or more persons, who need not be shareholders, acting alone or jointly, the daily management of Globant S.A. and the authority to represent us in connection with such daily management. Our board of directors may also grant special powers to any person(s) acting alone or jointly with others as agent of Globant S.A.

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Our board of directors may establish one or more committees, including without limitation, an audit committee, a corporate governance and nominating committee and a compensation committee, and for which it shall, if one or more of such committees are set up, appoint the members, determine the purpose, powers and authorities as well as the procedures and such other rules as may be applicable thereto.

No contract or other transaction between us and any other company or firm shall be affected or invalidated by the fact that any one or more of our directors or officers is interested in, or is a director, associate, officer, agent, adviser or employee of such other company or firm. Any director or officer who serves as a director, officer or employee or otherwise of any company or firm with which we shall contract or otherwise engage in business shall not, by reason of such affiliation with such other company or firm only, be prevented from considering and voting or acting upon any matters with respect to such contract or other business.

Any director having an interest in a transaction submitted for approval to our board of directors that conflicts with our interest, must inform our board of directors thereof and to cause a record of his statement to be included in the minutes of the meeting. Such director may not take part in these deliberations and may not vote on the relevant transaction. At the next general meeting, before any resolution is put to a vote, a special report shall be made on any transactions in which any of the directors may have had an interest that conflicts with our interest.

No shareholding qualification for directors is required.

Any director and other officer, past and present, is entitled to indemnification from us to the fullest extent permitted by law against liability and all expenses reasonably incurred or paid by such director in connection with any claim, action, suit or proceeding in which he is involved as a party or otherwise by virtue of his being or having been a director. We may purchase and maintain insurance for any director or other officer against any such liability.

No indemnification shall be provided against any liability to our directors or executive officers by reason of willful misconduct, bad faith, gross negligence or reckless disregard of the duties of a director or officer. No indemnification will be provided with respect to any matter as to which the director or officer shall have been finally adjudicated to have acted in bad faith and not in our interest, nor will indemnification be provided in the event of a settlement (unless approved by a court or our board of directors).

Board Committees

Our board of directors has established an audit committee, a compensation committee and a corporate governance and nominating committee. Our board of directors may from time to time establish other committees.

Audit Committee

Our audit committee oversees our corporate accounting and financial reporting process. Among other matters, our audit committee:

| • | is responsible for the appointment, compensation and retention of our independent auditors and reviews and evaluates the auditors’ qualifications, independence and performance;

| • | oversees our auditors’ audit work and reviews and pre-approves all audit and non-audit services that may be performed by them;

| • | reviews and approves the planned scope of our annual audit;

| • | monitors the rotation of partners of the independent auditors on our engagement team as required by law;

| • | reviews our financial statements and discusses with management and our independent auditors the results of the annual audit and the review of our quarterly financial statements;

| • | reviews our critical accounting policies and estimates;

| • | oversees the adequacy of our accounting and financial controls;

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| • | annually reviews the audit committee charter and the committee’s performance;

| • | reviews and approves related-party transactions; and

| • | establishes and oversees procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls or auditing matters and oversees enforcement, compliance and remedial measures under our code of conduct.

The current members of our audit committee are Messrs. Rottenberg, Odeen and Vázquez, with Mr. Vázquez serving as the chairman of our audit committee and our audit committee financial expert as currently defined under applicable SEC rules. Each of Messrs. Vázquez, Rottenberg and Odeen satisfies the “independence” requirements within the meaning of Section 303A of the corporate governance rules of the NYSE as well us under Rule 10A-3 under the Exchange Act.

On May 13, 2014, our board of directors adopted a written charter for our audit committee, which is available on our website at http://www.globant.com.

Compensation Committee

Our compensation committee reviews, recommends and approves policy relating to compensation and benefits of our officers and directors, administers our common shares option and benefit plans and reviews general policy relating to compensation and benefits. Duties of our compensation committee include:

| • | reviewing and approving corporate goals and objectives relevant to compensation of our directors, chief executive officer and other members of senior management;

| • | evaluating the performance of the chief executive officer and other members of senior management in light of those goals and objectives;

| • | based on this evaluation, determining and approving the compensation of the chief executive officer and other members of senior management;

| • | administering the issuance of common shares options and other awards to members of senior management and directors under our compensation plans; and

| • | reviewing and evaluating, at least annually, the performance of the compensation committee and its members, including compliance of the compensation committee with its charter.

The current members of our compensation committee are Mr. Vázquez, Odeen and Galperin, with Mr. Vázquez serving as chairman. Each of Messrs. Vázquez, Odeen and Galperin satisfies the “independence” requirements within the meaning of Section 303A of the corporate governance rules of the NYSE.

Effective as of July 23, 2014, our board of directors adopted a written charter for our compensation committee, which is available on our website at http://www.globant.com.

Corporate Governance and Nominating Committee

Our corporate governance and nominating committee identifies individuals qualified to become directors; recommends to our board of directors director nominees for each election of directors; develops and recommends to our board of directors criteria for selecting qualified director candidates; considers committee member qualifications, appointment and removal; recommends corporate governance guidelines applicable to us; and provides oversight in the evaluation of our board of directors and each committee.

The current members of our corporate governance and nominating committee are Messrs. Galperin, Odeen and Vázquez, with Mr. Vázquez serving as chairman. Each of Messrs. Galperin, Vázquez and Odeen satisfies the “independence” requirements within the meaning of Section 303A of the corporate governance rules of the NYSE.

Effective as of July 23, 2014, our board of directors adopted a written charter for our corporate governance and nominating committee, which is available on our website at www.globant.com.

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D. Employees

Our Globers

People are one of our most valuable assets. Attracting and retaining the right employees is critical to the success of our business and is a key factor in our ability to meet our client’s needs and the growth of our client and revenue base.

As of December 31, 2019, 2018 and 2017, on a consolidated basis, we had 11,855, 8,384 and 6,753 employees, respectively.

As of December 31, 2019, we had 230 Globers, principally at our delivery centers in Rosario, City of Buenos Aires and Mendoza, in Argentina, covered by a collective bargaining agreement with the trade union Federación Argentina de Empleados de Comercio y Servicios ("FAECYS"), which is renewed on an annual basis. Out of these 230 Globers, 188 were added as part of the Belatrix acquisition. In addition, the Globers from our Brazilian payroll are affiliated with the trade union SINDPD-SP, the Globers from our Spanish payroll are affiliated with the trade unions UGT y CCOO - Oficinas y Despachos de la Comunidad de Madrid, and the Globers from our French payroll are affiliated to the trade union Fédération Syntec.

The following tables show our total number of full-time employees as of December 31, 2019 broken down by functional area and geographical location:

|  | Number of employees |
Technology |  |  | 9,950 |
Operations |  |  | 1,071 |
Sales and Marketing |  |  | 125 |
Management and administration |  |  | 709 |
Total |  |  | 11,855 |

|  | Number of employees |
Argentina |  |  | 3,551 |
Brazil |  |  | 186 |
Colombia |  |  | 3,165 |
Chile |  |  | 446 |
United Kingdom |  |  | 56 |
Uruguay |  |  | 494 |
United States |  |  | 602 |
Mexico |  |  | 1,298 |
Peru |  |  | 557 |
India |  |  | 1,185 |
Spain |  |  | 99 |
Belarus |  |  | 106 |
Romania |  |  | 98 |
France |  |  | 4 |
Canada |  |  | 7 |
Luxembourg |  |  | 1 |
Total |  |  | 11,855 |

In 2007, we commenced shifting from a Buenos Aires-centric delivery model to a distributed organization with locations across Argentina, Latin America, Asia, and elsewhere. We believe that decentralizing our workforce and delivery centers improves our access to talent and could mitigate the impact of IT professionals’ attrition on our business. Additionally, we provide employees with more choices of where to work, which improves satisfaction and helps us retain our Globers. We continue to draw talent primarily from Latin America and Asia’s abundant skilled talent base.

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We believe our relations with our employees are good and we have not experienced any significant labor disputes or work stoppages.

Recruitment and Retention

We have a global presence with delivery centers in North America, Latin America, Europe, and Asia. Our de-centralization strategy allows us to expand and diversify our sources of talent in our development centers all over the world.

Our offices are located near regional academic and engineering hubs to facilitate our access to a growing talent base. In the case of Latin America, certain of the top universities from the region are located in cities where we have delivery centers with large operations. We work closely with those colleges, as well as non-governmental organizations, tech clusters and professional organizations to nurture the technological ecosystem and create opportunities for growth for both Globant and our current and prospective Globers, through meetups, conferences, bootcamps and recruiting events.

We seek employees who are motivated to be part of a leading company that uses the latest technologies in the digital and cognitive field to transform organizations in every aspect.

Of our employee base, approximately 74% of our Globers have obtained a university degree and 23% are undergoing university-level studies while they are employed by our company. Approximately 2.3% have obtained a postgraduate level degree, and many have specialized industry credentials or licensing, including in systems engineering, electronic engineering, computer science, information systems administration, business administration and graphic and web design.

Since our inception, we believe we have become a unique player for talent in the countries where we have operations. Our culture is the foundation that supports and facilitates our distinctive approach.

This culture can be best described as entrepreneurial, flexible, diverse and inclusive. Diversity and Inclusion are key to our business. Technology requires us to innovate constantly, and there is no way to innovate if we do not connect different points of view. This is why we strive to find talent in diverse places and walks of life, and why we launched several initiatives to strengthen our diversity.

Globant was named a Best Company for Women, Culture and Diversity in 2019 and 2018, and listed as one of the top 25 best companies for diversity in 2017 by Comparably.com.

Employee retention is one of our main priorities and a key driver of operational efficiency and productivity. We seek to retain top talent by providing the opportunity to work on cutting-edge projects for world-class clients, a flexible work environment, training and development programs, and non-traditional benefits. The total attrition rate among our Globers was 14.6%, 18.2% and 18.0% for the years ended December 31, 2019, 2018 and 2017, respectively.

We empower our Globers to take ownership over their careers, and offer the following five professional development dimensions:

| • | Geocultural diversity: We encourage our Globers to work wherever they want and embrace cultural exchanges. We have more than 37 offices in 12 countries, in LATAM, United States, Europe and India with open positions and relocation opportunities.

| • | Technology: Our studios consolidate expertise around a variety of emerging technologies where our Globers can develop, explore and learn.

| • | Industry expertise: We work with many clients within a different industries, which enables our Globers to develop their career with an industry focus within a given account or on multiple accounts of their industry of choice.

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| • | Multiple industries: We have more than 800 clients spanning several different industries. Our Globers may pursue industry agnostic career paths or switch to different industries of focus.

| • | Open positions: Globers can navigate their career paths within our company by gaining seniority or moving internally into other roles in different areas of expertise.

Training and Development

We dedicate significant resources to the development and professional growth of our employees through learning experiences, career plans, mentoring, talent assessment, succession planning and performance management.

In 2015, Globant Academy was launched. Globant Academy is a continuous training program in which all of our training efforts are consolidated and formalized within four distinct schools (Technology, Leadership, Corporate and Languages).

The Technology School was created to promote science, technology, engineering, software development and design. The Leadership School is for self-development, which facilitates training on social skills in order to become a successful leader. The Corporate School was created to educate our employees about agile methodologies, our internal processes and procedures. The Language School is to support learning and practicing the most popular languages in the industry.

Depending on the requirements of the particular program, we employ various training methodologies such as e-learning, virtual learning, face-to-face and blended learning.

We also use specific programs to recruit, train and develop our employees. Bootcamps is a program to select, train and hire talented employees. U-Grow is a program to educate university students about technologies, processes and methodologies while they intern with us. This program also serves as a recruitment source of junior-level employees. Acamica is an e-learning platform to provide technical training through in-person courses and videos.

One of our main focuses is to provide transparency and enable our employees to enhance their professional development within our organization. As part of our efforts to accomplish these objectives, we host an ongoing program called “Keep your Career Moving".

For our leaders, we offer a Leadership Community, in which leaders can find relevant information for their roles and obtain training through various offerings, including specific onboardings, knowledge sharing sessions and various resource materials. During 2018, we launched “LeAP” (Leadership Accelerator Program), which aims to help foster our leaders’ development and strengthen their management skills by giving them all the essential tools to leap ahead in their careers.

Through our Learning Community, we give our trainers and our learning content developers a space to share experiences, connect with others with the same interests and provide the resources to have the best learning experiences at Globant.

Compensation

We offer our Globers a compensation package consisting of base salary, short term incentives, long term incentives (for certain eligible positions) and fringe benefits. The variable component of our compensation package is intended to strengthen our values and culture, foster employee improvement and development, and align with our business strategy to pay for performance and development. Based on the Glober's position, bonus payments under the short term incentive plan are contingent on the accomplishment of key metrics, such as performance results, manager feedback and Globant's results. For key employees, we offer a long term incentive program in the form of share based compensation.

We offer several benefits including subsidized company trips, extended maternity and paternity leaves, health plans for Globers (and in some countries, for the Glober's family), yoga, relaxation and massage sessions, and corporate discount programs at certain universities and gyms, among others.

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E. Share Ownership

Share Ownership

The total number of shares of the company beneficially owned by our directors and executive officers, as of the date of this annual report, was 1,104,989 (includes common shares subject to options that are currently exercisable or will be exercisable within 60 days of February 13, 2020 as well as common shares issuable upon settlement of restricted stock units that have vested or will vest within 60 days of February 13, 2020 ), which represents 2.95% of the total shares of the company. See table in “Major Shareholders and Related Party Transactions — Major Shareholders.”

Share Options

See “— Compensation — Compensation of Board of Directors and Senior Management — 2014 Equity Incentive Plan.”

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table sets forth information regarding beneficial ownership of our common shares as of February 13, 2020, by:

| • | each of our directors and members of senior management individually;

| • | all directors and members of senior management as a group; and

| • | each shareholder whom we know to own beneficially more than 5% of our common shares.

As of February 13, 2020, we had 37,147,756 issued and outstanding common shares. Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof, to receive the economic benefit of ownership of the securities, or has the right to acquire such powers within 60 days. Common shares subject to options, restricted stock units, warrants or other convertible or exercisable securities that are currently convertible or exercisable or convertible or exercisable within 60 days of February 13, 2020 are deemed to be outstanding and beneficially owned by the person holding such securities. Common shares issuable pursuant to share options or warrants are deemed outstanding for computing the percentage ownership of the person holding such options or warrants but are not outstanding for computing the percentage of any other person. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all of our common shares. As of February 13, 2020, we had 142 holders of record in the United States with approximately 95.52% of our issued and outstanding common shares.

|  | Number |  |  | Percent |
Directors and Senior Management |  |  |  |  |  |  |  |
Francisco Álvarez-Demalde (1) |  |  | 20,250 |  |  |  | * |
Gustavo Barreiro (2) |  |  | 57,503 |  |  |  | * |
Yanina Maria Conti (3) |  |  | 750 |  |  |  | * |
Guibert Andres Englebienne (4) |  |  | 381,644 |  |  |  | 1.02 | %
Marcos Galperin |  |  | — |  |  |  | * |
Richard Haythornthwaite |  |  | — |  |  |  | * |
Mercedes María MacPherson (5) |  |  | 1,750 |  |  |  | * |
Martín Migoya (6) |  |  | 234,591 |  |  |  | * |
Sol Mariel Noello (7) |  |  | 7,000 |  |  |  | * |
Philip A. Odeen |  |  | — |  |  |  | * |
Patricia Pomies (8) |  |  | 23,125 |  |  |  | * |
Linda Rottenberg |  |  | — |  |  |  | * |
Martín Gonzalo Umaran (9) |  |  | 360,440 |  |  |  | * |
Juan Ignacio Urthiague |  |  | — |  |  |  | * |
Mario Vazquez |  |  | 436 |  |  |  | * |
Wanda Weigert (10) |  |  | 17,500 |  |  |  | * |
All Directors and Senior Management as a group |  |  | 1,104,989 |  |  |  | 2.97 | %
*Less than 1% |  |  |  |  |  |  |  |
5% or More Shareholders: |  |  |  |  |  |  |  |
GIC Private Limited (11) |  |  | 2,959,167 |  |  |  | 7.97 | %
Morgan Stanley (12) |  |  | 2,915,562 |  |  |  | 7.85 | %
Wasatch Advisors, Inc. (13) |  |  | 2,389,888 |  |  |  | 6.43 | %

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| (1) | Includes 20,250 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (2) | Includes 21,250 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (3) | Includes 750 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (4) | Includes 107,500 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable, and 177,166 common shares held by a revocable trust formed under Wyoming law (the “Revocable Englebienne Trust Shares”) formed by Mr. Englebienne that was established for the benefit of Mr. Englebienne, his wife and certain charitable organizations. Subsequently, the trust transferred its Revocable Englebienne Trust Shares to a BVI company wholly owned by the trust. Angerona Trust Company LLC acts as the independent trustee of the trust. Angerona Group Administration Limited is the sole director of the BVI company and holds voting and dispositive power over the 177,166 common shares held by such company.

| (5) | Includes 1,750 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (6) | Includes 65,000 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable, and 147,040 common shares held by a revocable trust formed under Wyoming law (the “Revocable Migoya Trust Shares”) formed by Mr. Migoya that was established for the benefit of Mr. Migoya, his wife and certain charitable organizations. Subsequently, the trust transferred its Revocable Migoya Trust Shares to a BVI company wholly owned by the trust. Angerona Trust Company LLC acts as the independent trustee of the trust. Angerona Group Administration Limited is the sole director of the BVI company and holds voting and dispositive power over the 147,040 common shares held by such company.

| (7) | Includes 6,000 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (8) | Includes 23,125 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (9) | Includes 22,500 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable, and 259,241 common shares held by a revocable trust formed under Wyoming law (the “Revocable Umaran Trust Shares”) formed by Mr. Umaran that was established for the benefit of Mr. Umaran, his wife and certain charitable organizations. Subsequently, the trust transferred its Revocable Umaran Trust Shares to a BVI company wholly owned by the trust. Angerona Trust Company LLC acts as the independent trustee of the trust. Angerona Group Administration Limited is the sole director of the BVI company and holds voting and dispositive power over the 259,241 common shares held by such company.

| (10) | Includes 17,500 common shares issuable upon exercise of vested options and settlement of restricted stock units, as applicable.

| (11) | Based on a Schedule 13G/A filed with the SEC on February 14, 2020. GIC Private Limited beneficially owns 2,959,167 of our common shares, has sole dispositive power with respect to 2,362,868 of such shares and has shared voting and dispositive power with respect to 596,299 of such shares. The address of GIC Private Limited’s principal business office is 168 Robinson Road, #37-01, Capital Tower, Singapore 068912.

| (12) | Based on a Schedule 13G filed jointly by Morgan Stanley, Morgan Stanley Asia Limited and Morgan Stanley Investment Management Inc. (“MSIM”) with the SEC on February 14, 2020. Morgan Stanley beneficially owns 2,915,562 of our common shares, has shared voting power with respect to 1,764,112 shares and has shared dispositive power with respect to all 2,915,562 shares. Morgan Stanley Asia Limited beneficially owns 2,108,502 of our common shares, has shared voting power with respect to 1,030,297 shares and has shared dispositive power with respect to all 2,108,502 shares. MSIM beneficially owns 805,323 of our common shares, has shared voting power with respect to 733,815 shares and has shared dispositive power with respect to all 805,323 shares. The securities are being reported upon by Morgan Stanley, Morgan Stanley Asia Limited and MSIM, in their capacity as an investment adviser in accordance with Rule 240.13d-1(b)(1)(ii)(E), as a parent holding company or control person in accordance with Rule 240.13d-1(b)(1)(ii)(G), and as a non-U.S. institution in accordance with section 240.13d-1(b)(1)(ii)(J), of the Exchange Act. The securities being reported on by Morgan Stanley as a parent holding company are owned, or may be deemed to be beneficially owned, by Morgan Stanley Asia Limited and MSIM, wholly-owned subsidiaries of Morgan Stanley. The address of the principal business office of Morgan Stanley and MSIM is 1585 Broadway New York, NY 10036. The address of the principal business office of Morgan Stanley Asia Limited is Level 46 International Commerce Centre 1 Austin Road West, Kowloon. .

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| (13) | Based on a Schedule 13G filed with the SEC on February 10, 2020. Wasatch Advisors, Inc beneficially owns 2,389,888 of our common shares and has sole and dispositive power with respect to all of such shares. The address of Wasatch Advisors, Inc.'s principal business office is 505 Wakara Way, Salt Lake City, UT 84108.

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B. Related Party Transactions

Registration Rights Agreement

On July 23, 2014, we entered into a registration rights agreement with Messrs. Migoya, Umaran, Englebienne and Nocetti (collectively, the "Founders"), Kajur International S.A. ("Kajur"), Mifery S.A. ("Mifery"), Gudmy S.A. ("Gudmy"), Noltur S.A. ("Noltur"), Etmyl S.A. ("Etmyl"), Ewerzy S.A. ("Ewerzy"), Fudmy Corporation S.A. ("Fudmy"), Gylcer International S.A. (together with Kajur, Mifery, Gudmy, Noltur, Etmyl, Ewerzy and Fudmy, the "Uruguayan Entities"), Paldwick S.A., Riverwood Capital LLC, Riverwood Capital Partners (Parallel-B) L.P., Riverwood Capital Partners L.P. and Riverwood Capital Partners (Parallel-A) (collectively, the "Riverwood Entities") and the FTV Partnerships and WPP (collectively, the "Registration Rights Holders") and Endeavor Global, Inc. and Endeavor Catalyst Inc. The registration rights agreement replaced the registration rights granted under the Shareholders Agreement and WPP's joinder agreement. Under the registration rights agreement, we are responsible, subject to certain exceptions, for the expenses of any offering of our common shares held by the Registration Rights Holders other than underwriting fees, discounts and selling commissions. Additionally, under the registration rights agreement we may not grant superior registration rights to any other person without the consent of the Registration Rights Holders. The registration rights agreement contains customary indemnification provisions.

Demand Registration Rights

Under the registration rights agreement each of (i) the Riverwood Entities (acting as a group), (ii) the FTV Partnerships (acting as a group), (iii) WPP and (iv) the Founders and the Uruguayan Entities (acting as a group) and any two of (i) the Riverwood Entities, (ii) the FTV Partnerships, (iii) WPP and (iv) the Founders and the Uruguayan Entities (acting as a group) may require us to effect a registration under the Securities Act for the sale of their common shares of our company. We are therefore obliged to effect up to five such demand registrations in total with respect to the common shares owned by such shareholders. However, we are not obliged to effect any such registration when (1) the request for registration does not cover that number of common shares with an anticipated gross offering price of at least $10.0 million, or (2) the amount of common shares to be sold in such registration represents more than 15% of our share capital. If we have been advised by legal counsel that such registration would require a special audit or the disclosure of a material impending transaction or other matter and our board of directors determines reasonably and in good faith that such disclosure would have a material adverse effect on us, we have the right to defer such registration, not more than once in any 12-month period, for a period of up to 90 days. We will not be required to effect a demand registration if we intend to effect a primary registration of our securities within 60 days of receiving notice of a demand registration, provided that we file such intended registration statement within the 60-day period. Additionally, we will not be required to effect a demand registration during the period beginning with the date of filing of, and ending 120 days following the completion of, a primary registered offering of our securities, except if any of the Registration Rights Holders had requested “piggyback” registration rights in connection with such offering. In any such demand registration, the managing underwriter will be selected by the majority of the shareholders exercising the demand.

In February 2015, we received a demand request from the Riverwood Entities and the FTV Partnerships. In April 2015 we closed a secondary public offering of our common shares through which they and certain selling shareholders sold 3,994,390 common shares. Subsequently, in June 2015, we received a second demand request from Riverwood Entities. In July 2015, we closed the second secondary public offering of our common shares through which they and certain other selling shareholders sold 4,025,000 common shares.

In May 2018, we received a demand request from WPP and, in June 2018, we closed a secondary public offering through which WPP sold 6,687,548 common shares.

Shelf Registration Rights

We will use commercially reasonable efforts to remain qualified to register securities pursuant to Form F-3, and each Registration Rights Holder may make one written request that we register the offer and sale of their common shares on a shelf registration statement on Form F-3 if we are eligible to file a registration statement on Form F-3 so long as the request covers at least that number of common shares with an anticipated aggregate offering sale of at least $5,000,000.

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Piggyback Registration Rights

If we propose to register for sale to the public any of our securities, in connection with the public offering of such securities, the Registration Rights Holders will be entitled to certain “piggyback” registration rights in connection with such public offering, allowing them to include their common shares in such registration, subject to certain limitations. As a result, whenever we propose to file a registration statement under the Securities Act, other than with respect to (1) a registration related to a company equity incentive plan and (2) a registration related to the exchange of securities in certain corporate reorganizations or certain other transactions or in other instances where a form is not available for registering securities for sale to the public, the Registration Rights Holders will be entitled to written notice of the registration and will have the right, subject to limitations that the underwriters may impose on the number of common shares included in the registration, to include their common shares in the registration.

Termination

As to each party to the Registration Rights Agreement, the rights of such party thereunder terminate upon the earlier to occur of the fifth anniversary of the date of the agreement or the date upon which the percentage of our total outstanding common shares held by such party ceases to be at least one percent.

Tag-Along Agreement

On July 23, 2014, the Founders, the Uruguayan Entities, Paldwick S.A., the Riverwood Entities, the FTV Partnerships, Endeavor Global, Inc. and Endeavor Catalyst Inc. (collectively, the “Selling Shareholders”) entered into a tag-along agreement. Under the Tag-Along Agreement, if, during the four years immediately following the date our registration statement filed with the SEC was declared effective, any of the Selling Shareholders proposes to make a transfer of our shares to any other Selling Shareholder or WPP, each of (i) the Founders and the Uruguayan Entities (individually and/or acting as a group, (ii) the RW Entities (individually and/or acting as a group), (iii) the FTV Partnerships (individually and/or acting as a group), and (v) Endeavor, shall have the right to participate in such sale with respect to any shares held by them on a pro rata basis, and on the same terms and conditions and the same total consideration, as those offered to the corresponding Selling Shareholder in the applicable transfer.

Other Related-Party Transactions

For a summary of our revenue and expenses and receivables and payables with related parties, please see note 23 to our audited consolidated financial statements.

Procedures for Related Party Transactions

On July 23, 2014, we adopted a written code of business conduct and ethics for our company, which is publicly available on our website at www.globant.com. Under our code of business conduct and ethics, our employees, officers and directors are discouraged from entering into any transaction that may cause a conflict of interest for us. In addition, they must report any potential conflict of interest, including related party transactions, to their managers or our corporate counsel who then will review and summarize the proposed transaction for our audit committee. Pursuant to its charter, our audit committee is required to then approve any related-party transactions, including those transactions involving our directors. In approving or rejecting such proposed transactions, the audit committee is required to consider the relevant facts and circumstances available and deemed relevant to the audit committee, including the material terms of the transactions, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence. Our audit committee will approve only those transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines in the good faith exercise of its discretion.

On November 5, 2015, we adopted a related party transactions policy. This policy indicates, based on certain specific parameters, which transactions should be submitted for approval by either our Audit Committee or our general counsel.

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C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated statements and other financial information.

We have included the Consolidated Financial Statements as part of this annual report. See Item 18, "Financial Statements."

Legal Proceedings

We may be involved in litigation in the normal course of our business, both as a defendant and as a plaintiff. In the ordinary course of our business, we are subject to certain contingent liabilities with respect a variety of potential claims, lawsuits and other proceedings, including claims related to patent infringement, purported class actions, tax and labor lawsuits and other claims. In particular, in the software and technology industries, other companies own large numbers of patents, copyrights, trademarks and trade secrets and frequently engage in litigation based on allegations of infringement or other violations of intellectual property rights. We have received and may continue to receive assertions and claims that our services infringe on these patents or other intellectual property rights. See “Risk Factors — Risks Related to Our Business and Industry — If we incur any liability for a violation of the intellectual property rights of others, our reputation, business, financial condition and prospects may be adversely affected.” In such cases litigation may be necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights. However, given that litigation could be costly and time-consuming and could divert the attention of management and key personnel from our business operations, we may elect to settle these claims from time to time. We accrue liabilities when it is probable that future costs will be incurred and such cost can be reasonably estimated.

Certain of our non-U.S. subsidiaries are currently under examination by the U.S. Internal Revenue Service ("IRS") regarding payroll and employment taxes primarily in connection with services performed by employees of certain of our subsidiaries in the United States from 2013 to 2015. On May 1, 2018, the IRS issued 30-day letters to those subsidiaries proposing total assessments of $1.4 million plus penalties and interest for employment taxes for those years. Our subsidiaries filed protests of these proposed assessments with the IRS on July 16, 2018. As of February 28, 2020 we have not received and answer. At this stage, the management cannot make any predictions about the final outcome of this matter or the timing thereof.

Our Colombian subsidiary is currently under examination by the Unidad de Gestión Pensional y Parafiscales ("UGPP") regarding social contribution payments for the year 2016. On November 6, 2019, the UGPP issued a demand letter to the Colombian subsidiary proposing a preliminary assessment of $2.1 million plus penalties and interest for social contribution payments during such year and requesting the Colombian subsidiary to revert with its own assessment. The response letter was presented by the Colombian subsidiary on February 5, 2020, after which letter the UGPP will have six months to issue its final determination.

On August 8, 2019, Certified Collectibles Group, LLC (“CCG”) and its affiliates filed a complaint in the U.S. District Court for the Middle District of Florida, Tampa Division, (Civil Action No. 19-CV-1962) against Globant S.A. and Globant, LLC. The complaint, arising from a dispute relating to a service contract, alleges nine causes of action against Globant, LLC: (1) fraudulent inducement of contract; (2) fraud; (3) fraudulent concealment; (4) negligent misrepresentation; (5) breach of contract and breach of express warranty; (6) violation of Florida’s Deceptive and Unfair Trade Practices Act; (7) professional negligence; (8) declaratory judgment; and (9) unjust enrichment. The complaint names Globant S.A. as a defendant with respect to several of these causes of action (counts 2-4, 6-7, and 9), on the alleged theory that Globant S.A. was an “alter ego” or agent of Globant, LLC. Globant, LLC has filed a motion to dismiss the complaint for failure to state a claim, and Globant S.A. has filed a motion to dismiss for lack of personal jurisdiction. CCG has opposed these filings. The court has not yet ruled on the motions to dismiss.

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In addition to the foregoing, as of December 31, 2019, we are a party to certain other legal proceedings, including tax and labor claims, where the risk of loss is considered possible. In the opinion of our management, the ultimate disposition of such threatened and/or pending matters, either individually or on a combined basis, is not likely to have a material effect on our financial condition, liquidity or results of operations.

Dividend Policy

We currently anticipate that we will retain all available funds for use in the operation and expansion of our business, and do not anticipate paying any dividends in the foreseeable future.

Under Luxembourg law, at least 5% of our net income per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve subsequently falls below the 10% threshold, 5% of net income again must be allocated toward the reserve until such reserve returns to the 10% threshold. If the legal reserve exceeds 10% of our issued share capital, the legal reserve may be reduced. The legal reserve is not available for distribution.

We are a holding company and have no material assets other than direct and indirect ownership of our operating and non-operating subsidiaries. If we were to distribute a dividend at some point in the future, we would cause the operating subsidiaries to make distributions in an amount sufficient to cover any such dividends.

B. Significant Changes

On February 6, 2020, Globant, LLC, our US subsidiary (the "Borrower"), entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”), by and among certain financial institutions listed therein, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. Under the Second A&R Credit Agreement, which amends and restates the existing A&R Credit Agreement dated as of November 1, 2018, the Borrower may borrow (i) up to $100 million in up to four borrowings on or prior to August 6, 2021 under a delayed-draw term loan facility and (ii) up to $250 million under a revolving credit facility. In addition, the Borrower may request increases of the maximum amount available under the revolving facility in an aggregate amount not to exceed $100 million. The maturity date of each of the facilities is February 5, 2025. Pursuant to the terms of the Second A&R Credit Agreement, interest on the loans extended thereunder shall accrue at a rate per annum equal to either (i) LIBOR plus 1.50%, or (ii) LIBOR plus 1.75%, determined based on the Borrower’s Maximum Total Leverage Ratio (as defined in the Second A&R Credit Agreement). The Borrower’s obligations under the Second A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of the Borrower’s now owned and after-acquired assets. The Second A&R Credit Agreement also contains certain customary negative and affirmative covenants, which compliance may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

ITEM 9. THE OFFER AND LISTING

A. Offering and listing details.

Our ordinary shares began trading on the NYSE under the symbol "GLOB" in connection with our IPO on July 18, 2014.

Our ordinary shares began trading on the Luxembourg Stock Exchange (the "LuxSE") under the International Securities Identification Number ("ISIN") code "LU0974299876" on August 11, 2016. On July 8, 2019, the LuxSE communicated its approval of our request to voluntarily delist our common shares from the Official List of the LuxSE, effective as of July 31, 2019. Following the LuxSE delisting, our common shares continue to trade on the NYSE under the symbol “GLOB”.

B. Plan of Distribution

Not applicable.

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C. Markets

Our ordinary shares began trading on the NYSE under the symbol "GLOB" in connection with our IPO on July 18, 2014. See "The Offer and Listing - Offering and Listing Details."

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION.

A. Share capital

Not applicable.

B. Memorandum and Articles of Association

The following is a summary of some of the terms of our common shares, based on our articles of association.

The following summary is not complete and is subject to, and is qualified in its entirety by reference to, the provisions of our articles of association, as amended, which were included as an exhibit to our report on Form 6-K filed with the SEC on June 1, 2016, and applicable Luxembourg law, including Luxembourg Corporate Law.

General

We are a Luxembourg joint stock company (société anonyme) and our legal name is "Globant S.A." We were incorporated on December 10, 2012. We are registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés de Luxembourg) under number B 173 727 and have our registered office at 37A Avenue J.F. Kennedy, L-1855, Luxembourg, Grand Duchy of Luxembourg.

Share Capital

As of December 31, 2019, our issued share capital was $44,522,125.20, represented by 37,101,771 common shares with a nominal value of $1.20 each, of which 138,152 were treasury shares held by us.

We had an authorized share capital, excluding the issued share capital, of $6,357,679.20 consisting of 5,298,066 common shares with a nominal value of $1.20 each.

Our shareholders' meeting has authorized our board of directors to issue common shares within the limits of the authorized share capital at such time and on such terms as our board of directors may decide during a period ending on the fifth anniversary of the date of publication in Recueil Electronique des Sociétés et Associations ("RESA") of the minutes of the extraordinary general meeting of shareholders held on May 8, 2017, which publication occurred on May 19, 2017, and which period ends on May 19, 2022 and may be renewed. Accordingly, as of December 31, 2019, our board of directors may issue up to 5,298,066 common shares until such date. We currently intend to seek renewals and/or extensions as required from time to time.

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Our authorized share capital is determined by our articles of association, as amended from time to time, and may be increased or reduced by amending the articles of association by approval of the requisite two-thirds majority of the votes at a quorate extraordinary general shareholders' meeting. Under Luxembourg law, our shareholders have no obligation to provide further capital to us.

Under Luxembourg law, our shareholders benefit from a pre-emptive subscription right on the issuance of common shares for cash consideration. However, our shareholders have, in accordance with Luxembourg law authorized our board of directors to waive, suppress or limit, any pre-emptive subscription rights of shareholders provided by law to the extent our board of directors deems such waiver, suppression or limitation advisable for any issue or issues of common shares within the scope of our authorized share capital. Such common shares may be issued above, at or below market value as well as above, at or below nominal value by way of incorporation of available reserves (including premium).

Form and Transfer of Common Shares

Our common shares are issued in registered form only and are freely transferable under Luxembourg law and our articles of association. Luxembourg law does not impose any limitations on the rights of Luxembourg or non-Luxembourg residents to hold or vote our common shares.

Under Luxembourg law, the ownership of registered shares is established by the inscription of the name of the shareholder and the number of shares held by him or her in the shareholder register. Transfers of common shares not deposited into securities accounts are effective towards us and third parties either through the recording of a declaration of transfer into the shareholders' register, signed and dated by the transferor and the transferee or their representatives or by us, upon notification of the transfer to, or upon the acceptance of the transfer by, us. Should the transfer of common shares not be recorded accordingly, the shareholder is entitled to enforce his or her rights by initiating the relevant proceedings before the competent courts of Luxembourg.

In addition, our articles of association provide that our common shares may be held through a securities settlement system or a professional depositary of securities. The depositor of common shares held in such manner has the same rights and obligations as if such depositor held the common shares directly. Common shares held through a securities settlement system or a professional depositary of securities may be transferred from one account to another in accordance with customary procedures for the transfer of securities in book-entry form. However, we will make dividend payments (if any) and any other payments in cash, common shares or other securities (if any) only to the securities settlement system or the depositary recorded in the shareholders’ register or in accordance with its instructions.

Issuance of Common Shares

Pursuant to Luxembourg Corporate Law, the issuance of common shares requires the amendment of our articles of association by the approval of two-thirds of the votes at a quorate extraordinary general shareholders' meeting; provided. however, that the general meeting may approve an authorized share capital and authorize our board of directors to issue common shares up to the maximum amount of such authorized unissued share capital for a five year period beginning either on the date of the relevant general meeting or the date of publication in the RESA of the minutes of the relevant general meeting approving such authorization. The general meeting may amend or renew such authorized share capital and such authorization of our board of directors to issue common shares.

As of December 31, 2019 we had an authorized share capital, excluding the issued share capital, of $6,357,679.20 and our board of directors was authorized to issue up to 5,298,066 common shares (subject to stock splits, consolidation of common shares or like transactions) with a nominal value of $1.20 per common share.

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Our articles of association provide that no fractional shares shall be issued or exist.

Pre-emptive Rights

Unless limited, waived or cancelled by our board of directors in the context of the authorized share capital or pursuant to a decision of an extraordinary general meeting of shareholders pursuant to the provisions of the articles of association relating to amendments thereof, holders of our common shares have a pro rata pre-emptive right to subscribe for any new common shares issued for cash consideration. Our articles of association provide that pre-emptive rights can be waived, suppressed or limited by our board of directors for a period ending on the fifth anniversary of the date of publication in the RESA of the minutes of the extraordinary general meeting of shareholders held on May 8, 2017, which publication occurred on May 19, 2017 and which period ends on May 19, 2022, in the event of an increase of the issued share capital by our board of directors within the limits of the authorized share capital.

Repurchase of Common Shares

We cannot subscribe for our own common shares. We may, however, repurchase issued common shares or have another person repurchase issued common shares for our account, subject to the following conditions:

| • | the repurchase complies with the principle of equal treatment of all shareholders, except in the event such repurchase was the result of the unanimous decision of a general meeting at which all shareholders were present or represented (in addition, listed companies may repurchase their own shares on the stock exchange without an offer to repurchase having to be made to the shareholders);

| • | prior authorization by a simple majority vote at an ordinary general meeting of shareholders is granted, which authorization sets forth the terms and conditions of the proposed repurchase, including the maximum number of common shares to be repurchased, the duration of the period for which the authorization is given (which may not exceed five years) and, in the case of a repurchase for consideration, the minimum and maximum consideration per common share;

| • | the repurchase does not reduce our net assets (on a non-consolidated basis) to a level below the aggregate of the issued share capital and the reserves that we must maintain pursuant to Luxembourg law or our articles of association; and

| • | only fully paid-up common shares are repurchased.

No prior authorization by our shareholders is required for us to repurchase our own common shares if:

| • | we are in imminent and severe danger, in which case our board of directors must inform the general meeting of shareholders held subsequent to the repurchase of common shares of the reasons for, and aim of such repurchase, the number and nominal value of the common shares repurchased, the fraction of the share capital such repurchased common shares represented and the consideration paid for such shares; or

| • | the common shares are repurchased by us or by a person acting for our account in view of a distribution of the common shares to our employees.

On May 31, 2019, the general meeting of shareholders according to the conditions set forth in article 430-15 of Luxembourg Corporate Law granted our board of directors the authorization to repurchase up to a maximum number of shares representing 20% of the issued share capital immediately after the closing of our initial public offering for a net purchase price being (i) no less than 50% of the lowest stock price and (ii) no more than 50% above the highest stock price, in each case being the closing price, as reported by the New York City edition of the Wall Street Journal, or, if not reported therein, any other authoritative sources to be selected by our board of directors, over the ten trading days preceding the date of the purchase (or the date of the commitment to the transaction). The authorization is valid for a period ending five years from the date of the general meeting or the date of its renewal by a subsequent general meeting of shareholders. Pursuant to such authorization, our board of directors is authorized to acquire and sell our common shares under the conditions set forth in the minutes of such general meeting of shareholders. Such purchases and sales may be carried out for any purpose authorized by the general meeting of Globant S.A.

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Capital Reduction

Our articles of association provide that our issued share capital may be reduced by a resolution adopted by a two-thirds majority of the votes at a quorate extraordinary general shareholders' meeting. If the reduction of capital results in the capital being reduced below the legally prescribed minimum, the general meeting of the shareholders must, at the same time, resolve to increase the capital up to the required level.

General Meeting of Shareholders

Any regularly constituted general meeting of our shareholders represents the entire body of shareholders.

Each of our common shares entitles the holder thereof to attend our general meeting of shareholders, either in person or by proxy, to address the general meeting of shareholders and to exercise voting rights, subject to the provisions of Luxembourg law and our articles of association. Each common share entitles the holder to one vote at a general meeting of shareholders. Our articles of association provide that our board of directors shall adopt as it deems fit all other regulations and rules concerning the attendance to the general meeting.

A general meeting of our shareholders may, at any time, be convened by our board of directors, to be held at such place and on such date as specified in the convening notice of such meeting. Our articles of association and Luxembourg law provide that a general meeting of shareholders must be convened by our board of directors, upon request in writing indicating the agenda, addressed to our board of directors by one or more shareholders representing at least 10% of our issued share capital. In such case, a general meeting of shareholders must be convened and must be held within a period of one month from receipt of such request. One or more shareholders holding at least 5% of our issued share capital may request the addition of one or more items to the agenda of any general meeting of shareholders and propose resolutions. Such requests must be received at our registered office by registered mail at least 22 days before the date of such meeting.

Our articles of association provide that if our common shares are listed on a stock exchange, all shareholders recorded in any register of our shareholders are entitled to be admitted and vote at the general meeting of shareholders based on the number of shares they hold on a date and time preceding the general meeting of shareholders as the record date for admission to the general meeting of shareholders (the "Record Date"), which the board of directors may determine as specified in the convening notice. Furthermore, any shareholder, holder or depositary, as the case may be, who wishes to attend the general meeting must inform us thereof no later than on the fourteenth day preceding the date of such general meeting, or by any other date which the board of directors may determine and as specified in the convening notice, in a manner to be determined by our board of directors in the notice convening the general meeting of the shareholders. In the case of common shares held through the operator of a securities settlement system or with a depositary, or sub-depositary designated by such depositary, a shareholder wishing to attend a general meeting of shareholders should receive from such operator or depositary a certificate certifying the number of common shares recorded in the relevant account on the Record Date. The certificate should be submitted to us at our registered office no later than three business days prior to the date of such general meeting. In the event that the shareholder votes by means of a proxy, the proxy must be deposited at our registered office at the same time or with any of our agents, duly authorized to receive such proxies. Our board of directors may set a shorter period for the submission of the certificate or the proxy in which case this will be specified in the convening notice.

The convening of, and attendance to, our general meetings is subject to the provisions of the Luxembourg Corporate Law.

General meetings of shareholders shall be convened in accordance with the provisions of our articles of association and the Luxembourg Corporate Law and the requirement of any stock exchange on which our shares are listed. The Luxembourg Corporate Law provides -inter alia- that convening notices for every general meeting shall contain the agenda and shall take the form of announcements filed with the register of commerce and companies, published on the RESA, and published in a Luxembourg newspaper at least 15 days before the meeting. As all of our common shares are in registered form, we may decide to send the convening notice only by registered mail to the registered address of each shareholder no less than eight days before the meeting. In that case, the legal requirements regarding the publication of the convening notice in the RESA and in a Luxembourg newspaper do not apply.

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In the event (i) an extraordinary general meeting of shareholders is convened to vote on an extraordinary resolution (See below under "Voting Rights" for additional information), (ii) such meeting is not quorate and (iii) a second meeting is convened, the second meeting will be convened as specified above.

Pursuant to our articles of association, if all shareholders are present or represented at a general meeting of shareholders and state that they have been informed of the agenda of the meeting, the general meeting of shareholders may be held without prior notice.

Our annual general meeting is held on the date set forth in the corresponding convening notice within six months of the end of each financial year at our registered office or such other place as specified in such convening notice.

Voting Rights

Each share entitles the holder thereof to one vote at a general meeting of shareholders.

Luxembourg law distinguishes between ordinary resolutions and extraordinary resolutions.

Extraordinary resolutions relate to proposed amendments to the articles of association and certain other limited matters. All other resolutions are ordinary resolutions.

Ordinary Resolutions. Pursuant to our articles of association and the Luxembourg Corporate Law, ordinary resolutions shall be adopted by a simple majority of votes validly cast on such resolution at a general meeting. Abstentions and nil votes will not be taken into account.

Extraordinary Resolutions. Extraordinary resolutions are required for any of the following matters, among others: (a) an increase or decrease of the authorized share capital or issued share capital, (b) a limitation or exclusion of preemptive rights, (c) approval of a merger (fusion) or de-merger (scission), (d) dissolution, (e) an amendment to our articles of association and (f) a change of nationality. Pursuant to Luxembourg law and our articles of association, for any extraordinary resolutions to be considered at a general meeting, the quorum must generally be at least 50% of our issued share capital. Any extraordinary resolution shall generally be adopted at a quorate general meeting upon a two-thirds majority of the votes validly cast on such resolution. In case such quorum is not reached, a second meeting may be convened by our board of directors in which no quorum is required, and which must generally still approve the amendment with two-thirds of the votes validly cast. Abstentions and nil votes will not be taken into account.

Appointment and Removal of Directors. Members of our board of directors are elected by ordinary resolution at a general meeting of shareholders. Under our articles of association, all directors are elected for a period of up to four years, provided, however, that our directors shall be elected on a staggered basis. Any director may be removed with or without cause and with or without prior notice by a simple majority vote at any general meeting of shareholders. The articles of association provide that, in case of a vacancy, our board of directors may fill such vacancy on a temporary basis by a person designated by the remaining members of our board of directors until the next general meeting of shareholders, which will resolve on a permanent appointment. The directors shall be eligible for re-election indefinitely.

Neither Luxembourg law nor our articles of association contain any restrictions as to the voting of our common shares by non-Luxembourg residents.

Amendment to Articles of Association

Shareholder Approval Requirements. Luxembourg law requires that an amendment to our articles of association generally be made by extraordinary resolution. The agenda of the general meeting of shareholders must indicate the proposed amendments to the articles of association.

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Pursuant to Luxembourg Corporate Law and our articles of association, for an extraordinary resolution to be considered at a general meeting, the quorum must generally be at least 50% of our issued share capital. Any extraordinary resolution shall be adopted at a quorate general meeting (save as otherwise required by law) upon a two-thirds majority of the votes validly cast on such resolution. If the quorum of 50% is not reached at this meeting, a second general meeting may be convened, in which no quorum is required, and may approve the resolution at a majority of two-third of votes validly cast.

Formalities. Any resolutions to amend the articles of association or to approve a merger, de-merger, change of nationality, dissolution or change of nationality must be taken before a Luxembourg notary and such amendments must be published in accordance with Luxembourg law.

Merger and Division

A merger by absorption whereby one Luxembourg company, after its dissolution without liquidation, transfers to another company all of its assets and liabilities in exchange for the issuance of common shares in the acquiring company to the shareholders of the company being acquired, or a merger effected by transfer of assets to a newly incorporated company, must, in principle, be approved at a general meeting of shareholders by an extraordinary resolution of the Luxembourg company, and the general meeting of shareholders must be held before a Luxembourg notary. Further conditions and formalities under Luxembourg law are to be complied with in this respect.

Liquidation

In the event of our liquidation, dissolution or winding-up, the assets remaining after allowing for the payment of all liabilities will be paid out to the shareholders pro rata according to their respective shareholdings. Generally, the decisions to liquidate, dissolve or wind-up require the passing of an extraordinary resolution at a general meeting of our shareholders, and such meeting must be held before a Luxembourg notary.

Mandatory Bid, Squeeze-Out and Sell-Out Rights

Mandatory bid. If our common shares are admitted to trading on a regulated market (within the meaning of Directive 2014/65/EU) within the territory of the European Economic Area (the "Regulated Market") the provisions of Directive 2004/25/EC on takeover bids shall apply in the context of any takeover in respect of the Company’s common shares.

As the common shares of the Company are currently not admitted to trading on any Regulated Market, the provisions of article 8 of our articles of association are applicable and provide that any person (the "Bidder") wishing to acquire by any means (including, but not limited to, the conversion of any financial instrument convertible into common shares), directly or indirectly, common shares of our Company (which, when aggregated with his/her/its existing common share holdings, together with any shares held by a person controlling the Bidder, controlled by the Bidder and/or under common control with the Bidder, represent at least thirty-three point thirty-three percent (33.33%) of the share capital of the Company (the "Threshold"), shall have the obligation to propose an unconditional takeover bid to acquire the entirety of the then-outstanding common shares together with any financial instrument convertible into common shares (the "Takeover Bid").

The consideration for each common share and financial instrument convertible into common shares payable to each holder thereof shall be the same, shall be payable in cash only, and shall not be lower than the highest of the following prices:

(a) the highest price per common shares and financial instrument convertible into common shares paid by the Bidder, or on behalf thereof, in relation to any acquisition of common shares and the financial instruments convertible into common shares within the twelve months period immediately preceding the takeover notice, adjusted as a consequence of any division of shares, stock dividend, subdivision or reclassification affecting or related to common shares and/or the financial instruments convertible into common shares; or

(b) the highest closing sale price, during the sixty-day period immediately preceding the takeover notice, of a common share of our Company as quoted by the New York Stock Exchange, in each case as adjusted as a consequence of any division of shares, stock dividend, subdivision or reclassification affecting or related to common shares and financial instrument convertible into common shares.

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Squeeze-out right and sell out right. Because our common shares used to be admitted to trading in the Luxembourg Stock Exchange (“LuxSE”), currently we fall under the scope of the Luxembourg law of July 21, 2012 on mandatory squeeze-out and sell-out of securities of companies admitted or having been admitted to trading on a regulated market or which have been subject to a public offer (the "Luxembourg Mandatory Squeeze-Out and Sell-Out Law"), which shall continue to be applicable to the Company for a period of five years from the date on which the request to voluntarily delist our common shares from the Official List of the LuxSE became effective (i.e. on July 31, 2019) provided that no new listing on a Regulated Market will occur between such period. The Luxembourg Mandatory Squeeze-Out and Sell-Out Law provides that, subject to the conditions set forth therein being met, if any individual or legal entity, acting alone or in concert with another, holds a number of shares or other voting securities representing at least 95% of our voting share capital and 95% of our voting rights: (i) such holder may require the holders of the remaining shares or other voting securities to sell those remaining securities (the "Mandatory Squeeze-Out"); and (ii) the holders of the remaining shares or securities may require such holder to purchase those remaining shares or other voting securities (the "Mandatory Sell-Out"). The Mandatory Squeeze-Out and the Mandatory Sell-Out must be exercised at a fair price according to objective and adequate methods applying to asset disposals. The procedures applicable to the Mandatory Squeeze-Out and the Mandatory Sell-Out are subject to further conditions and must be carried out under the supervision of the Commission de Surveillance du Secteur Financier (the "CSSF"). The Takeover Law provides that, when an offer (mandatory or voluntary) is made to all of the holders of voting securities of our Company and after such offer the offeror holds at least 95% of the securities carrying voting rights and 95% of the voting rights, the offeror may require the holders of the remaining securities to sell those securities (of the same class) to the offeror. The price offered for such securities must be a fair price. The price offered in a voluntary offer would be considered a fair price in the squeeze-out proceedings if the offeror acquired at least 90% of our shares carrying voting rights that were the subject of the offer. The price paid in a mandatory offer is deemed a fair price. The consideration paid in the squeeze-out proceedings must take the same form as the consideration offered in the offer or consist solely of cash. Moreover, an all-cash option must be offered to the remaining shareholders. Finally, the right to initiate squeeze-out proceedings must be exercised within three months following the expiration of the offer.

No Appraisal Rights

Neither Luxembourg law nor our articles of association provide for any appraisal rights of dissenting shareholders.

Distributions

Subject to Luxembourg law, if and when a dividend is declared by the general meeting of shareholders or an interim dividend is declared by our board of directors, each common share is entitled to participate equally in such distribution of funds legally available for such purposes. Pursuant to our articles of association, our board of directors may pay interim dividends, subject to Luxembourg law.

Declared and unpaid distributions held by us for the account of the shareholders shall not bear interest. Under Luxembourg law, claims for unpaid distributions will lapse in our favor five years after the date such distribution became due and payable.

Any amount payable with respect to dividends and other distributions declared and payable may be freely transferred out of Luxembourg, except that any specific transfer may be prohibited or limited by anti-money laundering regulations, freezing orders or similar restrictive measures.

Annual Accounts

Under Luxembourg law, our board of directors must prepare annual accounts and consolidated accounts. Except for certain cases as provided for by Luxembourg law, our board of directors must also annually prepare management reports on the annual accounts and consolidated accounts. The annual accounts, the consolidated accounts, management reports and auditor's reports must be available for inspection by shareholders at our registered office and on our website for an uninterrupted period beginning at least eight calendar days prior to the date of the annual ordinary general meeting of shareholders.

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The annual accounts and consolidated accounts are audited by an approved statutory auditor (réviseur d'entreprises agréé).

The annual accounts and the consolidated accounts, will be filed with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés of Luxembourg) and disseminated as regulated information.

Information Rights

Luxembourg law gives shareholders limited rights to inspect certain corporate records prior to the date of the annual ordinary general meeting of shareholders, including the annual accounts with the list of directors and auditors, the consolidated accounts, the notes to the annual accounts and the consolidated accounts, a list of shareholders whose common shares are not fully paid up, the management reports, the auditor's report and, in case of amendments to the articles of association, the text of the proposed amendments and the draft of the resulting consolidated articles of association.

In addition, any registered shareholder is entitled to receive, upon request, a copy of the annual accounts, the consolidated accounts, the auditor's reports and the management reports free of charge prior to the date of the annual ordinary general meeting of shareholders.

Board of Directors

Globant S.A. is managed by our board of directors which is vested with the broadest powers to take any actions necessary or useful to fulfill our corporate purpose with the exception of actions reserved by law or our articles of association to the general meeting of shareholders. Our articles of association provide that our board of directors must consist of at least seven members and no more than fifteen members. Our board of directors meets as often as company interests require.

A majority of the members of our board of directors present or represented at a board meeting constitutes a quorum, and resolutions are adopted by the simple majority vote of our board members present or represented. In the case of a tie, the chairman of our board shall have the deciding vote. Our board of directors may also make decisions by means of resolutions in writing signed by all directors.

Directors are elected by the general meeting of shareholders, and appointed for a period of up to four years; provided, however, that directors are elected on a staggered basis, with one-third of the directors being elected each year; and provided, further, that such term may be exceeded by a period up to the annual general meeting held following the fourth anniversary of the appointment, and each director will hold office until his or her successor is elected. The general shareholders' meeting may remove one or more directors at any time, without cause and without prior notice by a resolution passed by simple majority vote. If our board of directors has a vacancy, such vacancy may be filled on a temporary basis by a person designated by the remaining members of our board of directors until the next general meeting of shareholders, which will resolve on a permanent appointment. Any director shall be eligible for re-election indefinitely.

Within the limits provided for by applicable law and our articles of association, our board of directors may delegate to one or more directors or to any one or more persons, who need not be shareholders, acting alone or jointly, the daily management of Globant S.A. and the authority to represent us in connection with such daily management. Our board of directors may also grant special powers to any person(s) acting alone or jointly with others as agent of Globant S.A.

Our board of directors may establish one or more committees, including without limitation, an audit committee, a nominating and corporate governance committee, and a compensation committee, and for which it shall, if one or more of such committees are set up, appoint the members, determine the purpose, powers and authorities as well as the procedures and such other rules as may be applicable thereto. Our board of directors has established an audit committee as well as a compensation committee, and a nominating and corporate governance committee.

No contract or other transaction between us and any other company or firm shall be affected or invalidated by the fact that any one or more of our directors or officers is interested in, or is a director, associate, officer, agent, adviser or employee of such other company or firm. Any director or officer who serves as a director, officer or employee or otherwise of any company or firm with which we shall contract or otherwise engage in business shall not, by reason of such affiliation with such other company or firm only, be prevented from considering and voting or acting upon any matters with respect to such contract or other business.

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Any director who has, directly or indirectly, a conflicting interest in a transaction submitted for approval to our board of directors that conflicts with our interest, must inform our board of directors thereof and to cause a record of his statement to be included in the minutes of the meeting. Such director may not take part in these deliberations and may not vote on the relevant transaction. At the next general meeting, before any resolution is put to a vote, a special report shall be made on any transactions in which any of the directors may have had an interest that conflicts with our interest.

No shareholding qualification for directors is required.

Any director and other officer, past and present, is entitled to indemnification from us to the fullest extent permitted by law against liability and all expenses reasonably incurred or paid by such director in connection with any claim, action, suit or proceeding in which he or she is involved as a party or otherwise by virtue of his being or having been a director. We may purchase and maintain insurance for any director or other officer against any such liability.

No indemnification shall be provided against any liability to our directors or executive officers by reason of willful misconduct, bad faith, gross negligence or reckless disregard of the duties of a director or officer. No indemnification will be provided with respect to any matter as to which the director or officer shall have been finally adjudicated to have acted in bad faith and not in our interest, nor will indemnification be provided in the event of a settlement (unless approved by a court or our board of directors).

Registrars and Registers for Our Common Shares

All of our common shares are in registered form only.

We keep a register of common shares at our registered office in Luxembourg. This register is available for inspection by any shareholder. In addition, we may appoint registrars in different jurisdictions who will each maintain a separate register for the registered common shares entered therein. It is possible for our shareholders to elect the entry of their common shares in one of these registers and the transfer thereof at any time from one register to any other, including to the register kept at our registered office. However, our board of directors may restrict such transfers for common shares that are registered, listed, quoted, dealt in or have been placed in certain jurisdictions in compliance with the requirements applicable therein.

Our articles of association provide that the ownership of registered common shares is established by inscription in the relevant register. We may consider the person in whose name the registered common shares are registered in the relevant register as the owner of such registered common shares.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is American Stock Transfer & Trust Company, LLC, with an address at 6201 15th Avenue Brooklyn, New York, NY 11219.

Our common shares are listed on the NYSE under the symbol "GLOB".

C. Material Contracts

In November 2018, Globant LLC, our U.S. subsidiary (the “Borrower”) entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with the financial institutions listed therein, as lenders, and HSBC Bank USA, N.A., as administrative agent, issuing bank and swingline lender.

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On February 6, 2020, the Borrower, entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”), by and among certain financial institutions listed therein, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. Under the Second A&R Credit Agreement, which amends and restates the existing A&R Credit Agreement, dated as of November 1, 2018, the Borrower may borrow (i) up to $100 million in up to four borrowings on or prior to August 6, 2021 under a delayed-draw term loan facility and (ii) up to $250 million under a revolving credit facility. In addition, the Borrower may request increases of the maximum amount available under the revolving facility in an aggregate amount not to exceed $100 million. The maturity date of each of the facilities is February 5, 2025. Pursuant to the terms of the Second A&R Credit Agreement, interest on the loans extended thereunder shall accrue at a rate per annum equal to either (i) LIBOR plus 1.50%, or (ii) LIBOR plus 1.75%, determined based on the Borrower’s Maximum Total Leverage Ratio (as defined in the Second A&R Credit Agreement). The Borrower’s obligations under the Second A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of the Borrower’s now owned and after-acquired assets. The Second A&R Credit Agreement also contains certain customary negative and affirmative covenants, which compliance may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

On January 17, 2019, we entered into a share purchase agreement with the shareholders of Avanxo (Bermuda) Limited, pursuant to which we agreed to purchase all of Avanxo’s share capital subject to the terms and conditions set forth in the share purchase agreement. Avanxo is a cloud consulting and implementation company headquartered in Bermuda, with operations in Brazil, Mexico, Colombia, Peru, Argentina and the United States. The transaction closed on February 1, 2019. The aggregate purchase price under the share purchase agreement amounted to $44.5 million.

On August 9, 2019, we entered into an equity purchase agreement with the equityholders of Belatrix Global Corporation S.A., a Spanish stock company, pursuant to which we purchased all of the outstanding equity interests in Belatrix and its subsidiaries. The transaction was simultaneously signed and closed. Belatrix is a software and applications development company with operations in Argentina, Peru, Colombia and the United States. The aggregate purchase price under the SPA amounted to $64.5 million.

D. Exchange Controls

See "Information on the Company — Business Overview — Regulatory Overview — Foreign Exchange Controls."

E. Taxation

The following is a summary of the material Luxembourg and U.S. federal income tax consequences to U.S. Holders (as defined below) of the ownership and disposition of our common shares. This summary is based upon Luxembourg tax laws and U.S. federal income tax laws (including the U.S. Internal Revenue Code of 1986, as amended (the "Code"), final, temporary and proposed Treasury regulations, rulings, judicial decisions and administrative pronouncements), all currently in effect as of the date hereof and all of which are subject to change or changes in wording or administrative or judicial interpretation occurring after the date hereof, possibly with retroactive effect. To the extent that the following discussion relates to matters of Luxembourg tax law, it represents the opinion of Arendt & Medernach, Luxembourg, our Luxembourg counsel, and to the extent that the discussion relates to matters of U.S. federal income tax law, it represents the opinion of DLA Piper LLP (U.S.), our U.S. counsel.

As used herein, the term "U.S. Holder" means a beneficial owner of one or more of our common shares:

| (a) | that is for U.S. federal income tax purposes one of the following:

| (i) | an individual citizen or resident of the United States,

| (ii) | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof, or

| (iii) | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source;

| (b) | who holds the common shares as capital assets for U.S. federal income tax purposes;

| (c) | who owns, directly, indirectly or by attribution, less than 10% of our share capital or voting shares; and

| (d) | whose holding is not effectively connected with a permanent establishment in Luxembourg.

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This summary does not address all of the tax considerations that may apply to holders that are subject to special tax rules, such as U.S. expatriates, insurance companies, tax-exempt organizations, certain financial institutions, persons subject to the alternative minimum tax, dealers and certain traders in securities, persons holding common shares as part of a straddle, hedging, conversion or other integrated transaction, persons who acquired their common shares pursuant to the exercise of employee shares options or otherwise as compensation, partnerships or other entities classified as partnerships for U.S. federal income tax purposes or persons whose functional currency is not the U.S. dollar. Such holders may be subject to U.S. federal income tax consequences different from those set forth below. In addition, as described above, the 2017 Tax Act includes substantial changes to the U.S. federal income taxation of individuals and businesses which are effective from January 1, 2018. Although the new law substantially decreased corporate tax rates, all of the consequences of the new law, including the unintended consequences, if any, are not yet fully known. For the avoidance of doubt, this discussion (unless indicated otherwise) does not cover any implications of Code section 965 (Treatment of deferred foreign income upon transition to participation exemption system of taxation) or Code section 245A (Deduction for foreign source-portion of dividends received by domestic corporations from specified 10% owned foreign corporations). In addition, this summary does not address all of the Luxembourg tax considerations that may apply to holders that are subject to special tax rules.

If a partnership holds common shares, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partnership, or partner in a partnership, that holds common shares is urged to consult its own tax advisor regarding the specific tax consequences of owning and disposing of the common shares.

Potential investors in our common shares should consult their own tax advisors concerning the specific Luxembourg and U.S. federal, state and local tax consequences of the ownership and disposition of our common shares in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.

Luxembourg Tax Considerations

Introduction

The following is an overview of certain material Luxembourg tax consequences of purchasing, owning and disposing of the common shares issued by us. It does not purport to be a complete analysis of all possible tax situations that may be relevant to a decision to purchase, own or deposit our common shares. It is included herein solely for preliminary information purposes and is not intended to be, nor should it construed to be, legal or tax advice. Prospective purchasers of our common shares should consult their own tax advisers as to the applicable tax consequences of the ownership of our common shares, based on their particular circumstances. The following description of Luxembourg tax law is based upon the Luxembourg law and regulations as in effect and as interpreted by the Luxembourg tax authorities as of the date of this annual report and is subject to any amendments in law (or in interpretation) later introduced, whether or not on a retroactive basis. Please be aware that the residence concept used under the respective headings below applies for Luxembourg tax assessment purposes only. Any reference in this section to a tax, duty, levy impost or other charge or withholding of a similar nature refers to Luxembourg tax laws and/or concepts only. Also, please note that a reference to Luxembourg income tax encompasses corporate income tax (impôt sur le revenu des collectivités), municipal business tax (impôt commercial communal), a solidarity surcharge (contribution au fonds pour l'emploi) and personal income tax (impôt sur le revenu) generally. Corporate taxpayers may further be subject to net worth tax (impôt sur la fortune), as well as other duties, levies or taxes. Corporate income tax, municipal business tax, as well as the solidarity surcharge invariably applies to most corporate taxpayers resident of Luxembourg for tax purposes. Individual taxpayers are generally subject to personal income tax and to the solidarity surcharge. Under certain circumstances, where an individual taxpayer acts in the course of the management of a professional or business undertaking, municipal business tax may apply as well.

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Taxation of the company

Income tax

As the company is a fully-taxable Luxembourg company, its net taxable profit is as a rule subject to corporate income tax ("CIT") and municipal business tax ("MBT") at ordinary rates in Luxembourg.

The taxable profit as determined for CIT purposes is applicable, with minor adjustments, for MBT purposes. CIT is levied at an effective maximum rate of 18,19% as from 2019 (inclusive of the 7% surcharge for the employment fund). MBT is levied at a variable rate according to the municipality in which the company is located (6.75% in the City of Luxembourg). The maximum aggregate CIT and MBT rate consequently amounts to 24,94% as from 2019 for companies located in the City of Luxembourg.

Dividends and other payments derived from shares by the company are subject to income taxes, unless the conditions of the participation exemption regime, as described below, are satisfied. A tax credit is generally granted for withholding taxes levied at source within the limit of the tax payable in Luxembourg on such income, whereby any excess withholding tax is not refundable.

Under the participation exemption regime (subject to the relevant anti-abuse rules), dividends derived from shares may be exempt from income tax if (i) the distributing company is a qualified subsidiary ("Qualified Subsidiary") and (ii) at the time the dividend is put at the company's disposal, the company has held or commits itself to hold for an uninterrupted period of at least 12 months shares representing a direct participation in the share capital of the Qualified Subsidiary (i) of at least 10% or of (ii) an acquisition price of at least €1.2 million. A Qualified Subsidiary means (a) a Luxembourg resident fully-taxable company limited by share capital (société de capitaux), (b) a company covered by Article 2 of the Council Directive 2011/96/EU of November 30, 2011 as amended (the "EU Parent-Subsidiary Directive") or (c) a non-resident company limited by share capital (société de capitaux) liable to a tax corresponding to Luxembourg CIT.

Liquidation proceeds are assimilated to a received dividend and may be exempt under the same conditions. If the conditions of the participation exemption regime are not met, dividends derived by the company from Qualified Subsidiaries may be exempt for 50 % of their gross amount if they are received from (i) a Luxembourg resident fully-taxable company limited by share capital, or (ii) a company limited by share capital resident in a State with which the Grand Duchy of Luxembourg has concluded a double tax treaty and liable to a tax corresponding to Luxembourg CIT, or (iii) a company resident in a EU Member State and covered by Article 2 of the EU Parent-Subsidiary Directive.

Capital gains realized by the company on shares are subject to CIT and MBT at ordinary rates, unless the conditions of the participation exemption regime, as described below, are satisfied. Under the participation exemption regime, capital gains realized on shares of a Qualified Subsidiary may be exempt from CIT and MBT at the level of the company if at the time the capital gain is realized, the company has held or commits itself to hold for an uninterrupted period of at least 12 months shares representing a direct participation in the share capital of the Qualified Subsidiary (i) of at least 10% or of (ii) an acquisition price of at least €6 million. Taxable gains are defined as being the difference between the price for which shares have been disposed of and the lower of their cost or book value.

Withholding tax

Dividends paid by us to the holders of our common shares are as a rule subject to a 15% withholding tax in Luxembourg, unless a reduced withholding tax rate applies pursuant to an applicable double tax treaty or an exemption pursuant to the application of the participation exemption, and, to the extent withholding tax applies, we are responsible for withholding amounts corresponding to such taxation at its source.

If the company and a U.S. relevant holder are eligible for the benefits of the tax treaty concluded between the United State and Luxembourg (the "Treaty"), the rate of withholding on distributions is 15%, or 5% if the U.S. relevant holder is a qualified resident company as defined in Article 24 of the Treaty that owns at least 10% of the company's voting stock.

A withholding tax exemption may apply under the participation exemption if cumulatively (i) the holder of our shares is an eligible parent (an "Eligible Parent") and (ii) at the time the income is made available, the holder of our shares has held or commits itself to hold for an uninterrupted period of at least 12 months a direct participation of at least 10% of our share capital or a direct participation of an acquisition price of at least €1.2 million (or an equivalent amount in another currency). Holding a participation through an entity treated as tax transparent from a Luxembourg income tax perspective is deemed to be a direct participation in proportion to the net assets held in this entity. An Eligible Parent includes (a) a company covered by Article 2 of the EU Parent-Subsidiary Directive or a Luxembourg permanent establishment thereof, (b) a company resident in a State having a double tax treaty with Luxembourg and subject to a tax corresponding to Luxembourg CIT or a Luxembourg permanent establishment thereof, (c) a company limited by share capital (société de capitaux) or a cooperative society (société coopérative) resident in the European Economic Area other than an EU Member State and liable to a tax corresponding to Luxembourg CIT or a Luxembourg permanent establishment thereof or (d) a Swiss company limited by share capital (société de capitaux) which is effectively subject to corporate income tax in Switzerland without benefiting from an exemption.

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No withholding tax is levied on capital gains and liquidation proceeds.

Net wealth tax

The company is as a rule subject to Luxembourg net wealth tax ("NWT") on its net assets as determined for net wealth tax purposes. NWT is levied at the rate of 0.5% on net assets not exceeding EUR 500 million and at the rate of 0.05% on the portion of the net assets exceeding EUR 500 million. Net worth is referred to as the unitary value (valeur unitaire), as determined at January 1 of each year. The unitary value is in principle calculated as the difference between (i) assets estimated at their fair market value (valeur estimée de réalisation), and (ii) liabilities vis-à-vis third parties.

Under the participation exemption regime, a qualified shareholding held by the company in a Qualified Subsidiary is exempt for net wealth tax purposes.

A minimum net wealth tax ("MNWT") is levied on companies having their statutory seat or central administration in Luxembourg. For entities for which the sum of fixed financial assets, receivables against related companies, transferable securities and cash at bank exceeds 90% of their total balance sheet and EUR 350,000, the MNWT is set at EUR 4,815. For all other companies having their statutory seat or central administration in Luxembourg which do not fall within the scope of the EUR 4,815 MNWT, the MNWT ranges from EUR 535 to EUR 32,100, depending on the company's total balance sheet.

Other taxes

The issuance of our common shares and any other amendment of our articles of association are currently subject to a €75 fixed registration duty. The disposal of our common shares is not subject to a Luxembourg registration tax or stamp duty, unless recorded in a Luxembourg notarial deed or otherwise registered in Luxembourg.

Taxation of the holders of commons shares

Luxembourg tax residency of the holders of our common shares

A holder of our common shares will not become resident, nor be deemed to be resident, in Luxembourg by reason only of the holding and/or disposing of our common shares or the execution, performance or enforcement of his/her rights thereunder.

Income tax

Luxembourg resident holders

Luxembourg individual residents

Dividends and other payments derived from our common shares by resident individual holders of our common shares, who act in the course of the management of either their private wealth or their professional or business activity, are subject to income tax at the ordinary progressive rates. A tax credit may be granted, under certain circumstances, for Luxembourg withholding tax levied. 50% of the gross amount of dividends received from the company by resident individual holders of our common shares are exempt from income tax.

Capital gains realized on the disposal of our common shares by resident individual holders of our common shares, who act in the course of the management of their private wealth, are not subject to income tax, unless said capital gains qualify either as speculative gains or as gains on a substantial participation. Capital gains are deemed to be speculative and are subject to income tax at ordinary rates if our common shares are disposed of within six months after their acquisition or if their disposal precedes their acquisition. Speculative gains are subject to income tax as miscellaneous income at ordinary rates. A participation is deemed to be substantial where a resident individual holder of our common shares holds or has held, either alone or together with his spouse or partner and / or minor children, directly or indirectly at any time within the five years preceding the disposal, more than 10% of the share capital of the company whose common shares are being disposed of. A holder of our common shares is also deemed to alienate a substantial participation if he acquired free of charge, within the five years preceding the transfer, a participation that was constituting a substantial participation in the hands of the alienator (or the alienators in case of successive transfers free of charge within the same five-year period). Capital gains realized on a substantial participation more than six months after the acquisition thereof are taxed according to the half-global rate method, (i.e. the average rate applicable to the total income is calculated according to progressive income tax rates and half of the average rate is applied to the capital gains realized on the substantial participation). A disposal may include a sale, an exchange, a contribution or any other kind of alienation of the participation.

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Capital gains realized on the disposal of our common shares by resident individual holders of our common shares, who act in the course of their professional or business activity, are subject to income tax at ordinary rates. Taxable gains are determined as being the difference between the price for which our common shares have been disposed of and the lower of their cost or book value.

Luxembourg fully-taxable corporate residents

Dividends and other payments derived from our common shares by Luxembourg-resident, fully-taxable companies are subject to CIT and MBT, unless the conditions of the participation exemption regime, as described below, are satisfied. A tax credit may, under certain circumstances, be granted for any Luxembourg withholding tax levied. If the conditions of the participation exemption regime are not met, 50% of the gross amount of dividends received by Luxembourg-resident, fully-taxable companies from our common shares are exempt from CIT and MBT.

Under the participation exemption regime, dividends derived from our common shares may be exempt from CIT and MBT at the level of the holder of our common shares if cumulatively (i) the holder of our common shares is a Luxembourg-resident, fully-taxable company and (ii) at the time the dividend is put at the holder of our common shares' disposal, the holder of our common shares has held or commits itself to hold for an uninterrupted period of at least 12 months a qualified shareholding ("Qualified Shareholding"). A Qualified Shareholding means common shares representing a direct participation of at least 10% in the share capital of the company or a direct participation in the company of an acquisition price of at least €1.2 million (or an equivalent amount in another currency). Liquidation proceeds are assimilated to a received dividend and may be exempt under the same conditions. Common shares held through a tax-transparent entity are considered as being a direct participation proportionally to the percentage held in the net assets of the transparent entity.

Capital gains realized by a Luxembourg-resident, fully-taxable company on our common shares are subject to CIT and MBT at ordinary rates, unless the conditions of the participation exemption regime, as described below, are satisfied. Under the participation exemption regime, capital gains realized on our common shares may be exempt from income tax at the level of the holder of our common shares if cumulatively (i) the holder of our common shares is a Luxembourg fully-taxable corporate resident and (ii) at the time the capital gain is realized, the holder of our common shares has held or commits itself to hold for an uninterrupted period of at least 12 months our common shares representing a direct participation in the share capital of the company of at least 10% or a direct participation in the company of an acquisition price of at least €6 million (or an equivalent amount in another currency). Taxable gains are determined as being the difference between the price for which our common shares have been disposed of and the lower of their cost or book value.

Luxembourg residents benefiting from a special tax regime

Holders of our common shares who are either (i) an undertaking for collective investment governed by the amended law of December 17, 2010, (ii) a specialized investment fund governed by the amended law of February 13, 2007, (iii) a family wealth management company governed by the amended law of May 11, 2007 and (iv) a reserved alternative investment fund treated as a specialized investment fund for Luxembourg tax purposes governed by the amended law of July 23, 2016, are exempt from income tax in Luxembourg. Dividends derived from and capital gains realized on our common shares are thus not subject to income tax in their hands.

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Luxembourg non-resident holders

Non-resident holders of our common shares who have neither a permanent establishment nor a permanent representative in Luxembourg to which or whom our common shares are attributable, are not liable to any Luxembourg income tax on income and gains derived from our common shares except capital gains realised on (i) a substantial participation before the acquisition or within the first six months of the acquisition thereof, or (ii) a substantial participation more than six months after the acquisition thereof by a holder of our common shares who has been a former Luxembourg resident for more than fifteen years and has become a non-resident, at the time of transfer, less than five years ago. A participation is deemed to be substantial where a shareholder holds or has held, either alone or, in case of an individual shareholder, together with his/her spouse or partner and/or minor children, directly or indirectly at any time within the five years preceding the disposal, more than 10% of the share capital of the company whose common shares are being disposed of. A shareholder is also deemed to alienate a substantial participation if he acquired free of charge, within the five years preceding the transfer, a participation that was constituting a substantial participation in the hands of the alienator (or the alienators in case of successive transfers free of charge within the same five-year period).

If the company and a U.S. relevant holder are eligible for the benefits of the Treaty, such U.S. relevant holder generally should not be subject to Luxembourg tax on the gain from the disposal of such common shares unless such gain is attributable to a permanent establishment of such U.S. relevant holder in Luxembourg.

Non-resident holders of our common shares which have a permanent establishment or a permanent representative in Luxembourg to which or whom our common shares are attributable, must include any income received, as well as any gain realized, on the sale, disposal or redemption of our common shares, in their taxable income for Luxembourg tax assessment purposes, unless the conditions of the participation exemption regime, as described below, are satisfied. If the conditions of the participation exemption regime are not fulfilled, 50% of the gross amount of dividends received by a Luxembourg permanent establishment or permanent representative may be, however, exempt from income tax. Taxable gains are determined as being the difference between the price for which the common shares have been disposed of and the lower of their cost or book value.

Under the participation exemption regime, dividends derived from our common shares may be exempt from income tax if cumulatively (i) our common shares are attributable to a qualified permanent establishment ("Qualified Permanent Establishment") and (ii) at the time the dividend is put at the disposal of the Qualified Permanent Establishment, it has held or commits itself to hold a Qualified Shareholding for an uninterrupted period of at least 12 months. A Qualified Permanent Establishment means (a) a Luxembourg permanent establishment of a company covered by Article 2 of the EU Parent-Subsidiary Directive, (b) a Luxembourg permanent establishment of a company limited by share capital (société de capitaux) resident in a State having a tax treaty with Luxembourg, and (c) a Luxembourg permanent establishment of a company limited by share capital (société de capitaux) or a cooperative society (société coopérative) resident in the European Economic Area other than a EU Member State. Liquidation proceeds are assimilated to a received dividend and may be exempt under the same conditions. Common shares held through a tax transparent entity are considered as being a direct participation proportionally to the percentage held in the net assets of the transparent entity.

Under the participation exemption regime, capital gains realized on our common shares may be exempt from income tax if (i) our common shares are attributable to a Qualified Permanent Establishment and (ii) at the time the capital gain is realized, the Qualified Permanent Establishment has held or commits itself to hold, for an uninterrupted period of at least 12 months, our common shares representing a direct participation in the share capital of the company of at least 10% or a direct participation in the company of an acquisition price of at least €6 million (or an equivalent amount in another currency). Taxable gains are determined as being the difference between the price for which our common shares have been disposed of and the lower of their cost or book value.

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Net Wealth Tax

Luxembourg resident holders of our common shares, as well as non-resident holders of our common shares who have a permanent establishment or a permanent representative in Luxembourg to which or whom our common shares are attributable, are subject to Luxembourg net wealth tax on our common shares, except if the holder is (i) a resident or non-resident individual taxpayer, (ii) a securitization company governed by the amended law of March 22, 2004 on securitization, (iii) a company governed by the amended law of June 15, 2004 on venture capital vehicles, (iv) a professional pension institution governed by the amended law of July 13, 2005, (v) a specialized investment fund governed by the amended law of February 13, 2007, (vi) a family wealth management company governed by the amended law of May 11, 2007, (vii) an undertaking for collective investment governed by the amended law of December 17, 2010 or (viii) a reserved alternative investment fund governed by the amended law of July 23, 2016. However, (i) a securitization company governed by the amended law of March 22, 2004 on securitization, (ii) a company governed by the amended law of June 15, 2004 on venture capital vehicles, (iii) a professional pension institution governed by the amended law of July 13, 2005 and (iv) a reserved alternative investment fund treated as a venture capital vehicle for Luxembourg tax purposes and governed by the amended law of July 23, 2016, remain subject to minimum net wealth tax.

Under the participation exemption, a Qualified Shareholding held in the company by an Eligible Parent or attributable to a Qualified Permanent Establishment may be exempt. The net wealth tax exemption for a Qualified Shareholding does not require the completion of the 12-month holding period.

Other Taxes

Under Luxembourg tax law, where an individual holder of our common shares is a resident of Luxembourg for tax purposes at the time of his or her death, our common shares are included in his or her taxable basis for inheritance tax purposes. On the contrary, no inheritance tax is levied on the transfer of our common shares upon the death of an individual holder in cases where the deceased was not a resident of Luxembourg for inheritance purposes.

Gift tax may be due on a gift or donation of our common shares, if the gift is recorded in a Luxembourg notarial deed or otherwise registered in Luxembourg.

U.S. Federal Income Tax Considerations

Taxation of dividends

Distributions received by a U.S. Holder on common shares, including the amount of any Luxembourg taxes withheld, other than certain pro rata distributions of common shares to all shareholders, will constitute foreign source dividend income to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that such distributions (including any Luxembourg taxes withheld) will be reported to U.S. Holders as dividends. Although it is our intention, if we pay any dividends, to pay such dividends in U.S. dollars, if dividends are paid in euros, the amount of the dividend a U.S. Holder will be required to include in income will equal the U.S. dollar value of the euro, calculated by reference to the exchange rate in effect on the date the payment is received by the U.S. Holder, regardless of whether the payment is converted into U.S. dollars on the date of receipt. If the dividend is converted to U.S. dollars on the date of receipt, a U.S. holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of its receipt. If a U.S. Holder realizes gain or loss on a sale or other disposition of euro, it will be U.S. source ordinary income or loss. U.S. Holders that are corporations generally will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us, except that certain holders of our common shares that are corporations and that directly, indirectly or constructively own 10% or more of our voting power or value may be entitled to a 100% dividends received deduction under certain circumstances. The rules with respect to the dividends received deduction are complex and involve the application of rules that depend on a U.S. Holder’s particular circumstances and on whether we are a PFIC (defined below), a “controlled foreign corporation” or both, among other things. You should consult your own tax advisor to determine the effect of the dividends received deduction on your ownership of our common stock. Subject to applicable limitations, dividends received by certain non-corporate U.S. Holders of common shares generally will be taxable at the reduced rate that otherwise applies to long-term capital gains. Non-corporate U.S. Holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at this favorable rate. Certain pro rata distributions of ordinary shares to all shareholders are not generally subject to U.S. federal income tax.

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Instead of claiming a credit, a U.S. Holder may elect to deduct foreign taxes (including any Luxembourg taxes) in computing its taxable income, subject to generally applicable limitations. An election to deduct foreign taxes (instead of claiming foreign tax credits) applies to all taxes paid or accrued in the taxable year to foreign countries and possessions of the United States. The limitations on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The rules governing foreign tax credits are complex. Therefore, U.S. Holders should consult their own tax advisors regarding the availability of foreign tax credits in their particular circumstances.

Taxation upon sale or other taxable disposition of common shares

A U.S. Holder will recognize U.S. source capital gain or loss on the sale or other disposition of common shares, which will be long-term capital gain or loss if the U.S. Holder has held such common shares for more than one year. The amount of the U.S. Holder's gain or loss will be equal to the difference between such U.S. Holder's tax basis in the common shares sold or otherwise disposed of and the amount realized on the sale or other disposition.

Controlled Foreign Corporation

The 2017 Tax Act eliminated the prohibition on “downward attribution” from non-U.S. persons to U.S. persons under Section 958(b)(4) of the Code for purposes of determining constructive stock ownership under the controlled foreign corporation (“CFC”) rules. As a result, our U.S. subsidiary will be deemed to own all of the stock of our non-U.S. subsidiaries held by the Company for CFC purposes. To the extent a non-U.S. subsidiary is treated as a CFC for any taxable year, each U.S. person treated as a “10% U.S. Shareholder” with respect to such CFC that held our common shares directly or indirectly through non-U.S. entities (including the Company) as of the last day in such taxable year that the subsidiary was a CFC would generally be required to include in gross income as ordinary income its pro rata share of certain income of the CFC, regardless of whether that income was actually distributed to such U.S. person. For tax years beginning on or after January 1, 2018, a “10% U.S. Shareholder” of a non-U.S. corporation includes any U.S. person that owns (or is treated as owning) stock of the non-U.S. corporation possessing 10% or more of the total voting power or total value of such non-U.S. corporation’s stock. The legislative history under the 2017 Tax Act indicates that this change was not intended to cause our non-U.S. subsidiaries to be treated as CFCs with respect to a 10% U.S. Shareholder that is not related to our U.S. subsidiary. However, it is not clear whether the IRS or a court would interpret the change made by the 2017 Tax Act in a manner consistent with such indicated intent. Treasury and the IRS, in recent issued guidance, however, have declined to provide relief to unrelated “10% U.S. Shareholders” of foreign-controlled CFCs.

Thus, investors are strongly urged to consult their own tax advisors to determine whether their ownership of our common shares will cause them to become a 10% U.S. Shareholder and the impact of such a classification.

Passive foreign investment company rules

We believe that we will not be a passive foreign investment company ("PFIC") for U.S. federal income tax purposes for this current taxable year and does not expect to become one in the foreseeable future. However, because PFIC status depends upon the composition of our income and assets and the market value of the assets (including, among others, less than 25% owned equity investments) from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year. Because we have valued our goodwill based on the market value of our equity, a decrease in the price of common shares may also result in us becoming a PFIC. The composition of our income and our assets will also be affected by how, and how quickly, we spend our cash. Under circumstances where the cash is not deployed for active purposes, our risk of becoming a PFIC may increase. If we were treated as a PFIC for any taxable year during which a U.S. Holder held common shares, certain adverse tax consequences could apply to the U.S. Holder.

If we were treated as a PFIC for any taxable year during which a U.S. Holder held common shares, gain recognized by a U.S. Holder on a sale or other disposition of a common shares would be allocated ratably over the U.S. Holder's holding period for the common shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the resulting tax liability. The same treatment would apply to any distribution in respect of common shares to the extent it exceeds 125% of the average of the annual distributions on common shares received by the U.S. Holder during the preceding three years or the U.S. Holder's holding period, whichever is shorter. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the common shares.

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In addition, if we were treated as a PFIC in a taxable year in which we pay a dividend or in the prior taxable year, the reduced rate discussed above with respect to dividends paid to certain non-corporate U.S. Holders would not apply.

Information reporting and backup withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting and to backup withholding unless the U.S. Holder is a corporation or other exempt recipient or, in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder's U.S. federal income tax liability and may entitle such U.S. Holder to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts.

Not applicable.

H. Documents on Display

As a foreign private issuer, we are subject to periodic reporting and other informational requirements of the Exchange Act as applicable. Accordingly, we are required to file reports, including this annual report on Form 20-F, and other information with the SEC. However, we are allowed four months to file our annual report with the SEC instead of approximately three, and we are not required to disclose certain detailed information regarding executive compensation that is required from United States domestic issuers. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently as companies that are not foreign private issuers whose securities are registered under the Exchange Act. Also, as a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing of proxy statements to shareholders, and our senior management, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

As a foreign private issuer, we are also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. We are, however, still subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5. Since many of the disclosure obligations required of us as a foreign private issuer are different than those required by other United States domestic reporting companies, our shareholders, potential shareholders and the investing public in general should not expect to receive information about us in the same amount, and at the same time, as information is received from, or provided by, other United States domestic reporting companies. We are liable for violations of the rules and regulations of the SEC which do apply to us as a foreign private issuer.

You may review and copy the registration statement, reports and other information we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may also request copies of these documents upon payment of a duplicating fee by writing to the SEC.

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For further information on the Public Reference Room, please call the SEC at 1-800-SEC-0330. Our SEC filings, including the registration statement, are also available to you on the SEC’s website at http://www.sec.gov. This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this annual report.

I. Subsidiaries Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our market risk exposure results primarily from concentration of credit risk, fluctuations in interest rates and foreign currency rates and inflation. We do not engage in trading of derivative instruments for speculative purposes.

Concentration of Credit and Other Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and bank balances, short-term investments and trade receivables. These financial instruments approximate fair value due to short-term maturities. We maintain our cash and bank balances and short-term investments with high credit quality financial institutions. Our investment portfolio is primarily comprised of time deposits and corporate and treasury bonds. We believe that our credit policies reflect normal industry terms and business risk. We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral.

Trade receivables are generally dispersed across our clients in proportion to the revenues we generate from them. For the years ended December 31, 2019, 2018 and 2017, our top five clients accounted for 26.1%, 32.0% and 28.9%, respectively, of our net revenues. Our top client for the years ended December 31, 2019, 2018 and 2017, accounted for 11.2%, 11.3% and 10.2%, respectively. Our top client for 2019, 2018 and 2017 was Walt Disney Parks and Resorts Online. As of December 31, 2019, 2018 and 2017, accounts receivable from Walt Disney Parks and Resorts Online represented 8.0%, 8.3% and 10.1% of our total accounts receivable, respectively.

Credit losses and write-offs of trade receivable balances have historically not been material to our consolidated financial statements.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our cash and bank balances and our credit facilities. Our credit line in the United States bear interest at fixed rate of 1.75% and at variable rates linked to LIBOR. We do not use derivative financial instruments to hedge our risk of interest rate volatility.

Based on our debt position as of December 31, 2019, if we needed to refinance our existing debt, a 1% increase in interest rates would not materially impact us.

We have not been exposed to material risks due to changes in market interest rates. However, our future financial costs related to borrowings may increase and our financial income may decrease due to changes in market interest rates.

Foreign Exchange Risk

Our exchange rate risk arises in the ordinary course of our business primarily from our foreign currency expenses and, to a lesser extent, revenues. We are also exposed to exchange rate risk on the portion of our cash and bank balances, investments and trade receivables that is denominated in currencies other than the U.S. dollar and on other receivables, such as Argentine tax credits.

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Our consolidated financial statements are prepared in U.S. dollars. Because the majority of our operations are conducted in Latin America and Asia, we incur the majority of our operating expenses and capital expenditures in non-U.S. dollar currencies, primarily the Argentine peso, Uruguayan peso, Colombian peso, Mexican peso, Indian rupees and Brazilian real. 85.5% of our revenues for the year ended December 31, 2019 was generated in U.S. dollars, with the balance being generated primarily in Euros and, to a lesser extent, other currencies (including the Argentine peso, the Colombian peso and the Mexican peso). The following table shows the breakdown of our revenues by the currencies in which they were generated during the years ended December 31, 2019, 2018 and 2017, respectively.

|  | Year ended December 31, |
|  | (in thousands) |
|  | 2019 |  |  | 2018 |  |  | 2017 |
By Currency |  |  |  |  |  |  |  |  |
USD |  | $ | 563,747 |  |  |  | 85.5 | % |  | $ | 447,314 |  |  |  | 85.6 | % |  | $ | 354,824 |  |  |  | 85.8 | %
EUR |  |  | 28,237 |  |  |  | 4.3 | % |  |  | 30,087 |  |  |  | 5.8 | % |  |  | 23,518 |  |  |  | 5.7 | %
GBP |  |  | 3,012 |  |  |  | 0.5 | % |  |  | 6,550 |  |  |  | 1.3 | % |  |  | 4,107 |  |  |  | 1.0 | %
ARS |  |  | 26,948 |  |  |  | 4.1 | % |  |  | 20,651 |  |  |  | 4.0 | % |  |  | 12,856 |  |  |  | 3.1 | %
MXN |  |  | 19,939 |  |  |  | 3.0 | % |  |  | 11,711 |  |  |  | 2.2 | % |  |  | 6,942 |  |  |  | 1.7 | %
COP |  |  | 6,831 |  |  |  | 1.0 | % |  |  | 4,068 |  |  |  | 0.8 | % |  |  | 2,341 |  |  |  | 0.6 | %
BRL |  |  | 8,030 |  |  |  | 1.2 | % |  |  | 46 |  |  |  | — | % |  |  | 126 |  |  |  | — | %
Others |  |  | 2,581 |  |  |  | 0.4 | % |  |  | 1,883 |  |  |  | 0.4 | % |  |  | 8,725 |  |  |  | 2.1 | %
Revenues |  | $ | 659,325 |  |  |  | 100.0 | % |  | $ | 522,310 |  |  |  | 100.0 | % |  | $ | 413,439 |  |  |  | 100.0 | %

A small percentage of our trade receivables is generated from net revenues earned in non-U.S. dollar currencies (primarily Euros, British pounds sterling, the Argentine peso, the Mexican peso, the Brazilian Real and the Colombian peso).

Our results of operations can be affected if the Argentine peso, Colombian peso, Uruguayan peso, Mexican peso, Euros or British pound appreciate or depreciate against the U.S. dollar.

The following tables illustrate our sensitivity to increases and decreases in the U.S. dollar against the relevant foreign currency. The following sensitivity analysis includes outstanding foreign currency denominated monetary items at December 31, 2019 and adjusts their translation at the year-end for changes in U.S. dollars against the relevant foreign currency.

|  |  |  |  |  |  | Gain/(loss) |
Account |  | Currency |  | Amount |  |  | % Increase |  |  | Amount |  |  | % Decrease |  |  | Amount |
Net balances |  | Argentine pesos |  |  | 8,023 |  |  |  | 40 | % |  |  | (2,292 | ) |  |  | 10 | % |  |  | 891 |
|  | Chilean pesos |  |  | (2,789 | ) |  |  | 10 | % |  |  | 254 |  |  |  | 10 | % |  |  | (310 | )
|  | Colombian pesos |  |  | (7,770 | ) |  |  | 10 | % |  |  | 706 |  |  |  | 10 | % |  |  | (863 | )
|  | Indian rupees |  |  | (252 | ) |  |  | 10 | % |  |  | 23 |  |  |  | 10 | % |  |  | (28 | )
|  | Uruguayan pesos |  |  | (4,034 | ) |  |  | 10 | % |  |  | 363 |  |  |  | 10 | % |  |  | (443 | )
|  | Total |  |  | (6,822 | ) |  |  |  |  |  |  | (946 | ) |  |  |  |  |  |  | (753 | )

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Depreciation of the Argentine Peso

During 2019, the Argentine peso experienced a 59.02% devaluation from 37.60 Argentine peso per U.S dollar to 59.79 Argentine peso per U.S dollar.

During 2018, the Argentine peso experienced a 102.2% devaluation from 18.60 Argentine peso per U.S. dollar to 37.60 Argentine peso per U.S. dollar. As explained in note 28.10 to our audited consolidated financial statements, the Argentine's subsidiaries entered into foreign exchange forward and future contracts in order to mitigate the risk of fluctuations in the foreign exchange rate and reduce the impact in costs and expenses.

We periodically evaluate the need for hedging strategies with our board of directors, including the use of such instruments to mitigate the effect of foreign exchange rate fluctuations. During the year ended December 31, 2019, our principal Argentine operating subsidiaries, Sistemas Globales S.A. and IAFH Global S.A., and Sistemas Colombia S.A., Sistemas Globales Chile Asesorías Ltda. and Sistemas Globales Uruguay S.A.entered into foreign exchange forward contracts to reduce their risk of exposure to fluctuations in foreign currency. As of December 31, 2019 and 2018, the foreign exchange forward contracts were recognized, according to IFRS 9. We may in the future, as circumstances warrant, decide to enter into derivative transactions to reduce our exposure to appreciation or depreciation in the value of certain foreign currencies.

Wage Inflation Risk

Argentina has experienced significant levels of inflation in recent years. In November 2015, the INDEC suspended the publication of the CPI. According to the most recent publicly available information based on data from the Province of San Luis, the CPI grew by 31.4% in 2016. According to the most recent publicly available information based on data from the City of Buenos Aires, the CPI grew by 41.0% in 2016. After implementing certain methodological reforms and adjusting certain macroeconomic statistics based of these reforms, in June 2016 the INDEC resumed its publication of the CPI. According to the INDEC, Argentina's rate of inflation for May, June, July, August, September, October, November and December 2016 was 4.2%, 3.2%, 2.2%, 0.2%, 1.3%, 2.6%, 1.8% and 1.4%, respectively, 24.8% in 2017 and 47.6% in 2018, based on the CPI. See "Key Information — Risk Factors — Risks Related to Operating in Latin America — Argentina — Our results of operations may be adversely affected by high and possibly increasing inflation in Argentina." and "Key Information — Risk Factors — Risks Related to Operating in Latin America — Argentina — In the past, the credibility of several Argentine economic indexes has been called into question". The impact of inflation on our salary costs, or wage inflation, and thus on our statement of profit or loss and other comprehensive income varies depending on the fluctuation in exchange rates between the Argentine peso and the U.S. dollar. In an environment where the Argentine peso is weakening against the U.S. dollar, the impact of wage inflation will be partially offset, whereas in an environment where the Argentine peso is strengthening against the U.S. dollar, the impact of wage inflation will be increased. As of December 31, 2019, approximately 8.7% of our employees received salaries in Argentine pesos, which are the wages that can be influenced by current inflation rates. Assuming a constant exchange rate and no ability to increase prices, for every 10.0% increase in wage inflation in Argentina we would experience an estimated decrease of approximately $1.2 million in net income for the year.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

Not applicable.

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PART II.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

a) Disclosure Controls and Procedures

As of December 31, 2019, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, of the effectiveness of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that Company's disclosure controls and procedures were effective as of December 31, 2019.

b) Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer that: (i) pertains to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (ii) provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements for external reporting in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and (iii) provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedure may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, our management used the criteria established in "Internal Control — Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, our management has determined that our internal control over financial reporting was effective as of December 31, 2019.

Our management has excluded Avanxo and Belatrix, which were acquired on February 1, 2019 and August 9, 2019, respectively from its assessment of internal control over financial reporting as of December 31, 2019. In aggregate, the financial statements of each of the aforementioned entities constitute 8.2% of our total consolidated assets and 6.0% of related consolidated revenues for the year ended December 31, 2019.

163

c) Attestation Report of the Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by Deloitte & Co. S.A., an independent registered public accounting firm, as stated in their report which is included below:

| Deloitte & Co. S.A. Florida 234, 5° piso C1005AAF Ciudad Autónoma de Buenos Aires Argentina Tel.: (+54-11) 4320-2700 Fax: (+54-11) 4325-8081/4326-7340 www.deloitte.com/ar

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Globant S.A.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Globant S.A. and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 25, 2020, expressed an unqualified opinion on those consolidated financial statements.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Avanxo’s Group and Belatrix’s Group, which were acquired on February 1, 2019 and August 9, 2019, respectively, and whose financial statements constitutes in aggregate 8% and 6% of net assets and revenues, respectively of the consolidated financial statements of Globant S.A. as of December 31, 2019. Accordingly, our audit did not include the internal control over financial reporting at Avanxo’s Group and Belatrix’s Group.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

164

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Co. S.A.

Autonomous City of Buenos Aires, Argentina

February 25, 2020

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Deloitte Touche Tomatsu Limited is a private Company limited by guarantee incorporated in England & Wales under Company number 07271800, and its registered office is Hill House, 1 Little new Street, London, EC4a, 3TR, United Kingdom.

d) Changes in internal control over financial reporting

As required by Rule 13a-15(d), under the Securities Exchange Act of 1934, as amended, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the period covered since the last annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on this evaluation, it has been determined that there has been no change during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

See “Directors, Senior Management and Employees—Board Practices—Board Committees—Audit Committee.” Our Board of Directors has determined that Mario Vázquez qualifies as an “audit committee financial expert” under applicable SEC rules.

165

ITEM 16B. CODE OF ETHICS.

Effective as of July 23, 2014, we adopted a code of business conduct and ethics which sets the guidelines and principles necessary for promoting and assuring good behavior within the organization. A copy of that code is available on our website at investors.globant.com/code-of-ethics. Any amendments to such code will be disclosed on our website.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table provides information on the aggregate fees billed by our principal accountants, Deloitte & Co. S.A. and affiliates, classified by type of service rendered for the periods indicated, in thousands of dollars:

|  | 2019 |  |  | 2018 |
|  | ($ in thousands) |
Audit Fees (1) |  |  | 1,264 |  |  |  | 1,137 |
Audit Related Fees (2) |  |  | — |  |  |  | 133 |
Total |  |  | 1,264 |  |  |  | 1,270 |

| (1) | "Audit Fees" includes fees billed for professional services rendered by the principal accountant in connection with the audit of the annual financial statements, certain procedures regarding our quarterly financial results, services in connection with statutory and regulatory filings.

| (2) | “Audit Related Fees” includes fees billed for professional services rendered by the principal accountant and not included under the prior category. These services include, among others, due diligence related to mergers and acquisitions, and fees relating to the issuance of comfort letters and other procedures in connection with our offering of securities.

Audit Committee Approval Policies and Procedure

In accordance with the audit committee's charter, all fees and retention terms relating to audit and non-audit services performed by our independent auditors must be pre-approved by the audit committee. The audit committee makes annual recommendations to the general meeting of shareholders of the company regarding the appointment, replacement, base compensation, evaluation and oversight of the work of the independent auditors to be retained to audit the annual financial statements of the company and review the quarterly financial statements of the company.

The audit committee oversees the relationship with the independent auditors, including discussing with the auditors the planning and staffing of the audit and the nature and rigor of the audit process, receiving and reviewing audit reports, reviewing with the auditors any problems or difficulties the auditors may have encountered in carrying out their responsibilities and any board of directors’ letters provided by the auditors and the company’s response to such letters, and providing the auditors full access to the audit committee and the board of directors to report on all appropriate matters.

The audit committee provides oversight of the company’s auditing, accounting and financial reporting principles, policies, controls, procedures and practices, and reviews significant changes to the foregoing as suggested by the independent auditors, internal auditors or the board of directors.

The audit committee approved all of the services described above and determined that the provision of such services is compatible with maintaining the independence of Deloitte & Co. S.A. and affiliates.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

Not applicable.

166

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE.

Corporate Governance Practices

Our corporate governance practices are governed by Luxembourg law (particularly the law of August 10th, 1915 on commercial companies as amended) and our articles of association.

As a Luxembourg company listed on the NYSE, we are not required to comply with all of the corporate governance listing standards of the NYSE for U.S. listed companies. We, however, believe that our corporate governance practices meet or exceed, in all material respects, the corporate governance standards that are generally required by the NYSE for U.S. listed companies. Below is a summary of the significant ways that our corporate governance practices differ from the corporate governance standards required for listed U.S. companies by the NYSE (provided that our corporate governance practices may differ in non-material ways from the standards required by the NYSE that are not detailed here).

Majority of Independent Directors

Under NYSE standards, U.S. listed companies must have a majority of independent directors. There is no legal obligation under Luxembourg law to have a majority of independent directors on the board of directors.

Non-management Directors’ Meetings

Under NYSE standards, non-management directors must meet at regularly scheduled executive sessions without management present and, if such group includes directors who are not independent, a meeting should be scheduled once per year including only independent directors. Luxembourg law does not require holding of such meetings. For additional information, see “Directors, Senior Management and Employees—Directors and Senior Management.”

Audit Committee

Under NYSE standards, listed U.S. companies are required to have an audit committee composed of independent directors that satisfies the requirements of Rule 10A-3 promulgated under the Exchange Act of 1934. Luxembourg law also provides for an audit committee and related rules. Our articles of association provide that the board of directors may set up an audit committee. The board of directors has set up an Audit Committee and has appointed Messrs. Odeen and Vázquez, and Ms. Rottenberg, with Mr. Vázquez serving as the chairman of our audit committee. Each of Messrs. Odeen and Vázquez, and Ms. Rottenberg satisfies the “independence” requirements within the meaning of Section 303A of the corporate governance rules of the NYSE as well as under Rule 10A-3 under the Exchange Act. For additional information, see “Directors, Senior Management and Employees—Board Practices”.

Under NYSE standards, all audit committee members of listed U.S. companies are required to be financially literate or must acquire such financial knowledge within a reasonable period and at least one of its members shall have experience in accounting or financial administration. In addition, if a member of the audit committee is simultaneously a member of the audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its members may serve, then in each case the board must determine whether the simultaneous service would prevent such member from effectively serving on the listed company’s audit committee and shall publicly disclose its decision. Under Luxembourg law, at least one member of the audit committee must be financially literate and the committee members as a whole shall have competence relevant to the sector in which the company is operating.

167

Standards for Evaluating Director Independence

Under NYSE standards, the board is required, on a case by case basis, to express an opinion with regard to the independence or lack of independence of each individual director. Neither Luxembourg law nor our articles of association require the board to express such an opinion.

Audit Committee Responsibilities

The NYSE requires certain matters to be set forth in the audit committee charter of U.S. listed companies. Our audit committee charter provides for many of the responsibilities that are expected from such bodies under the NYSE standard; however, the charter does not contain all such responsibilities, including provisions related to setting hiring policies for employees or former employees of independent auditors.

Corporate Governance and Nominating Committee

The NYSE requires that a listed U.S. company has a corporate governance and nominating committee of independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee.

The board of directors has set up corporate governance and nominating committee and has appointed Messrs. Galperin, Odeen and Vázquez, with Mr. Vázquez serving as chairman of our corporate governance and nominating committee. Each of Messrs. Galperin, Vázquez and Odeen satisfies the “independence” requirements within the meaning of Section 303A of the corporate governance rules of the NYSE. For additional information, see “Directors, Senior Management and Employees— Board Practices”.

Compensation Committee

The NYSE requires that a listed U.S. company have a compensation committee of independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee.

The current members of our compensation committee are Messrs. Vázquez, Odeen and Galperin, with Mr. Vázquez serving as chairman. Each of Messrs. Vázquez, Odeen and Galperin satisfies the “independence” requirements within the meaning of Section 303A of the corporate governance rules of the NYSE. For additional information, see “Directors, Senior Management and Employees—Board Practices”.

Shareholder Voting on Equity Compensation Plans

Under NYSE standards, shareholders of U.S. listed companies must be given the opportunity to vote on equity compensation plans and material revisions thereto, except for employment inducement awards, certain grants, plans and amendments in the context of mergers and acquisitions, and certain specific types of plans. Neither Luxembourg corporate law nor our articles of incorporation require shareholder approval of equity based compensation plans. Luxembourg law only requires approval of the board of directors for the adoption of equity based compensation plans.

Code of Business Conduct and Ethics

Under NYSE standards, listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. Effective as of July 23, 2014 we adopted a code of business conduct and ethics applicable to our principal executive, financial and accounting officers and all persons performing similar functions. A copy of that code is available on our website at www.globant.com.

168

Chief Executive Officer Certification

A chief executive officer of a U.S. company listed on NYSE must annually certify that he or she is not aware of any violation by the company of NYSE corporate governance standards. In accordance with NYSE rules applicable to foreign private issuers, our chief executive officer is not required to provide NYSE with this annual compliance certification. However, in accordance with NYSE rules applicable to all listed companies, our chief executive officer must promptly notify NYSE in writing after any of our executive officers becomes aware of any noncompliance with any applicable provision of NYSE's corporate governance standards. In addition, we must submit an executed written affirmation annually and an interim written affirmation each time a change occurs to the board or the audit committee.

ITEM 16H. MINE SAFETY DISCLOSURE.

Not applicable.

169

PART III.

ITEM 17. FINANCIAL STATEMENTS.

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS.

Our Consolidated Financial Statements are included at the end of this annual report.

ITEM 19. EXHIBITS.

The following exhibits are filed or incorporated by reference as part of this annual report:

170

Exhibit No. |  | Description
1.1 |  |  | Amended and Restated Articles of Association, dated November 29, 2019.
2.1 |  |  | Description of Capital Stock.
4.1 |  |  | Lease, dated May 31, 2010, by and between Laminar S.A. de Inversiones Inmobiliarias and Sistemas Globales S.A.; incorporated by reference to Exhibit 10.3 to the Registrant's Registration Statement on Form F-1 (SEC File No. 333-190841), filed with the SEC on August 27, 2013.
4.2 |  |  | Globant S.A. 2014 Equity Incentive Plan; incorporated by reference to Exhibit 10.4 to the Registrant's Registration Statement on Form F-1 (SEC File No. 333-190841), filed with the SEC on May 28, 2014.
4.3 |  |  | Amendment No. 1 to the Globant S.A. 2014 Equity Incentive Plan; incorporated by reference to Exhibit 99.2 to the Registrant's Registration Statement on Form S-8 (SEC File No. 333-211835), filed with the SEC on June 3, 2016.
4.4 |  |  | Amendment No. 2 to the Globant S.A. 2014 Equity Incentive Plan; incorporated by reference to Exhibit 99.3 to the Registrant's Registration Statement on Form S-8 (SEC File No. 333-232022), filed with the SEC on June 7, 2019.
4.5 |  |  | Form of Nonstatutory Stock Option Notice; incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form F-1 (SEC File No. 333-190841), filed with the SEC on May 28, 2014.
4.6 |  |  | Form of Nonstatutory Stock Option Notice — International; incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form F-1 (SEC File No. 333-190841), filed with the SEC on May 28, 2014.
4.7 |  |  | Form of Restricted Stock Unit Notice and Restricted Stock Unit Agreement.
4.8 |  |  | Equityholders Additional Agreement, dated May 7, 2012, by and among Paldwick S.A., Martín Migoya, Martín Gonzalo Umaran, Néstor Augusto Nocetti, Guibert Andrés Englebienne, Riverwood Capital LLC, RW Holdings S.à. r.l., ITO Holdings S.à. r.l., Endeavor Global, Inc. and IT Outsourcing S.L.; incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form F-1 (SEC File No. 333-190841), filed with the SEC on May 28, 2014.
4.9 |  |  | Second Amended and Restated Credit Agreement, dated February 6, 2020, by and among Globant, LLC, as borrower, HSBC Bank USA, National Association, Citibank N.A., BNP Paribas, BBVA USA, Truist Bank, US Bank National Association, Silicon Valley Bank, JPMorgan Chase Bank, N.A, Bank of America, N.A, as lenders, and HSBC Bank USA, N.A., as administrative agent, issuing bank and swingline lender.
4.10 |  |  | Guaranty, dated August 3, 2017, made by Globant S.A. (Luxembourg) in favor of HSBC Bank USA, N.A., as administrative agent, incorporated by reference to Exhibit 4.8 to the Registrant's Annual Report on Form 20-F (SEC File No. 001-36535), filed with the SEC on April 13, 2018.
4.11 |  |  | Guaranty, dated August 3, 2017, made by Globant, S.A. (Spain) in favor of HSBC Bank USA, N.A., as administrative agent, incorporated by reference to Exhibit 4.9 to the Registrant's Annual Report on Form 20-F (SEC File No. 001-36535), filed with the SEC on April 13, 2018.
4.12 |  |  | Security Agreement, dated August 3, 2017, by and between Globant, LLC, as grantor, and HSBC Bank USA, N.A., as administrative agent, incorporated by reference to Exhibit 4.10 to the Registrant's Annual Report on Form 20-F (SEC File No. 001-36535), filed with the SEC on April 13, 2018.
4.13 |  |  | Share Purchase Agreement, dated January 17, 2019, by and among the sellers identified therein and Globant España S.A. (sociedad unipersonal), as purchaser; incorporated by reference to Exhibit 4.12 to the Registrant's Annual Report on Form 20-F (SEC File No. 001-36535), filed with the SEC on March 29, 2019.
4.14 |  |  | Equity Purchase Agreement, dated August 9, 2019, by and among the sellers identified therein and Globant España S.A. (sociedad unipersonal) and Software Product Creation S.L., as purchasers.
8.1 |  |  | List of Subsidiaries
12.1 |  |  | Certification of Martín Migoya, Chief Executive Officer of Globant S.A., pursuant to Section 302 of the Sarbanes Oxley Act of 2002
12.2 |  |  | Certification of Juan Ignacio Urthiague, Chief Financial Officer of Globant, S.A., pursuant to Section 302 of the Sarbanes Oxley Act of 2002
13.1 |  |  | Certification of Martín Migoya, Chief Executive Officer of Globant S.A.pursuant to Section 906 of the Sarbanes Oxley Act of 2002
13.2 |  |  | Certification of Juan Ignacio Urthiague, Chief Financial Officer of Globant, S.A., pursuant to Section 906 of the Sarbanes Oxley Act of 2002
15.1 |  |  | Consent of Deloitte & Co. S.A.
101.INS |  |  | XBRL Instance Document
101.SCH |  |  | XBRL Taxonomy Extension Schema Document
101.CAL |  |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  |  | XBRL Taxonomy Extension Presentation Linkbase Document

171

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Date: February 28, 2020

| GLOBANT S.A.
| By: | /s/ Juan Ignacio Urthiague
| Name: | Juan Ignacio Urthiague
| Title: | Chief Financial Officer

172

GLOBANT S.A.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019 |
Report of Independent Registered Public Accounting Firm | F-3
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years ended December 31, 2019, 2018 and 2017 | F-5
Consolidated Statements of Financial Position as of December 31, 2019 and 2018 | F-7
Consolidated Statements of Changes in Equity for the Years ended December 31, 2019, 2018 and 2017 | F-9
Consolidated Statements of Cash Flows for the Years ended December 31, 2019, 2018 and 2017 | F-11
Notes to the Consolidated Financial Statements | F-13

F-1

|  | Globant S.A.
|  | Consolidated Financial Statements as of December 31, 2019 and December 31, 2018 and for each of the three years in the period ended December 31, 2019

F-2

| Deloitte & Co. S.A. Florida 234, 5° piso C1005AAF Ciudad Autónoma de Buenos Aires Argentina Tel.: (+54-11) 4320-2700 Fax: (+54-11) 4325-8081/4326-7340 www.deloitte.com/ar

Page 1 of 2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Globant S.A.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Globant S.A. and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-3

Page 2 of 2

Revenue Recognition - Fixed price contracts - Refer to Notes 3.3 and 4.1 to the consolidated financial statements

Critical Audit Matter Description

The Company’s services are performed mainly under two principal types of contracts: fixed-price and time-and-materials. In recognizing revenue for fixed-price contracts the Company applies an input or output method depending on the nature of the project and the agreement with the customer. The application of an input method is a significant management judgment that involves estimating the progress of the Company’s efforts relative to the total expected inputs necessary to satisfy a performance obligation.

We identified the revenue recognition for fixed price contracts using the input method as a critical audit matter because of the subjectivity in estimating the progress towards satisfying the performance obligation. This required a high degree of auditor judgment in evaluating the audit evidence supporting the application of the input method used to recognize revenue and a higher extent of audit effort to evaluate the reasonableness of the total estimated amount of revenue recognized for ongoing fixed-price contracts as of year-end.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s determination of the progress towards satisfying the performance obligation related to fixed price contracts using the input method and the resulting revenue recognized, included the following, among others:

| • | We tested the effectiveness of controls relating to the revenue recognition process, including controls over the determination of the progress towards to complete satisfaction of fixed-price contracts.

| • | We evaluated management’s ability to reasonably estimate the progress towards complete satisfaction by comparing actual information to prior year estimates for performance obligations of contracts that have been fulfilled.

| • | We selected a sample of ongoing fixed-price contracts as of year-end and performed the following procedures for each selection:

| – | Read the contracts and based on the terms and conditions evaluated, assessed the reasonableness of the information used in the estimate.

| – | Evaluated the appropriateness of and consistency in the application of management’s policies and methodologies to estimate progress towards satisfying the performance obligation.

| – | Evaluated the reasonableness of the progress towards satisfying the performance obligation by testing actual cost incurred and the mathematical accuracy of the estimate.

/s/ Deloitte & Co. S.A. |
Autonomous City of Buenos Aires, Argentina |
February 25, 2020 |

We have served as the Company's auditor since 2009.

F-4

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.

Deloitte Touche Tomatsu Limited is a private Company limited by guarantee incorporated in England & Wales under Company number 07271800, and its registered office is Hill House, 1 Little new Street, London, EC4a, 3TR, United Kingdom.

F-5

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

(in thousands of U.S. dollars, except per share amounts)

|  |  |  |  | For the year ended December 31, |
|  | Notes |  |  | 2019 |  |  | 2018 |  |  | 2017 |
Revenues (1) |  | 5 |  |  |  | 659,325 |  |  |  | 522,310 |  |  |  | 413,439 |
Cost of revenues (2) (4) |  | 6.1 |  |  |  | (405,164 | ) |  |  | (318,554 | ) |  |  | (263,171 | )
Gross profit |  |  |  |  |  | 254,161 |  |  |  | 203,756 |  |  |  | 150,268 |
Selling, general and administrative expenses (3) (4) |  | 6.2 |  |  |  | (172,478 | ) |  |  | (133,187 | ) |  |  | (110,813 | )
Net impairment losses on financial assets (5) |  |  |  |  |  | (228 | ) |  |  | (3,469 | ) |  |  | (1,581 | )
Other operating expense, net (6) |  |  |  |  |  | (720 | ) |  |  | (306 | ) |  |  | (4,708 | )
Profit from operations |  |  |  |  |  | 80,735 |  |  |  | 66,794 |  |  |  | 33,166 |
Gain on transactions with bonds |  | 3.18 |  |  |  | 1,569 |  |  |  | — |  |  |  | — |
Finance income |  | 7 |  |  |  | 13,643 |  |  |  | 11,418 |  |  |  | 7,956 |
Finance expense |  | 7 |  |  |  | (26,801 | ) |  |  | (16,968 | ) |  |  | (11,036 | )
Finance expense, net |  | 7 |  |  |  | (13,158 | ) |  |  | (5,550 | ) |  |  | (3,080 | )
Share of results of investment in associates |  | 11.2 |  |  |  | (224 | ) |  |  | — |  |  |  | — |
Other income, net (7) |  |  |  |  |  | 110 |  |  |  | 6,220 |  |  |  | 8,458 |
Profit before income tax |  |  |  |  |  | 69,032 |  |  |  | 67,464 |  |  |  | 38,544 |
Income tax |  | 8.1 |  |  |  | (15,017 | ) |  |  | (15,868 | ) |  |  | (8,081 | )
Net income for the year |  |  |  |  |  | 54,015 |  |  |  | 51,596 |  |  |  | 30,463 |
Other comprehensive income (loss) net of income tax effects |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Items that may be reclassified subsequently to profit and loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Exchange differences on translating foreign operations |  |  |  |  |  | (400 | ) |  |  | (871 | ) |  |  | (265 | )
- Net change in fair value on financial assets measured at FVOCI |  |  |  |  |  | (373 | ) |  |  | (12 | ) |  |  | (27 | )
- Gains and losses on cash flow hedges |  |  |  |  |  | 352 |  |  |  | — |  |  |  | — |
Total comprehensive income for the year |  |  |  |  |  | 53,594 |  |  |  | 50,713 |  |  |  | 30,171 |
Net income attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owners of the Company |  |  |  |  |  | 54,015 |  |  |  | 51,677 |  |  |  | 30,539 |
Non-controlling interest |  |  |  |  |  | — |  |  |  | (81 | ) |  |  | (76 | )
Net income for the year |  |  |  |  |  | 54,015 |  |  |  | 51,596 |  |  |  | 30,463 |
Total comprehensive income for the year attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owners of the Company |  |  |  |  |  | 53,594 |  |  |  | 50,794 |  |  |  | 30,247 |
Non-controlling interest |  |  |  |  |  | — |  |  |  | (81 | ) |  |  | (76 | )
Total comprehensive income for the year |  |  |  |  |  | 53,594 |  |  |  | 50,713 |  |  |  | 30,171 |

F-6

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

(in thousands of U.S. dollars, except per share amounts)

|  |  |  |  |  | For the year ended December 31, |
|  |  | Notes |  |  | 2019 |  |  | 2018 |  |  | 2017 |
Earnings per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 9 |  |  |  | 1.48 |  |  |  | 1.45 |  |  |  | 0.87 |
Diluted |  |  | 9 |  |  |  | 1.43 |  |  |  | 1.41 |  |  |  | 0.84 |
Weighted average of outstanding shares (in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 9 |  |  |  | 36,586 |  |  |  | 35,746 |  |  |  | 34,919 |
Diluted |  |  | 9 |  |  |  | 37,674 |  |  |  | 36,685 |  |  |  | 36,094 |

| (1) | Includes transactions with related parties of 1,419, 5,937 and 5,590 for 2019, 2018 and 2017, respectively. See note 23.1.

| (2) | Includes depreciation and amortization expense of 7,350, 4,022 and 4,339 for 2019, 2018 and 2017, respectively. See note 6.1.

| (3) | Includes depreciation and amortization expense of 16,905, 16,521 and 11,789 for 2019, 2018 and 2017, respectively. See note 6.2.

| (4) | Includes share-based compensation expense of 4,976, 4,248 and 5,666 under cost of revenues; and 14,912, 8,665 and 8,798 under selling, general and administrative expenses for 2019, 2018 and 2017, respectively. See note 6.

| (5) | Includes a loss of 275 and 3,421 and a gain of 5 on impairment of trade receivables for 2019, 2018 and 2017, respectively (see note 12). Includes a recovery of impairment of tax credits of 47 for 2019, an impairment loss of tax credits of 48 and 1,586 for 2018 and 2017, respectively (see note 4.4).

| (6) | Includes an impairment of intangibles assets of 720, 306 (note 4.6) and 4,708 (note 4.10) for 2019, 2018 and 2017, respectively.

| (7) | Includes as of December 31,2019, 2018 and 2017 a loss of 85, a gain of 6,700 and 6,735 on remeasurement of the contingent consideration of Avanxo, Pointsource, Clarice, L4, WAE and Ratio explained in note 28.9.1. Includes as of December 31, 2018 and 2017 a gain of 1,611 and 1,726 related to the remeasurement at fair value of the call and put option over non-controlling interest explained in note 28.9.2, respectively. In 2018 includes the derecognition of the call option over non-controlling interest of 455 explained in note 25.2. In 2018 includes the loss of 1,038 related to the settlement agreed with WAE former owners (note 28.9.1). In 2018 includes the impairment of the investment in Collokia of 800 explained in note 11.2.

The accompanying notes 1 to 32 are an integral part of these consolidated financial statements

F-7

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2019 AND 2018

(in thousands of U.S. dollars)

|  |  |  |  | As of December 31, |
|  | Notes |  |  | 2019 |  |  | 2018 |
ASSETS |  |  |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | 10 |  |  |  | 62,721 |  |  |  | 77,606 |
Investments |  | 11.1 |  |  |  | 19,780 |  |  |  | 8,635 |
Trade receivables (1) |  | 12 |  |  |  | 156,676 |  |  |  | 110,898 |
Other assets |  | 16 |  |  |  | 13,439 |  |  |  | — |
Other receivables |  | 13 |  |  |  | 19,308 |  |  |  | 15,341 |
Other financial assets (2) |  |  |  |  |  | 4,527 |  |  |  | 550 |
Total current assets |  |  |  |  |  | 276,451 |  |  |  | 213,030 |
Non-current assets |  |  |  |  |  |  |  |  |  |  |
Investments |  | 11.1 |  |  |  | 418 |  |  |  | 527 |
Other assets |  | 16 |  |  |  | 7,796 |  |  |  | — |
Other receivables |  | 13 |  |  |  | 8,810 |  |  |  | 34,197 |
Deferred tax assets |  | 8.2 |  |  |  | 26,868 |  |  |  | 16,916 |
Investment in associates |  | 11.2 |  |  |  | 3,776 |  |  |  | 4,000 |
Other financial assets (3) |  |  |  |  |  | 1,683 |  |  |  | 345 |
Property and equipment |  | 14 |  |  |  | 87,533 |  |  |  | 51,460 |
Intangible assets |  | 15 |  |  |  | 27,110 |  |  |  | 11,778 |
Right-of-use asset |  | 27 |  |  |  | 58,781 |  |  |  | — |
Goodwill |  | 25.14 |  |  |  | 188,538 |  |  |  | 104,846 |
Total non-current assets |  |  |  |  |  | 411,313 |  |  |  | 224,069 |
TOTAL ASSETS |  |  |  |  |  | 687,764 |  |  |  | 437,099 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |  |  |
Trade payables |  | 17 |  |  |  | 31,487 |  |  |  | 17,578 |
Payroll and social security taxes payable |  | 18 |  |  |  | 72,252 |  |  |  | 58,535 |
Borrowings |  | 19 |  |  |  | 1,198 |  |  |  | — |
Other financial liabilities (4) |  |  |  |  |  | 8,937 |  |  |  | 9,347 |
Lease liabilities |  | 27 |  |  |  | 19,439 |  |  |  | — |
Tax liabilities |  | 20 |  |  |  | 12,510 |  |  |  | 7,399 |
Other liabilities |  |  |  |  |  | 368 |  |  |  | 44 |
Total current liabilities |  |  |  |  |  | 146,191 |  |  |  | 92,903 |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |
Trade payables |  | 17 |  |  |  | 5,500 |  |  |  | — |
Borrowings |  | 19 |  |  |  | 50,188 |  |  |  | — |
Other financial liabilities |  | 25.11 |  |  |  | 1,617 |  |  |  | 3,418 |
Lease liabilities |  | 27 |  |  |  | 41,924 |  |  |  | — |
Deferred tax liabilities |  | 8.2 |  |  |  | 1,028 |  |  |  | — |
Provisions for contingencies |  | 21 |  |  |  | 2,602 |  |  |  | 2,862 |
Total non-current liabilities |  |  |  |  |  | 102,859 |  |  |  | 6,280 |
TOTAL LIABILITIES |  |  |  |  |  | 249,050 |  |  |  | 99,183 |
Capital and reserves |  |  |  |  |  |  |  |  |  |  |
Issued capital |  |  |  |  |  | 44,356 |  |  |  | 43,158 |
Additional paid-in capital |  |  |  |  |  | 157,537 |  |  |  | 109,559 |
Other reserves |  |  |  |  |  | (2,557 | ) |  |  | (2,136 | )
Retained earnings |  |  |  |  |  | 239,378 |  |  |  | 187,335 |
Total equity |  |  |  |  |  | 438,714 |  |  |  | 337,916 |
TOTAL EQUITY AND LIABILITIES |  |  |  |  |  | 687,764 |  |  |  | 437,099 |

F-8

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2019 AND 2018

(in thousands of U.S. dollars)

| (1) | Includes balances due from related parties of 91 and 993 as of December 31, 2019 and 2018, respectively. See note 23.1.

| (2) | Includes the fair value of convertible notes of 3,236 and 106 (notes 3.12.9.1, 3.12.9.2 and 3.12.9.3) as of December 31, 2019 and 2018, respectively, the fair value of foreign exchange forward contracts of 1,291 and 44 as of December 31, 2019 and 2018, respectively (notes 28.10 and 28.11) and a financial asset related to the acquisition of Clarice of 400 as of December 31, 2018 (note 25.1).

| (3) | Includes 1,383 and 345 of guarantee payments related to the future lease of a property under construction as of December 31, 2019 and 2018, respectively. Includes convertible notes of 300 (note 3.12.9.4) as of December 31, 2019.

| (4) | Includes other financial liabilities related to business combinations of 8,937 and 9,335 as of December 31, 2019 and 2018, respectively (note 25.11) and the fair value of foreign exchange forward contracts of 12 as of December 31, 2018, respectively (notes 28.10 and 28.11).

The accompanying notes 1 to 32 are an integral part of these consolidated financial statements

F-9

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

(in thousands of U.S. dollars except number of shares issued)

|  | Number of Shares Issued (1) |  |  | Issued capital |  |  | Additional paid-in capital |  |  | Retained earnings |  |  | Foreign currency translation reserve |  |  | Investment revaluation reserve |  |  | Attributable to owners of the Parent |  |  | Non- controlling interests |  |  | Total |
Balance at January 1, 2017 |  |  | 34,647,643 |  |  |  | 41,576 |  |  |  | 62,790 |  |  |  | 105,119 |  |  |  | (961 | ) |  |  | — |  |  |  | 208,524 |  |  |  | 36 |  |  |  | 208,560 |
Issuance of shares under share-based compensation plan (see note 29.1) |  |  | 425,640 |  |  |  | 511 |  |  |  | 7,926 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,437 |  |  |  | — |  |  |  | 8,437 |
Issuance of shares under subscription agreement (see note 29.1) |  |  | 153,481 |  |  |  | 184 |  |  |  | 5,511 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,695 |  |  |  | — |  |  |  | 5,695 |
Share-based compensation plan (see note 24) |  |  | — |  |  |  | — |  |  |  | 10,501 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,501 |  |  |  | — |  |  |  | 10,501 |
Other comprehensive income (loss) for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (265 | ) |  |  | (27 | ) |  |  | (292 | ) |  |  | — |  |  |  | (292 | )
Net income for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 30,539 |  |  |  | — |  |  |  | — |  |  |  | 30,539 |  |  |  | (76 | ) |  |  | 30,463 |
Balance at December 31, 2017 |  |  | 35,226,764 |  |  |  | 42,271 |  |  |  | 86,728 |  |  |  | 135,658 |  |  |  | (1,226 | ) |  |  | (27 | ) |  |  | 263,404 |  |  |  | (40 | ) |  |  | 263,364 |

|  | Number of Shares Issued (1) |  |  | Issued capital |  |  | Additional paid-in capital |  |  | Retained earnings |  |  | Foreign currency translation reserve |  |  | Investment revaluation reserve |  |  | Attributable to owners of the Parent |  |  | Non- controlling interests |  |  | Total |
Issuance of shares under share-based compensation plan (see note 29.1) |  |  | 674,901 |  |  |  | 810 |  |  |  | 8,275 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,085 |  |  |  | — |  |  |  | 9,085 |
Issuance of shares under subscription agreement (see note 29.1) |  |  | 63,997 |  |  |  | 77 |  |  |  | 3,140 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,217 |  |  |  | — |  |  |  | 3,217 |
Share-based compensation plan (see note 24) |  |  | — |  |  |  | — |  |  |  | 11,537 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,537 |  |  |  | — |  |  |  | 11,537 |
Other comprehensive income (loss) for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (871 | ) |  |  | (12 | ) |  |  | (883 | ) |  |  | — |  |  |  | (883 | )
Acquisition of non-controlling interest (see note 25.2) |  |  | — |  |  |  | — |  |  |  | (121 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (121 | ) |  |  | 121 |  |  |  | — |
Net income for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 51,677 |  |  |  | — |  |  |  | — |  |  |  | 51,677 |  |  |  | (81 | ) |  |  | 51,596 |
Balance at December 31, 2018 |  |  | 35,965,662 |  |  |  | 43,158 |  |  |  | 109,559 |  |  |  | 187,335 |  |  |  | (2,097 | ) |  |  | (39 | ) |  |  | 337,916 |  |  |  | — |  |  |  | 337,916 |

F-10

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

(in thousands of U.S. dollars except number of shares issued)

|  | Number of Shares Issued (1) |  |  | Issued capital |  |  | Additional paid-in capital |  |  | Retained earnings |  |  | Foreign currency translation reserve |  |  | Investment revaluation reserve and cash flow hedge reserve |  |  | Total |
Balance at January 1, 2019 |  |  | 35,965,662 |  |  |  | 43,158 |  |  |  | 109,559 |  |  |  | 187,335 |  |  |  | (2,097 | ) |  |  | (39 | ) |  |  | 337,916 |
Adjustment on initial application of IFRS 16 (note 2.1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,972 | ) |  |  | — |  |  |  | — |  |  |  | (1,972 | )
Balance at January 1, 2019 restated |  |  | 35,965,662 |  |  |  | 43,158 |  |  |  | 109,559 |  |  |  | 185,363 |  |  |  | (2,097 | ) |  |  | (39 | ) |  |  | 335,944 |
Issuance of shares under share-based compensation plan (see note 29.1) |  |  | 899,100 |  |  |  | 1,079 |  |  |  | 21,475 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 22,554 |
Issuance of shares under subscription agreement (see note 29.1) |  |  | 98,857 |  |  |  | 119 |  |  |  | 7,651 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,770 |
Share-based compensation plan (see note 24) |  |  | — |  |  |  | — |  |  |  | 18,852 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 18,852 |
Other comprehensive income (loss) for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (400 | ) |  |  | (21 | ) |  |  | (421 | )
Net income for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 54,015 |  |  |  | — |  |  |  | — |  |  |  | 54,015 |
Balance at December 31, 2019 |  |  | 36,963,619 |  |  |  | 44,356 |  |  |  | 157,537 |  |  |  | 239,378 |  |  |  | (2,497 | ) |  |  | (60 | ) |  |  | 438,714 |

(1) All shares are issued, authorized and fully paid. Each share is issued at a nominal value of $1.20 per share and entitles to one vote.

The accompanying notes 1 to 32 are an integral part of these consolidated financial statements

F-11

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

(in thousands of U.S. dollars)

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Cash flows from operating activities |  |  |  |  |  |  |  |  |  |  |  |
Net income for the year |  |  | 54,015 |  |  |  | 51,596 |  |  |  | 30,463 |
Adjustments to reconcile net income for the year to net cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Share-based compensation expense |  |  | 15,357 |  |  |  | 10,551 |  |  |  | 12,865 |
Current income tax (note 8.1) |  |  | 19,327 |  |  |  | 23,324 |  |  |  | 14,053 |
Deferred income tax (note 8.1) |  |  | (4,310 | ) |  |  | (7,456 | ) |  |  | (5,972 | )
Depreciation of property and equipment (note 14) |  |  | 14,542 |  |  |  | 11,230 |  |  |  | 9,053 |
Depreciation of right-of-use assets (note 27) |  |  | 14,584 |  |  |  | — |  |  |  | — |
Amortization of intangible assets (note 15) |  |  | 9,713 |  |  |  | 9,313 |  |  |  | 7,075 |
Impairment of intangible assets (note 4.6 and 4.10) |  |  | 720 |  |  |  | 306 |  |  |  | 4,708 |
Net impairment losses on financial assets (note 4.4) |  |  | 228 |  |  |  | 3,469 |  |  |  | 1,581 |
Impairment of investments in associates (note 11.2) |  |  | — |  |  |  | 800 |  |  |  | — |
Allowance for claims and lawsuits (note 21) |  |  | — |  |  |  | 2,070 |  |  |  | 527 |
Loss (gain) on remeasurement of contingent consideration (note 28.9.1) |  |  | 85 |  |  |  | (6,700 | ) |  |  | (6,735 | )
Gain on transactions with bonds (note 3.18) |  |  | (1,569 | ) |  |  | — |  |  |  | — |
Net gain on remeasurement of valuation of call and put option over non-controlling interest and on derecognition of the call option (note 28.9.2) |  |  | — |  |  |  | (1,156 | ) |  |  | (1,726 | )
Accrued interest |  |  | 4,151 |  |  |  | 270 |  |  |  | 404 |
Interest received |  |  | 734 |  |  |  | 401 |  |  |  | — |
Net gain arising on financial assets measured at FVPL |  |  | (1,285 | ) |  |  | (2,763 | ) |  |  | (303 | )
Net gain arising on financial assets measured at FVOCI |  |  | (58 | ) |  |  | (258 | ) |  |  | (240 | )
Net gain arising on financial assets measured at amortised cost (note 7) |  |  | (99 | ) |  |  | — |  |  |  | — |
Exchange differences |  |  | 8,291 |  |  |  | 6,989 |  |  |  | 2,645 |
Share of results of investment in associates |  |  | 224 |  |  |  | — |  |  |  | — |
Changes in working capital: |  |  |  |  |  |  |  |  |  |  |  |
Net increase in trade receivables |  |  | (38,945 | ) |  |  | (36,356 | ) |  |  | (25,599 | )
Net (increase) decrease in other receivables |  |  | (8,432 | ) |  |  | (10,559 | ) |  |  | 1,240 |
Net increase in other assets |  |  | (9,967 | ) |  |  | — |  |  |  | — |
Net increase in trade payables |  |  | 7,235 |  |  |  | 2,479 |  |  |  | 4,341 |
Net increase in payroll and social security taxes payable |  |  | 8,766 |  |  |  | 21,885 |  |  |  | 7,576 |
Net increase (decrease) in tax liabilities |  |  | 2,079 |  |  |  | 939 |  |  |  | (700 | )
Utilization of provision for contingencies (note 21) |  |  | (194 | ) |  |  | (222 | ) |  |  | (1,320 | )
Cash provided by operating activities |  |  | 95,192 |  |  |  | 80,152 |  |  |  | 53,936 |
Income tax paid |  |  | (17,055 | ) |  |  | (12,955 | ) |  |  | (11,383 | )
Proceeds received from reimbursement of income tax |  |  | 1,572 |  |  |  | — |  |  |  | 436 |
Net cash provided by operating activities |  |  | 79,709 |  |  |  | 67,197 |  |  |  | 42,989 |
Cash flows from investing activities |  |  |  |  |  |  |  |  |  |  |  |
Acquisition of property and equipment (2) |  |  | (20,375 | ) |  |  | (19,171 | ) |  |  | (19,605 | )
Proceeds from disposals of property and equipment and intangibles |  |  | 102 |  |  |  | 149 |  |  |  | 468 |
Acquisition of intangible assets (3) |  |  | (11,617 | ) |  |  | (9,711 | ) |  |  | (8,447 | )
Acquisition of investment in sovereign bonds (note 3.18) |  |  | (6,000 | ) |  |  | — |  |  |  | — |
Proceeds of investment in sovereign bonds (note 3.18) |  |  | 7,569 |  |  |  | — |  |  |  | — |
(Payments) proceeds related to forward and future contracts |  |  | (651 | ) |  |  | 2,382 |  |  |  | (579 | )
Acquisition of investments measured at FVTPL |  |  | (143,763 | ) |  |  | (99,482 | ) |  |  | (137,788 | )
Proceeds from investments measured at FVTPL |  |  | 129,910 |  |  |  | 103,083 |  |  |  | 140,144 |
Acquisition of investments measured at FVOCI |  |  | (11,684 | ) |  |  | (39,435 | ) |  |  | (13,824 | )
Proceeds from investments measured at FVOCI |  |  | 15,618 |  |  |  | 35,340 |  |  |  | 13,176 |
Acquisition of investments measured at amortised cost |  |  | — |  |  |  | (527 | ) |  |  | — |
Guarantee payments |  |  | (1,038 | ) |  |  | (345 | ) |  |  | — |
Payments to acquire investments in associates |  |  | — |  |  |  | (3,250 | ) |  |  | (469 | )
Acquisition of investment in convertible notes (note 3.12.9.2 to 3.12.9.4) |  |  | (3,350 | ) |  |  | — |  |  |  | — |
Acquisition of business, net of cash (note 25) (1) |  |  | (97,298 | ) |  |  | (4,137 | ) |  |  | (19,149 | )
Payments of earn-outs related to acquisition of business |  |  | (8,981 | ) |  |  | (11,013 | ) |  |  | (11,461 | )
Net cash used in investing activities |  |  | (151,558 | ) |  |  | (46,117 | ) |  |  | (57,534 | )

F-12

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

(in thousands of U.S. dollars)

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Cash flows from financing activities |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from the issuance of shares under the share-based compensation plan (note 29.1) |  |  | 15,822 |  |  |  | 7,040 |  |  |  | 5,296 |
Proceeds from subscription agreements (note 29.1) |  |  | 7,770 |  |  |  | 3,217 |  |  |  | 5,695 |
Proceeds from borrowings (note 19) |  |  | 90,523 |  |  |  | — |  |  |  | 22,000 |
Repayment of borrowings (note 19) |  |  | (40,806 | ) |  |  | (6,004 | ) |  |  | (16,198 | )
Payments of principal portion of lease liabilities (note 27) |  |  | (15,358 | ) |  |  | — |  |  |  | — |
Convertible notes (note 3.12.9.1) |  |  | — |  |  |  | — |  |  |  | (100 | )
Cash provided by financing activities |  |  | 57,951 |  |  |  | 4,253 |  |  |  | 16,693 |
Payments of lease liabilities interest (note 27) |  |  | (475 | ) |  |  | — |  |  |  | — |
Interest paid (note 19) |  |  | (764 | ) |  |  | (159 | ) |  |  | (95 | )
Net cash provided by financing activities |  |  | 56,712 |  |  |  | 4,094 |  |  |  | 16,598 |
Effect of exchange rate changes on cash and cash equivalents |  |  | 252 |  |  |  | (93 | ) |  |  | (60 | )
(Decrease) increase in cash and cash equivalents |  |  | (14,885 | ) |  |  | 25,081 |  |  |  | 1,993 |
Cash and cash equivalents at beginning of the year |  |  | 77,606 |  |  |  | 52,525 |  |  |  | 50,532 |
Cash and cash equivalents at end of the year |  |  | 62,721 |  |  |  | 77,606 |  |  |  | 52,525 |

(1) Cash paid for assets acquired and liabilities assumed in the acquisition of subsidiaries (note 25):

Supplemental information |  |  |  |  |  |  |  |  |  |  |  |
Cash paid |  |  | 103,978 |  |  |  | 4,328 |  |  |  | 21,300 |
Less: cash and cash equivalents acquired |  |  | (6,678 | ) |  |  | (191 | ) |  |  | (2,151 | )
Total consideration paid net of cash and cash equivalents acquired |  |  | 97,300 |  |  |  | 4,137 |  |  |  | 19,149 |

| (2) | In 2019, 2018 and 2017, there were 2,179, 4,316 and 1,264 of acquisition of property and equipment financed with trade payables, respectively. In 2019, 2018 and 2017, the Company paid 4,316, 1,264 and 478 related to property and equipment acquired in 2018, 2017 and 2016, respectively. In 2019, 2018 and 2017 there were 1,862, 3,301 and 2,861 of advances paid. Finally, 2019 excludes 30,661 of advances reclassified from other receivables which was a non-cash transaction.

| (3) | In 2018 and 2017 there were 217 and 344 of acquisition of intangibles financed with trade payables, respectively. In 2019, 2018 and 2017, the Company paid 217, 344 and 7 related to intangibles acquired in 2018, 2017 and 2016, respectively.

The accompanying notes 1 to 32 are an integral part of these consolidated financial statements

F-13

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 1 – COMPANY OVERVIEW AND BASIS OF PRESENTATION

Globant S.A. is a company organized in the Grand Duchy of Luxembourg, primarily engaged in building digital journeys that matter to millions of users through its subsidiaries (hereinafter the “Company” or “Globant” or “Globant Group”). The Company specializes in providing innovative software solutions services by leveraging emerging technologies and trends.

The Company's principal operating subsidiaries and countries of incorporation as of December 31, 2019 were the following: Sistemas UK Limited and We are London Limited in the United Kingdom and Globant LLC in the United States of America (the “U.S.”), Sistemas Globales S.A., IAFH Global S.A., Dynaflows S.A., Avanxo S.A. and BSF S.A. in Argentina, Sistemas Colombia S.A.S., Avanxo Colombia and Belatrix Colombia S.A.S. in Colombia, Global Systems Outsourcing S. de R.L. de C.V. and Avanxo Servicios S.A. de C.V. in Mexico, Sistemas Globales Uruguay S.A. and Difier S.A. in Uruguay, Globant Brasil Consultoria Ltda. and Orizonta Consutoria de Negocios e Tecnología Ltda. in Brazil; Sistemas Globales Chile Asesorías Limitada in Chile, Globant Peru S.A.C., Avanxo Perú and Belatrix Peru S.A.C. in Peru, Globant India Private Limited in India, Globant Bel LLC in Belarus, Small Footprint S.R.L. in Romania, Software Product Creation S.L. in Spain, Globant France S.A.S. in France, Software Product Creation S.L - Dubai Branch in United Arab Emirates and Globant Canada Corp. in Canada.

The Company provides services from development and delivery centers located in United States (San Francisco, New York, Seattle, Raleigh, Chicago and Dallas), Argentina (Buenos Aires, Tandil, Rosario, Tucumán, Córdoba, Resistencia, Bahía Blanca, Mendoza, Mar del Plata and La Plata), Uruguay (Montevideo), Colombia (Bogotá and Medellín), Brazil (São Paulo), Peru (Lima), Chile (Santiago), México (Guadalajara and México City), India (Pune and Bangalore), Spain (Madrid), Belarus (Minsk), Romania (Cluj) and United Kingdom (London). The Company also has client management centers in United States (Houston, San Francisco, New York, Winston-Salem, Redwood City and Miami), Brazil (São Paulo), Colombia (Bogotá), Uruguay (Montevideo), Argentina (Buenos Aires), France (Paris) and the United Kingdom (London). The Company also has centers of software engineering talent and educational excellence, primarily across Latin America.

Most of the revenues are generated through subsidiaries located in the U.S. The Company's workforce is mainly located in Latin America and to a lesser extent in India and U.S.

The Company's registered office address is 37A Avenue J.F. Kennedy L-1855, Luxembourg.

NOTE 2 – BASIS OF PREPARATION OF THESE CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements are presented in thousands of United States dollars ("U.S. dollars") and have been prepared under the historical cost convention except as disclosed in the accounting policies below.

2.1 – Application of new and revised International Financial Reporting Standards

| • | Adoption of new and revised standards

The Company has adopted all of the new and revised standards and interpretations issued by the IASB that are relevant to its operations and that are mandatorily effective at December 31, 2019. The impact of the new and revised standards and interpretations mentioned on these consolidated financial statements is described as follows.

F-14

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Company has initially adopted IFRS 16 Leases from January 1, 2019. The Company has elected the practical expedient to not restate comparative information and has recognised the cumulative effect of initially applying the Standard as an adjustment to the opening balance of retained earnings at January 1, 2019.

The Company has lease contracts for office spaces. Before the adoption of IFRS 16, in an operating lease, the leased property was not capitalised and the lease payments were recognised as rent expense in profit or loss on a straight–line basis over the lease term. Any prepaid rent and accrued rent were recognised under Other receivables and Trade and other payables, respectively.

On adoption of IFRS 16, the Company recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases. These lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities recognised on January 1, 2019, was 6.14%.

Operating lease commitments disclosed as at December 31, 2018 |  |  | 55,222 |
Discounted using the lessee's incremental borrowing rate of at the date of initial application |  |  | 46,887 |
Lease liability recognised as at January 1, 2019 |  |  | 46,887 |

The associated right-of-use assets were measured on a retrospective basis as if IFRS 16 had always been applied.

The net impact on retained earnings on January 1, 2019, was a decrease of 1,972.

The effect of adoption IFRS 16 as at January 1, 2019 (increase/(decrease)) is as follows:

Assets |  |  |  |
Right-of-use assets |  |  | 46,567 |
Prepayments |  |  | (1,652 | )
Liabilities |  |  |  |
Lease liabilities |  |  | 46,887 |
Total adjustment on equity: |  |  |  |
Retained earnings |  |  | (1,972 | )

In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

| • | the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;

| • | reliance on previous assessments on whether leases are onerous;

| • | the accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019, as short-term leases;

| • | the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.

F-15

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Company has also elected not to reassess whether a contract is, or contains a lease at the date of the initial application. Instead, for contracts entered into before the transition date the group relied on its assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.

As a practical expedient, IFRS 16 permits a lessee not to separate non–lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient.

From January 1, 2019, leases are recognised as a right-of-use asset and a corresponding lease liability at the commencement date of the lease. Each payment is allocated between the liability and a finance cost. The finance cost is charged to profit or loss over the lease term so as to produce a constant period rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the lease term on a straight-line basis.

The Company has also adopted the following standards and interpretation that became applicable for annual periods commencing on or after January 1, 2019:

IFRIC 23 | Uncertainty over Income Tax Treatments
Amendments to IFRS 3 and 11 and IAS 12 and 23 | Annual improvements 2015-2017 Cycle
Amendment to IAS 28 | Long-term Interests in Associates and Joint Ventures
Amendment to IFRS 9 | Prepayment Features with Negative Compensation
Amendments to IAS 19 | Plan Amendment, Curtailment or Settlement

Those standards did not have any impact on the Company's accounting policies and did not require retrospective adjustments, except for IFRIC 23 "Uncertainty over Income Tax Treatments" that required a retrospective analysis which concluded that there is a possibility that a loss may have been incurred of 1,768 related to the fiscal years 2014 to 2019. As of December 31, 2019 these matter has not been recorded, it may be subject to inspection by the tax authority and claims may be asserted in the future.

| • | New accounting pronouncements

The Company has not applied the following new and revised IFRSs that have been issued but are not yet mandatorily effective:

Amendments to References to the Conceptual Framework in IFRS Standards1

| Amendment to IFRS 3 | Definition of a business2
| Amendment to IAS 1 and IAS 8 | Definition of material1
| Amendments to IFRS 9, IAS 39 and IFRS 7 | Interest Rate Benchmark Reform1
| Amendments to IAS 1 | Classification of Liabilities as Current or Non-Current 3

1Effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

2Effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period. Earlier application is permitted.

3Effective for annual reporting periods beginning on or after January 1, 2022 and are to be applied retrospectively. Earlier application is permitted.

F-16

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| • | On March 29, 2018, the IASB issued the Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework. The management of the Company does not anticipate that the application of these amendments will have a material impact on the Company's consolidated financial statements. The amendments are effective for annual periods beginning on or after January 1, 2020.

| • | On October 22, 2018, the IASB has issued 'Definition of a Business (Amendments to IFRS 3)' aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets.

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:

| ◦ | clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

| ◦ | narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;

| ◦ | add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;

| ◦ | remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs;

| ◦ | and add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

The management of the Company does not anticipate that the application of this amendment will have a material impact on the Company's consolidated financial statements. This amendment is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period. Earlier application is permitted. The Company has not opted for early application.

| • | On October 31, 2018, the IASB has issued 'Definition of Material (Amendments to IAS 1 and IAS 8)' to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves.

The changes in Definition of Material (Amendments to IAS 1 and IAS 8) all relate to a revised definition of 'material' which is quoted as follows from the final amendments: "Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity". Three new aspects of the new definition should especially be noted:

| ◦ | Obscuring. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Although the term obscuring is new in the definition, it was already part of IAS 1 (IAS 1.30A).

F-17

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| ◦ | Could reasonably be expected to influence. The existing definition referred to 'could influence' which the Board felt might be understood as requiring too much information as almost anything ‘could’ influence the decisions of some users even if the possibility is remote.

| ◦ | Primary users. The existing definition referred only to 'users' which again the Board feared might be understood too broadly as requiring to consider all possible users of financial statements when deciding what information to disclose.

| • | On September 26, 2019, IASB has issued 'Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)' as a first reaction to the potential effects the Interbank Offered Rate ("IBOR") reform could have on financial reporting.

The amendments published deal with issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative interest rate and address the implications for specific hedge accounting requirements.

The changes in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

| ◦ | modify specific hedge accounting requirements so that entities would apply those hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform;

| ◦ | are mandatory for all hedging relationships that are directly affected by the interest rate benchmark reform;

| ◦ | are not intended to provide relief from any other consequences arising from interest rate benchmark reform (if a hedging relationship no longer meets the requirements for hedge accounting for reasons other than those specified by the amendments, discontinuation of hedge accounting is required);

| ◦ | require specific disclosures about the extent to which the entities' hedging relationships are affected by the amendments.

The management of the Company does not anticipate that the application of these amendments will have a material impact on the Company's consolidated financial statements. These amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted. The Company has not opted for early application.

| • | On January 23, 2020, IASB has issued 'Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)' providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.

The amendments in Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) affect only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:

| ◦ | clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;

| ◦ | clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and

| ◦ | make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

F-18

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The management of the Company does not anticipate that the application of these amendment will have a material impact on the Company's consolidated financial statements. These amendments are effective for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted. The Company has not opted for early application.

2.2 – Basis of consolidation

These consolidated financial statements include the consolidated financial position, results of operations and cash flows of the Company and its consolidated subsidiaries. Control is achieved where the company has the power over the investee; exposure, or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the returns. All intercompany transactions and balances between the Company and its subsidiaries have been eliminated in the consolidation process.

Non-controlling interest in the equity of consolidated subsidiaries is identified separately from the Company's net liabilities therein. Non-controlling interest consists of the amount of that interest at the date of the original business combination and the non-controlling share of changes in equity since the date of the consolidation. Losses applicable to non-controlling shareholders in excess of the non-controlling interest in the subsidiary's equity are allocated against the interest of the Company, except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

Acquired companies are accounted for under the acquisition method whereby they are included in the consolidated financial statements from their acquisition date.

Detailed below are the subsidiaries of the Company whose financial statement line items have been included in these consolidated financial statements.

F-19

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | Country |  |  |  | Percentage ownership |
|  | of |  | Main |  | As of December 31, |
Company |  | incorporation |  | Activity |  | 2019 |  |  | 2018 |  |  | 2017 |
Sistemas UK Limited |  | United Kingdom |  | Customer referral services and software development support and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globant, LLC |  | United States of America |  | Customer referral services and software development support and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Sistemas Colombia S.A.S. |  | Colombia |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Global Systems Outsourcing S. de R.L. de C.V. |  | Mexico |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Software Product Creation S.L. |  | Spain |  | Holding, investment, software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globant España S.A. (sociedad unipersonal) |  | Spain |  | Holding and investment activities |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Sistemas Globales Uruguay S.A. |  | Uruguay |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Sistemas Globales S.A. |  | Argentina |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
IAFH Global S.A. |  | Argentina |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Sistemas Globales Chile Asesorías Limitada |  | Chile |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globers S.A. |  | Argentina |  | Travel organization services |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globant Brasil Consultoria Ltda. |  | Brazil |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Huddle Group S.A. (1) |  | Argentina |  | Software development and consultancy |  |  | - |  |  |  | - |  |  |  | 100.00 | %
Globant Peru S.A.C. |  | Peru |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globant India Private Limited |  | India |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Dynaflows S.A. (2) |  | Argentina |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 66.73 | %
We Are London Limited |  | United Kingdom |  | Service design consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %

F-20

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | Country |  |  |  | Percentage ownership |
|  | of |  | Main |  | As of December 31, |
Company |  | incorporation |  | Activity |  | 2019 |  |  | 2018 |  |  | 2017 |
Difier S.A. |  | Uruguay |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globant Bel LLC |  | Belarus |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | - |
Globant Canada Corp. |  | Canada |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Globant France S.A.S. |  | France |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | - |
Small Footprint S.R.L. |  | Romania |  | Software development and consultancy |  |  | 100.00 | % |  |  | 100.00 | % |  |  | - |
Globant Ventures S.A.S. (3) |  | Argentina |  | Holding and investment activities |  |  | 100.00 | % |  |  | 100.00 | % |  |  | - |
Software Product Creation SL Dubai Branch (4) |  | United Arab Emirates |  | Software development and consultancy |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo (Bermuda) Limited (5) |  | Bermuda |  | Holding, investment activities and software development |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo México Sociedad Anónima Promotora de inversión de Capital Variable (5) |  | Mexico |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo Servicios S.A. de C.V. (5) |  | Mexico |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo Brasil Tecnología da Informacao LTDA (5) |  | Brasil |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Orizonta Consutoria De Negocios E Tecnologia LTDA (5) |  | Brasil |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo S.A. (5) |  | Argentina |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo - Sucursal del Perú (5) |  | Perú |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Avanxo Colombia (5) |  | Colombia |  | Cloud consulting and implementation services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Belatrix Global Corporation S.A. (6) |  | Spain |  | Holding and investment activities |  |  | 100.00 | % |  |  | - |  |  |  | - |
BSF S.A. (6) |  | Argentina |  | Agile product development services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Belatrix Peru SAC (6) |  | Peru |  | Agile product development services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Belatrix Colombia SAS (6) |  | Colombia |  | Agile product development services |  |  | 100.00 | % |  |  | - |  |  |  | - |
Belatrix Service Corp (6) |  | United States Of America |  | Agile product development services |  |  | 100.00 | % |  |  | - |  |  |  | - |

| (1) | On December 31, 2017, Huddle Group S.A. was merged into Sistemas Globales S.A. (currently under registration).

| (2) | On October 26, 2018, the sellers exercised the put option on the non-controlling interest of Dynaflows (see note 25.2).

| (3) | Globant Ventures S.A.S was registered on January 17, 2019.

| (4) | Software Product Creation SL Dubai Branch obtained its definitive professional license on February 21, 2019.

| (5) | Avanxo (Bermuda) Limited along with its subsidiaries in Brazil, Mexico, Colombia, Peru, Argentina and the United States ("Avanxo Group") were acquired on February 1, 2019 (see note 25.8).

| (6) | Belatrix Global Corporation S.A along with its subsidiaries in Peru, Colombia, Spain, the United States and Argentina ("Belatrix Group") were acquired on August 9, 2019 (see note 25.9).

F-21

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 – Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred to the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-related charges are recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

| • | deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; and

| • | liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquired business, and the fair value of the acquirer's previously held equity interest in the acquired business (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquired business and the fair value of the acquirer's previously held equity interest in the acquired business (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognized amounts of the acquired business identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.

When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 3 and IFRS 13, as appropriate, with the corresponding gain or loss being recognized in profit or loss.

F-22

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

When a business combination is achieved in stages, the Company's previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

Arrangements that include remuneration of former owners of the acquiree for future services are excluded of the business combinations and will be recognized in expense during the required service period.

3.2 – Goodwill

Goodwill arising in a business combination is carried at cost as established at the acquisition date of the business less accumulated impairment losses, if any. For the purpose of impairment testing, goodwill is allocated to a unique cash generating unit (CGU).

Goodwill is not amortised and is reviewed for impairment at least annually or more frequently when there is an indication that the business may be impaired. If the recoverable amount of the business is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the business and then to the other assets of the business pro-rata on the basis of the carrying amount of each asset in the business. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of income and other comprehensive income. An impairment loss recognized for goodwill is not reversed in a subsequent period.

The Company has not recognized any impairment loss in the years ended December 31, 2019, 2018 and 2017.

3.3 – Revenue recognition

The Company generates revenue primarily from the provision of software development, testing, infrastructure management, application maintenance, outsourcing services, consultancy and Services over Platforms (SoP). SoP is a new concept for the services industry that aims to deliver digital journeys in more rapid manner providing specific platforms as a starting point and then customizing them to the specific need of the customers. Revenue is measured at the fair value of the consideration received or receivable.

The Company’s services are performed under both time-and-material and fixed-price contracts. For revenues generated under time-and-material contracts, revenues are recognized as a performance obligation satisfied over time, using an input method based on hours incurred. The majority of such revenues are billed on an hourly, daily or monthly basis whereby actual time is charged directly to the client.

The Company recognizes revenues from fixed-price contracts applying the input or output methods depending on the nature of the project and the agreement with the customer, recognizing revenue on the basis of the Company’s efforts to the satisfaction of the performance obligation relative to the total expected inputs to the satisfaction of the performance obligation, or recognizing revenue on the basis of direct measurements of the value to the customer of the services transferred to date relative to the remaining services promised under the contract, respectively. Each method is applied according to the characteristics of each contract and client. The inputs and outputs are selected based on how faithfully they depict the Company's performance towards complete satisfaction of the performance obligation.

The Company also provides hosted access to software applications for a subscription-based fee. The revenue from these subscription resales contracts is recognised at a point in time, given that the performance obligation is satisfied when the contract is signed by the customer and the Company. The Company acts as an agent because the performance obligation is to arrange for the service to be provided to the customer by another party (the owner of the software applications). Consequently, the revenue is measured as the amount of the commission, which is the net amount of consideration that the Company retains after paying the other party the consideration received in exchange for the services to be provided by that party.

F-23

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.4 – Leases

During 2018, the Company applied IAS 17 for leases recognition, where leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Finance leases which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the consolidated statement of profit or loss and other comprehensive income. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

As of January 1, 2019, the Company applied IFRS 16 where the Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (leases with a lease term of 12 months or less) and leases of low value assets (assets with a value of 5 or less when new). For these leases, the Company recognizes the lease payments as an operating expense on a straightline basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

| • | fixed payments, less any lease incentives receivable;

| • | variable lease payments that are based on an index or a rate;

| • | payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

The Company remeasures the lease liability (and makes a corresponding adjustment to the related right–of–use asset) whenever:

| 1. | the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

| 2. | the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

F-24

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| 3. | a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

The Company made adjustments related to leases that are subject to changes in the consumer price index. As of December 31, 2019, such adjustments amounted to 126.

Right-of-use asset are measured at cost comprising the following:

| • | the amount of the initial measurement of lease liability;

| • | any lease payments made at or before the commencement date less any lease incentives received;

| • | any initial direct costs.

Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses.

Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The costs are included in the related right–of-use asset.

The right-of-use assets are presented as a separate line in the consolidated statement of financial position.

The Company applies IAS 36 Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 3.10.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets are assets with a value of 5 or less when new.

In determining the lease term, management considers all fact and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options and periods after termination options are only included in the lease term if the lease is reasonably certain to be extended or not terminated. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

F-25

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.5 – Foreign currencies

The functional currency of the Company and most of its subsidiaries is the U.S. dollar, except for:

| • | Globant Brasil Consultoría Ltda.: the functional currency is the Brazilian Real.

| • | Globers S.A.: the functional currency is the Argentine Peso.

| • | We are London Limited: the functional currency is the Great Britain Pound

| • | Avanxo Servicios S.A. de C.V.: the functional currency is the Mexican Peso.

| • | Avanxo Mexico S.A.P.I de C.V.: the functional currency is the Mexican Peso.

| • | Avanxo Brasil Tecnología da Informacao LTDA: the functional currency is the Brazilian Real.

| • | Orizonta Consutoria De Negocios E Tecnologia LTDA: the functional currency is the Brazilian Real.

| • | Avanxo S.A.: the functional currency is the Argentine Peso.

| • | Avanxo - Sucursal del Perú: the functional currency is the Peruvian Sol.

| • | Avanxo Colombia: the functional currency is the Colombian Peso.

In preparing these consolidated financial statements, transactions in currencies other than the U.S. dollar (“foreign currencies”) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are kept at the original translated cost. Exchange differences are recognized in profit and loss in the period in which they arise.

In the case of the subsidiaries with a functional currency other than the U.S. dollar, assets and liabilities are translated at current exchange rates, while income and expense are translated at the date of the transaction rate. The resulting foreign currency translation adjustment is recorded as a separate component of accumulated other comprehensive income (loss) in equity.

Accounting standards are applied on the assumption that the value of money (the unit of measurement) is constant over time. However, when the rate of inflation is no longer negligible, a number of issues arise impacting the true and fair nature of the accounts of entities that prepare their financial statements on a historical cost basis. To address such issues, entities apply IAS 29 Financial Reporting in Hyperinflationary Economies from the beginning of the period in which the existence of hyperinflation is identified. Based on the statistics published on July 17, 2018, the 3-year cumulative rate of inflation for consumer prices and wholesale prices in Argentina reached a level of about 123% and 119%, respectively. On that basis, Argentina was considered an hyperinflationary economy since July 1, 2018. As of December 31, 2019, the Company has recognized the effects of inflation in their financial statements, it also has evaluated this situation and concluded that it has no significant impact considering that the most significant Argentine subsidiaries have the U.S. dollars as their functional currency, except for Globers S.A. and Avanxo S.A as explained above.

3.6 – Borrowing costs

The Company does not have borrowings attributable to the construction or production of assets. All borrowing costs are recognized in profit and loss under finance loss.

3.7 – Taxation

3.7.1 – Income taxes – current and deferred

Income tax expense represents the estimated sum of income tax payable and deferred tax.

F-26

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.7.1.1 – Current income tax

The current income tax payable is the sum of the income tax determined in each taxable jurisdiction, in accordance with their respective income tax regimes.

Taxable profit differs from profit as reported in the consolidated statement of profit or loss and other comprehensive income because taxable profit excludes items of income or expense that are taxable or deductible in future years and it further excludes items that are never taxable or deductible. The Company's liability for current income tax is calculated using tax rates that have been enacted or substantively enacted as of the balance sheet dates. The current income tax charge is calculated on the basis of the tax laws in force in the countries in which the consolidated entities operate.

For the fiscal year 2019, Globant S.A, is subject to a corporate income tax rate of 17% on taxable income exceeding EUR 200, the rate is 15% if annual taxable income does not exceed EUR175. For amounts between EUR 175 and EUR 200, corporate income tax is calculated based on a formula, adding EUR 26.2 (i.e. EUR 175 x 15%) and 31% of the income amount exceeding EUR 175. For fiscal year 2018, the rate was 18% for a company whose taxable income exceeds EUR 30 and 15% if annual taxable income does not exceed EUR 25. The corporate income tax is increased by a contribution of 7% to the unemployment fund. A municipal business tax also may be imposed at rates ranging from 6% to 12% depending on where the undertaking is located.

In 2008, Globant España S.A. elected to be included in the Spanish special tax regime for entities having substantially all of their operations outside of Spain, known as “Empresas Tenedoras de Valores en el Exterior” (“ETVE”), on which dividends distributed from its foreign subsidiaries as well as any gain resulting from disposal are tax free. In order to be entitled to the tax exemption, among other requirements, the main activity of Globant España S.A. must be the administration and management of equity instruments from non-Spanish entities and such entities must be subject to a tax regime similar to that applicable in Spain for non-ETVEs companies. The subsidiaries did not distribute dividends during 2017. During 2018 the Company’s Uruguayan and Argentinian subsidiaries distributed dividends to Globant España S.A. for a total amount of 27,462. As of December 31, 2019 the Uruguayan subsidiary distributed dividends for a total amount of 11,000 to Globant España S.A and BSF S.A distributed dividends for a total amount of 310 to Belatrix Global Corporation S.A. If this tax exemption would not apply, the applicable tax rate should be 25%. The Company´s Spanish subsidiary Software Product Creation S.L. is subject to a 25% corporate income tax rate. Also, Belatrix Global Corporation S.A. is an ETVE company located in Spain, subject to the benefits of the regime. The company was registered as ETVE on December, 2013.

Argentine companies are subject to a 30% corporate income tax rate. In May 2008, IAFH Global S.A. and Sistemas Globales S.A. were notified by the Argentine Government through the Ministry of Economy and Public Finance that they had been included within the promotional regime for the software industry established under Law No. 25,922 (the “Software Promotion Regime”). BSF S.A is benefited by the promotional regimen as well. The incorporation was notified on April 2008.

Under Argentina’s Software Promotion Law No. 25,922 (Ley de Promoción de la Industria de Software), as amended by Law No. 26,692 and Decree No. 95/2018 (the "Software Promotion Law"), the Company's operating subsidiaries in Argentina benefit from a 60% reduction in their corporate income tax rate (as applied to income from promoted software activities) and a tax credit of up to 70% of amounts paid for certain social security taxes (contributions) that may be offset against value-added tax liabilities. Law No. 26,692, the 2011 amendment to the Software Promotion Law (“Law No. 26,692”), also allows such tax credits to be applied to reduce the Company's Argentine subsidiaries’ corporate income tax liability by a percentage not higher than the subsidiaries’ declared percentage of exports and extends the tax benefits under the Software Promotion Law until December 31, 2019.

F-27

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Software Promotion Law remains in effect until December 31, 2019. On May 22, 2019 the Argentine Congress approved Law No. 27,506 that creates a promotion regime for knowledge economy-related business (the "Knowledge based economy law") which is applicable to IAFH Global S.A., Sistemas Globales S.A. and BSF S.A. The Law is valid from January 1, 2020 until December 31, 2029.

The beneficiaries of the regime will enjoy the following benefits:

| • | Fiscal stability as of the moment of the registration and for the term of validity of the Regime.This benefit may be also extended to provincial and municipal taxes, as long as such jurisdictions adhere to this Knowledge based Economy Law.

| • | Beneficiaries are not subject to any value-added tax withholding or collection regimes.

| • | A reduced corporate income tax rate of 15% to the extent that the beneficiaries maintain their payroll in accordance with the conditions described in the regulations.

| • | Beneficiaries will be allowed to deduct a tax credit derived from any payment or withholding of foreign taxes, if the taxed income constitutes an Argentine source of income.

| • | A reduction from their employer social security contributions, in relation to each employee, of an amount equal to 7,003 ARS per employee for year 2020.

| • | A tax credit equal to 1.6 times the amount of the employer’s social security contributions applicable to the detraction. This tax credit, which is onetime transferable, can be used to offset the beneficiary's income tax liability and/or value added tax liability with no restriction.

The beneficiaries of the Software Promotion Law must declare their intention to be transferred to the Knowledge Economy Regime until December 31, 2019. Sistemas Globales S.A. and IAFH S.A. have been incorporated in the National Registry of Beneficiaries of the Regime for the Promotion of the Knowledge Economy on November 12, 2019 and BSF S.A. was included on December 3, 2019. Both registrations are treated as provisional and the companies must fill a final declaration before June 30, 2020.

Additionally, Ministry of Production and Labor issued on October 10, 2019, the Resolution No. 1084/2019, which appointed the Secretariat of Entrepreneurs and Small and Medium-Sized Enterprises as enforcement authority of the Regime and authorized the Secretariat to issue complementary regulations. Consequently, the Secretariat issued Resolution No. 449/2019, establishing the details of the procedure to be followed and the conditions to be met to enjoy the benefits of the Regime. Also, the Secretariat will be in charge of analyzing the information submitted and verifying compliance with all the relevant requirements.

On January 20, 2020, Ministry of Productive Development issued Resolution No. 30/2020, revoking Resolution No. 1,084/2019 and Resolution No. 449/2019.

Also, under the new administrative structure, Ministry of Productive Development appointed the Secretariat of Industry, Knowledge Economy and External Commercial Management of the Ministry of Productive Development as enforcement authority of the New Regime and authorized that Secretariat to issue complementary regulations.

Finally, the review and processing of applications filed so far have been suspended until new complementary regulations are issued by such new enforcement authority.

F-28

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Therefore, the Law and the Decree are currently in force, and have not been repealed, suspended or modified.

According to the New Regime – currently in force – beneficiaries of the Regime for the Promotion of the Software Industry (Law 25,922) have the right to enjoy the benefits established as long as they are registered in the Registry for which it is necessary to: (i) have submitted the application for the provisional incorporation into the New Regime until December 31, 2019 (which allows the definitive registration to have effects as from January 1st, 2020), and (ii) prove the compliance of the requirements provided in the Law and complementary regulations before June 30, 2020.

In the meantime, the Argentine Executive Power is considering a bill to modify the Knowledge based Economy Law to include the following:

| • | a 60% reduction in the total amount of corporate income tax applied to income from the promoted activities.

| • | a tax credit equal to the 70% of the social security contribution paid. The social security contribution benefit would apply only to a portion of the beneficiary’s payroll (in principle up to 3745 employees, except when there is an increase of the payroll) and in the future might be distributed according to a quote (cupo fiscal).

On December 29, 2017, Argentina enacted a comprehensive tax reform (Law No. 27,430) through publication in the Official Gazette. The Law is effective from January 1, 2018. Specifically, introduces amendments to income tax (both at corporate and individual levels), value added tax (VAT), tax procedural law, criminal tax law, social security contributions, excise tax, tax on fuels, and tax on the transfer of real estate.

At a corporate level, the law decreases the corporate income tax rate from 35% to 30% for fiscal years starting January 1, 2018 to December 31, 2019, and to 25% for fiscal years starting January 1, 2020 and onwards. The Law also establishes dividend withholding tax rates of 7% for profits accrued during fiscal years starting January 1, 2018 to December 31, 2019, and 13% for profits accrued in fiscal years starting January 1, 2020 and onwards. The new withholding rates apply to distributions made to shareholders qualifying as resident individuals or nonresidents.

Even though the combined effective rate for shareholders on distributed income (corporate income tax rates plus dividend withholding rates on the after tax profit) will be close to the prior 35% rate, this change is aimed at promoting the reinvestment of profits. Additionally, the Law repeals the “equalization tax” (i.e., 35% withholding applicable to dividends distributed in excess of the accumulated taxable income) for income accrued from January 1, 2018.

On December 23, 2019, the Argentine Government enacted the Ley de Solidaridad Social y Reactivación Productiva No. 27,541 (the "Law on Social Solidarity and Productive Reactivation " or the "Social Solidarity Law") which declared a public emergency in economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters, and also delegated legislative powers to the National Executive Power, until December 31, 2020. According to the Social Solidarity Law, the corporate income tax for years starting January 1, 2020 is 30%, and the tax rate applicable to dividends is 7%, delaying the effectiveness of the 25% and 13% rates until tax years starting on January 1, 2021.

The Social Solidarity Law also introduced amendments to the income tax, personal assets tax, excise tax on certain goods, tax on debits and credits in local bank accounts and social security rules. It also establishes a new tax on certain purchases of foreign currency, a new tax debt settlement plan for certain taxpayers, and establish new rates on export of goods and services.

According to the Social Solidarity Law, the corporate income tax for years starting January 1, 2020 is 30%, extending the enforcement of the 25% to tax year starting January 1, 2021.

F-29

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Company’s Argentine subsidiaries, Globers Travel, Dynaflows, Globant Ventures SAS and Avanxo S.A. are subject to a corporate income tax rate of 30% as they are not in included within the Software Promotion Regime nor Knowledge Economy Regime.

The Company’s Uruguayan subsidiary Sistemas Globales Uruguay S.A. is domiciled in a tax free zone and has an indefinite tax relief of 100% of the income tax rate and an exemption from VAT. Aggregate income tax relief arising under Sistemas Globales Uruguay S.A. for years ended December 31, 2019, 2018 and 2017 were 21,224, 11,095, 2,488, respectively. The Company’s Uruguayan subsidiary Difier S.A. is located outside tax-free zone and according to Article 163 bis of Decree No. 150/007 the software development services performed are exempt from income tax and value-added tax applicable as long as they are exported and utilized abroad, except for the financial results that are taxable at a rate of 25%. Difier S.A is 100% export-oriented.

The Colombian subsidiaries are subject to federal corporate income tax at the rate of 33%. Until December 31, 2018 the Company's Colombian subsidiary Sistemas Colombia S.A.S. was subject to federal corporate income tax at the rate of 33% and a surcharge at the rate of 4% calculated on net income before income tax. Law N°1,943 gradually reduces the corporate tax rates from 33% to 30% from fiscal years 2020 to 2022.

The Company’s U.S. subsidiaries are subject to U.S. federal income tax at the rate of 21%. Fiscal years beginning before January 1, 2018 were subject to corporate tax at the rate of 35%.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (“Tax Act”) that instituted fundamental changes to the taxation of multinational corporations. The Tax Act includes significant changes to the U.S. corporate income tax system, including a federal corporate rate reduction from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, changes regarding net operating loss carryforwards, and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. Furthermore, as part of the transition to the new tax system, a one-time transition tax is imposed on a U.S. shareholder's historical undistributed earnings of foreign affiliates. The Tax Act introduces various other changes to the Internal Revenue Code.

The reform also introduces base erosion provisions for U.S corporations that are part of multinational group. For fiscal years beginning after December 31, 2017, a U.S corporation is potentially subject to tax under the Base Erosion Anti-Abuse Tax provision (“BEAT”), if the controlled group of which it is a part has sufficient gross receipts and derives a sufficient level of “base erosion tax benefits”.

On December 13, 2018, the Internal Revenue Service (“IRS”) published a proposed regulation that provide guidance regarding the BEAT application for public comments. The final document was published in the Federal Register on December 2, 2019.

The Company’s English subsidiaries Sistemas UK Limited and We are London Limited are subject to corporate income tax at the rate of 19%, the same rate was applied for the years 2018 and 2017. The rate is reduced to 17% as from April 1, 2020.

The Company’s Chilean subsidiary Sistemas Globales Chile Ases. Ltda. is subject to corporate income tax at the rate of 27%. For the years 2018 and 2017, the corporate income tax rates were27% and 25.5%, respectively.

The Company’s Brazilian subsidiaries apply the taxable income method called “Lucro real”. Under this method, taxable income is based upon a percentage of profit accrued by the Company, adjusted according to the add-backs and exclusions provided in the relevant tax law. The rate applicable to the taxable income derived from the subsidiary’s activity is 24% plus 10% if the net income before income tax is higher than 240 Brazilian real for the years 2017 and onwards.

F-30

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Company’s Peruvian subsidiaries are subject to corporate income tax at the rate of 29.5%. For the years 2018 and 2017, the corporate income tax rate was 29.5%.

The Company’s Mexican subsidiaries are subject to corporate income tax at the rate of 30%.

The Company's Indian subsidiary Globant India Private Limited is primarily export-oriented and is eligible for certain income tax holiday benefits granted by the government of India for export activities conducted within Special Economic Zones, or SEZs. The services provided by our Pune development center are eligible for a deduction of 100% of the profits or gains derived from the export of services for the first five years from the financial year in which the center commenced the provision of services, which occurred on August 3, 2017, and 50% of such profits or gains for the five years thereafter. Certain tax benefits are also available for a further five years subject to the center meeting defined conditions. Indian profits ineligible for SEZ benefits are subject to corporate income tax at the rate of 34.61%. In addition, all Indian profits, including those generated within SEZs, are subject to the Minimum Alternative Tax (MAT), at the current rate of approximately 21.34%, including surcharges.

On February 1, 2018, the Finance Minister presented the Union Budget 2018-19. A reduction in the corporate tax rate was proposed for companies with an annual turnover of up to Rupees (Rs) 2.5 billion. In such case, the tax rate is 25% plus surcharge. Globant India Private Limited is eligible for the lower corporate tax rate.

The Indian Government introduced on September, 2019, a slew of measures through the Taxation Laws (Amendment) Ordinance, to make certain amendments in the Income-tax Act 1961 and the Finance (No.2) Act 2019.

Under the new measures, any domestic company will be able to choose to be taxed at the rate of 22% if, among other things, reject the SEZ tax holidays. Thus, the effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. The option must be exercised before the filing of the Income Tax Return for FY19-20 (due date November 2020), and once the option is made it cannot be withdrawn for any subsequent year. Also, such companies shall not be required to pay Minimum Alternate Tax (‘MAT’). The Company is still analyzing the future impact of the benefit.

The Company's subsidiary located in Belarus is resident of the High Technology Park (“HTP”). HTP residents are exempted from corporate income tax and VAT.

On December 21, 2017 the President of the Republic of Belarus published the Decree N° 8 that extends the duration of the HTP’s tax incentives and the special legal regime until January 1, 2049. The Company will be benefited by the exemption as long as the regime is valid.

The Company's subsidiary located in Romania is subject to income tax at the rate of 16%.

The Company´s subsidiary located in Canada is subject to federal income tax at the rate of 15%. The rate is increased by the state income tax rate which is 11% in the case of the state of British Columbia where the subsidiary is incorporated.

The corporate tax rate in France for most companies is 33%. The Finance Bill for 2017 contains provisions for the progressive reduction of the corporate income tax rate from 33% to 28% over the period 2017 to 2020. Also, there is a reduced tax rate of 15% for companies whose turnover does not exceed EUR 7,63 million, but only for the first EUR 38,120 of taxable income. In 2019 the reduced rate will be applicable to small and medium-size enterprises. To qualified as a small and medium-size enterprise, a company must employ less than 250 employees and have an annual turnover not exceeding EUR 50 million.

F-31

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

According to the Finance Bill, the Company´s subsidiary located in France is subject to tax at a rate of 28% during 2019. The rate applies for the first EUR 500.

The company located in United Arab Emirates is not subject to Income tax. Under the Emirate-based tax decrees, Corporate Income Tax may be imposed on all companies (including branches and permanent establishments) at rates of up to 55%. However, in practice, the taxation is currently only enforced in respect of corporate entities engaged in the production of oil and gas or extraction of other natural resources in the United Arab Emirates.

3.7.1.2 – Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets including tax loss carry forwards are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the entities are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. The Company has not recorded any current or deferred income tax in other comprehensive income or equity in any each of the years presented, except for deferred income tax arising from the share-based compensation plan and for the translation of deferred tax assets and liabilities arising from subsidiaries with functional currencies other than U.S. dollar.

Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Under IFRS, deferred income tax assets (liabilities) are classified as non-current assets (liabilities).

F-32

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.7.1.3 – Uncertain tax treatments

The Company determines the accounting for tax position when there is uncertainty over income tax treatments as follows. First, the Company determine whether uncertain tax positions are assessed separately or as a group; and then, the Company assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings. If yes, the Company determine its accounting tax position consistently with the tax treatment used or planned to be used in its income tax filings. If no, the Company reflect the effect of uncertainty in determining its accounting tax position using either the most likely amount or the expected value method. The Company discloses in note to the consolidated financial statements certain matters related to the interpretation of income tax laws for which there is a possibility that a loss may have been incurred.

As of December 31, 2019, there are certain matters related to the interpretation of income tax laws for which there is a possibility that a loss may have been incurred, as of the date of the financial statements in accordance with IFRIC 23 in an amount of 1,768, related to assessments for the fiscal years 2014 to 2019. No formal claim has been made for fiscal years within the statute of limitation by Tax authorities in any of the mentioned matters, however those years are still subject to audit and claims may be asserted in the future.

3.8 – Property and equipment

Fixed assets are valued at acquisition cost, net of the related accumulated depreciation and accumulated impairment losses, if any.

Depreciation is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Lands and properties under construction are carried at cost, less any recognized impairment loss. Properties under construction are classified to the appropriate categories of property and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Land is not depreciated.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

The value of fixed assets, taken as a whole, does not exceed their recoverable value.

3.9 – Intangible assets

Intangible assets include licenses, customer relationships, customer contracts and non-compete agreements. The accounting policies for the recognition and measurement of these intangible assets are described below.

F-33

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.9.1 – Intangible assets acquired separately

Intangible assets with finite useful life that are acquired separately (licenses) are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over the intangible assets estimated useful lives. The estimated useful lives and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimates being accounted for on a prospective basis.

3.9.2 – Intangible assets acquired in a business combination

Intangible assets acquired in a business combination (trademarks, customer relationships, customer contracts and non-compete agreements) are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets acquired separately.

3.9.3 – Internally-generated intangible assets

Intangible assets arising from development are recognized if, and only if, all the following have been demonstrated:

- the technical feasibility of completing the intangible asset so that it will be available for use or sale;

- the intention to complete the intangible asset and use or sell it;

- the ability to use or sell the intangible asset;

- how the intangible asset will generate probable future economic benefits;

- the ability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and

- the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated assets is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

3.9.4 – Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss when the asset is derecognized. As of December 31, 2019, the Company has derecognized intangible assets for an amount of 24. No intangible asset has been derecognized as of December 31, 2018.

3.10 – Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit or the business, as the case may be.

F-34

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The recoverable amount of an asset is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of profit or loss and other comprehensive income for the year.

As of December 31, 2019 and 2018 the Company recorded an impairment loss of 720 and 306, respectively, related to internally-generated intangible assets. In 2017 the Company recorded an impairment loss of 4,708 related to the intangible assets acquired in business combinations.

3.11 – Provisions for contingencies

The Company has existing or potential claims, lawsuits and other proceedings. Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation, and the advice of the Company’s legal advisers.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The amount of the recognized receivable does not exceed the amount of the provision recorded.

3.12 – Financial assets

On initial recognition, a financial asset is classified as measured at: (i) amortised cost (ii) fair value through other comprehensive income (FVOCI) or (iii) fair value through profit or loss (FVTPL). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

3.12.1 – Amortised cost and effective interest method

A financial asset is measured at amortised cost if both of the following conditions are met, and is not designated as at FVPL:

| - | It is held within a business model whose objective is to hold financial assets to collect contractual cash flow;

| - | Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The effective interest method is a method of calculating the amortised cost of an instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

F-35

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.12.2 – Financial assets measured at FVOCI

A financial asset is measured at FVOCI if both of the following conditions are met, and is not designated as at FVPL:

| - | It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets

| - | Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

The change in fair value of financial assets measured at FVOCI is accumulated in the investment revaluation reserve until they are derecognised. When a financial asset measured at FVOCI is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

3.12.3 – Financial assets measured at FVPL

All financial assets not classified as measured at amortised cost or FVOCI as described above, are measured at FVPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘Finance income or Finance expense’ line.

F-36

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.12.4 - Derivative financial instruments

The Company enters into foreign exchange forward contracts. Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Company has both a legally enforceable right and intention to offset. The impact of the futures and forward contracts on the Company’s financial position is disclosed in note 28. A derivative is presented as a non–current asset or a non–current liability if the remaining maturity of the instrument is more than 12 months and it is not due to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

The Company designates certain derivatives as hedging instruments in respect of foreign currency risk in cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

- there is an economic relationship between the hedged item and the hedging instrument;

- the effect of credit risk does not dominate the value changes that result from that economic relationship; and

- the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company actually hedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item.

If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Company adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.

The Company designates the full change in the fair value of a forward contract (i.e. including the forward elements) as the hedging instrument for all of its hedging relationships involving forward contracts.

Movements in the hedging reserve in equity are detailed in note 29.3.

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other gains and losses’ line item. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item.

The Company discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognized in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve is reclassified immediately to profit or loss.

F-37

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.12.5 - Investment in associates

An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate.

3.12.6 – Other Financial Assets

Call option over non-controlling interest in subsidiary

On October 22, 2015, the Company was granted with a call option to acquire the remaining 33.27% interest in Dynaflows S.A, which can be exercised from October 22, 2020 till October 21, 2021. At the same moment, the Company has also agreed on a put option with the non-controlling shareholders which gives them the right to sell its remaining 33.27% interest on October 22, 2018 or October 22, 2020. During the year ended December 31, 2018, the sellers exercised the put option, as explained in note 25.2, and the Company derecognized the call option.

Clarice Subscription agreement

On May 14, 2015, the Company signed a subscription agreement as described in note 25.1. According to this agreement, the Company will receive a fix amount of money in exchange of a variable number of shares of the Company. According to IAS 32:11, a financial asset has been recognized in order to reflect the contractual right to receive cash. As of December 31, 2018, the Company has recorded 400 as current financial assets. As of December 31, 2019 the financial asset and the financial liability were fully settled.

3.12.7 – Impairment of financial assets

The Company recognises a loss allowance for expected credit losses on financial assets, other than those at FVTPL. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Company always recognises lifetime expected credit losses ("ECL") for trade receivables, using a simplified approach. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

F-38

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

Significant increase in credit risk since initial recognition

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument at the reporting date with such risk at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including forward-looking information that is available without undue cost or effort. In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

| • | internal credit rating

| • | external credit rating (as far as available)

| • | significant deterioration in external market indicators of credit risk for a particular financial instrument

| • | actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations

| • | actual or expected significant changes in the operating results of the debtor

| • | significant increases in credit risk on other financial instruments of the same debtor

| • | actual or expected significant adverse changes in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment, unless the Company has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial asset is determined to have low credit risk if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations. The Company considers a financial asset to have low credit risk when the asset has external credit rating of 'investment grade' in accordance with the globally understood definition, or if an external rating is not available, if the counterparty has a strong financial position and there is no past due amounts. All of the Company's current and non current investments are considered to have low credit risk.

Definition of default

A default on a financial asset is when the counterparty fails to make contractual payments within 90 days of when they fall due, unless an entity has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events:

F-39

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| a. | significant financial difficulty of the issuer or the borrower;

| b. | a breach of contract, such as a default or past due event;

| c. | the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

| d. | it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

| e. | the disappearance of an active market for that financial asset because of financial difficulties; or

| f. | the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

It may not be possible to identify a single discrete event-instead, the combined effect of several events may have caused financial assets to become credit-impaired.

Write-off policy

Financial assets' carrying amounts are reduced through the use of an allowance account on a case-by-case basis. When a financial asset is considered uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit and loss.

Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default and the exposure at default. The assessment of the probability of default and loss given default is based on historical data, adjusted by forward-looking information as described above. The exposure of default is represented by the asset's gross carrying amount at the reporting date.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. Financial assets other than trade receivables, have been grouped at the lowest levels for which there are separately identifiable cash flows.

No significant changes to estimation techniques or assumptions were made during the reporting period, except for the changes in the expected credit loss rate used for the calculation of allowance for doubtful accounts as of December 31,2019, as disclosed in note 12.

3.12.8 – Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

F-40

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

As of December 31, 2019, the Company incurred in a singular factoring agreement arranged with Banco Santander, pursuant to which Globant, LLC transferred receivables for a total amount of 3,510. The Company considers that it has substantially transferred the risks and rewards intrinsic to these receivables to the bank and therefore they were derecognized.

3.12.9 – Convertible Notes

The Company recognizes convertible notes measured at their fair value using the market approach which consist in using prince and relevant information generated by market transactions involving identical or comparable assets, liabilities or group of assets and liabilities, such as a business.

3.12.9.1 Convertible note - Collokia

On May, 5, 2017, the Company and Collokia LLC, signed a loan agreement whereby the Company provides a financing facility of 100. Interest on the entire outstanding principal balance is computed at an annual rate of 2.8%. Collokia shall repay the loan in full within 18 months from the date that this agreement has been signed off. The Company has the right to convert any portion of the outstanding principal into preferred units of Collokia. As of December 31, 2019 and 2018, the fair value of the loan agreement amounted to 115 and 106, respectively, and is disclosed as other financial assets current. The Company expects to collect the convertible note in a foreseeable future and hence it has concluded that the convertible note is recoverable.

3.12.9.2 Convertible note - Wolox

On January 21, 2019 ("issuance date"), Globant España S.A. and Wolox, LLC (Wolox), agreed into a convertible promissory note purchase agreement whereby Globant España S.A. provides financing facility for 1,800. Interest on the entire outstanding principal balance is computed at an annual rate equal to LIBOR plus 2%. Wolox shall repay the loan in full within 18 months from the date as of the issuance date. Globant España S.A has the right to convert any portion of the outstanding principal into fully paid and nonassessable membership interest of Wolox. As of December 31, 2019, the fair value of the loan agreement amounted to 1,841 and is disclosed as other financial assets current.

3.12.9.3 Convertible note - Singularity

On July 8, 2019 ("issuance date"), Globant España S.A. and Singularity Education Group, agreed into a note purchase agreement whereby Globant España S.A. provides financing facility for 1,250. Interest on the entire outstanding principal balance is computed at an annual rate of 5%. Singularity Education Group shall repay the loan in full within 1 year from the effective date. Globant España S.A has the right to convert any portion of the outstanding principal into Conversion Shares of Singularity Education Group. As of December 31, 2019, the fair value of the loan agreement amounted to 1,280 and is disclosed as other financial assets current.

F-41

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.12.9.4 Convertible notes - Globant Ventures

During the year ended December 31, 2019, Globant Venture SAS entered into 4 note purchase agreements with Interactive Mobile Media S.A. (CamonApp), AvanCargo Corp., TheEye S.A.S. and Robin (the "startups"), pursuant to which Globant Ventures provides financing facility for a total amount of 300. Interest on the entire outstanding principal balance is computed at annual rates ranging from 5% to 12% for Interactive Mobile Media S.A. (CamonApp), AvanCargo Corp., TheEye S.A.S and Robin. Globant Venture SAS has the right to convert any portion of the outstanding principal into equity interest of the startups. As of December 31, 2019, the fair value of the loan agreement amounted to 300, and is disclosed as other financial assets non-current.

3.13 – Financial liabilities and equity instruments

3.13.1 – Classification as debt or equity

Debt and equity instruments issued by the Company and its subsidiaries are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

3.13.2 – Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

3.13.3 – Financial liabilities

Financial liabilities, including trade payables, other liabilities and borrowings, are initially measured at fair value, net of transaction costs.

Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognized on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

3.13.4 – Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

F-42

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

3.14 – Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and short-term highly liquid investments (original maturity of less than 90 days). In the consolidated statements of financial position, bank overdrafts are included in borrowings within current liabilities.

Cash and cash equivalents as shown in the statement of cash flows only includes cash and bank balances and time deposits as disclosed in note 10.

3.15 – Reimbursable expenses

Out-of-pocket and travel expenses are recognized as expense in the statements of income for the year. Reimbursable expenses are billed to customers and presented within the line item "Revenues" in the statements of income for the year.

3.16 – Share-based compensation plan

The Company has a share-based compensation plan for executives and employees of the Company and its subsidiaries. Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set forth in note 24.

The fair value determined at the grant date of the equity-settled share-based payments is recognised to spread the fair value of each award over the vesting period on a straight-line basis, based on the Company’s estimate of equity instruments that will potentially vest, with a corresponding increase in equity.

3.17 – Components of other comprehensive income

Components of other comprehensive income are items of income and expense that are not recognized in profit or loss as required or permitted by other IFRSs. The Company included gains and losses arising from translating the financial statements of a foreign operation, the gains and losses related to the valuation of the financial assets measured at fair value through other comprehensive income and the effective portion of changes in the fair value of derivatives hedging instruments that are designated and qualify as cash flow hedges.

3.18 – Gain on transactions with bonds

During the year ended December 31, 2019, the Company's Argentine subsidiaries, through cash received from repayments of intercompany loans, acquired Argentine sovereign bonds in the U.S. market denominated in U.S. dollars.

After acquiring these bonds, the Company's Argentine subsidiaries sold those bonds in the Argentine market. The fair value of these bonds in the Argentine market (in Argentine pesos) during the year ended December 31, 2019 was higher than its quoted price in the U.S. market (in U.S dollars) converted at the official exchange rate prevailing in Argentina, which is the rate used to convert these transactions in foreign currency into the Company's Argentine subsidiaries' functional currency, thus, as a result, the Company recognized a gain when remeasuring the fair value of the bonds in Argentine pesos into U.S. dollars at the official exchange rate prevailing in Argentina.

During the year ended December 31, 2019, the Company recorded a gain amounting to 1,569 due to the above mentioned transactions that were disclosed under the caption "Gain on transaction with bonds" in the consolidated statements of profit or loss.

During the year ended December 31, 2018, the Company did not engage in the above described transaction.

F-43

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 4 – CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company's accounting policies, which are described in note 3, the Company's management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The critical accounting estimates concerning the future and other key sources of estimation uncertainty at the end of the reporting year that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are the following:

| 1. | Revenue recognition

In accounting for fixed-price contracts the Company applies the input or output methods depending on the nature of the project and the agreement with the customer, recognizing revenue on the basis of the Company’s efforts to the satisfaction of the performance obligation relative to the total expected inputs to the satisfaction of the performance obligation, or recognizing revenue on the basis of direct measurements of the value to the customer of the services transferred to date relative to the remaining services promised under the contract, respectively. Each method is applied according to the characteristics of each contract and client.

These methods are followed where reasonably dependable estimates of revenues and costs can be made. Fixed-price projects generally correspond to short-term contracts. Some fixed-price contracts are recurring contracts that establish a fixed amount per month and do not require the Company to apply significant judgment in accounting for those types of contracts. In consequence, the use of estimates is only applicable for those contracts that are on-going at the year end and that are not recurring.

Reviews to these estimates may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified. If the estimates indicate that a contract loss will be incurred, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated costs of the contract exceed the estimated total revenues that will be generated by the contract and are included in cost of revenues in the consolidated statement of income and other comprehensive income. Contract losses for the periods presented in these consolidated financial statements were immaterial.

| 2. | Goodwill impairment analysis

Goodwill is measured as the excess of the cost of an acquisition over the sum of the amounts assigned to tangible and intangible assets acquired less liabilities assumed. The determination of the fair value of the tangible and intangible assets involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

F-44

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Company evaluates goodwill for impairment at least annually or more frequently when there is an indication that the unit may be impaired. When determining the fair value of the Company's cash generating unit, the Company utilizes both the market and income approaches. The Company first determines the value of the unit using the market approach. For the purposes of the calculation, the Company considers the value of the shares in the market.

In addition, the Company utilizes the income approach, using discounted cash flow. The income approach considers various assumptions including increase in headcount, headcount utilization rate, income from each country and revenue per employee, income tax rates and discount rates. The assumptions considered by the Company as of December 31, 2019 are the following: projected cash flows for the following five years, the average growth rate considered was 22.0% and the rate used to discount cash flows was 9.50%. The long-term rate used to extrapolate cash flows beyond the projected period was 3%.

Any adverse changes in key assumptions about the businesses and their prospects or an adverse change in market conditions may cause a change in the estimation of fair value and could result in an impairment charge. Based upon the Company's evaluation of goodwill, no impairments were recognized during 2019, 2018 and 2017.

| 3. | Income taxes

Determining the consolidated provision for income tax expenses, deferred income tax assets and liabilities requires significant judgment. The provision for income taxes is calculated over the net income of the company and is inclusive of federal, local and state taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences in each of the jurisdictions where the Company operates of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be reversed. Changes to enacted tax rates would result in either increases or decreases in the provision for income taxes in the period of changes.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized. This assessment requires judgments, estimates and assumptions by management. In evaluating the Company's ability to utilize its deferred tax assets, the Company considers all available positive and negative evidence, including the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable. The Company's judgments regarding future taxable income are based on expectations of market conditions and other facts and circumstances. Any adverse change to the underlying facts or the Company's estimates and assumptions could require that the Company reduces the carrying amount of its net deferred tax assets.

The Company evaluates the uncertain tax treatment, such determination requires the use of significant judgment in evaluating the tax treatments and assessing the timing and amounts of deductible and taxable items, see note 3.7.1.3.

| 4. | Impairment of financial assets

The Company measures ECL using reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive.

F-45

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.

As of December 31, 2019, 2018 and 2017, the Company recorded an impairment of trade receivables for an amount of 275, an impairment of 3,421 and a recovery of 5, respectively, using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

As of December 31, 2019, 2018 and 2017, the Company recorded a recovery for an amount of 47, an impairment of tax credits for an amount of 48 and 1,586, respectively, based on assumptions about expected credit losses. The Company uses judgment in making these assumptions based on existing regulatory conditions as well as forward looking estimates, which are described as follows. The tax credits included in the allowance for impairment are mainly related to Argentine taxation. The Company estimated the future VAT credit and VAT debit that comes from domestic purchases and sales, respectively. Since exports are zero-rated, any excess portion of the credit not used against any VAT debit is reimbursable to the Company, through a special VAT recovery regime. However, according to VAT recovery rules, there are certain limitations on the amount that may be reimbursed and the Company considered any VAT credit that cannot be reimbursed to be an impairment.

| 5. | Share-based compensation plan

The Company's grants under its share-based compensation plan with employees are measured based on fair value of the Company's shares at the grant date and recognized as compensation expense on a straight-line basis over the requisite service period, with a corresponding impact reflected in additional paid-in capital.

Determining the fair value of the share-based awards at the grant date requires judgments. The Company calculated the fair value of each option award on the grant date using the Black-Scholes option pricing model. The Black-Scholes model requires the input of highly subjective assumptions, including the fair value of the Company's shares, expected volatility, expected term, risk-free interest rate and dividend yield.

Fair value of the shares: For 2014 Equity Incentive Plan, the fair value of the shares is based on the quote market price of the Company's shares at the grant date. For 2012 Equity Incentive Plan, as the Company's shares were not publicly traded the fair value was determined using the market approach technique based on the value per share of private placements. The Company had gone in the past through a series of private placements in which new shares have been issued. The Company understood that the price paid for those new shares was a fair value of those shares at the time of the placement. In January 2012, Globant España S.A. had a capital contribution from a new shareholder, which included cash plus share options granted to the new shareholder, therefore, the Company considered that amount to reflect the fair value of their shares. The fair value of the shares related to this private placement resulted from the following formula: cash minus fair value of share options granted to new shareholder divided by number of newly issued shares. The fair value of the share options granted to the new shareholder was determined using the same variables and methodologies as the share options granted to the employees. After the reorganization in December 2012, shares of Globant S.A (Luxembourg) were sold by existing shareholders in a private placement to WPP Plc. The fair value of the shares related to this private placement results from the total amount paid by WPP Plc. to the existing shareholders.

F-46

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Expected volatility: Since January 1, 2018 the expected volatility of the Company's shares is calculated by using the average share price volatility of the Company since January 1, 2016 to the date of grant. Before 2018, as the Company did not have sufficient trading history for the purpose of valuing the share options, the expected volatility of their shares was estimated by using the average historic price volatility of the NASDAQ 100 Telecommunication Index.

Expected term: The expected life of options represents the period of time the granted options are expected to be outstanding.

Risk free rate: The risk-free rate for periods within the contractual life of the option is based on the U.S. Federal Treasury yield curve with maturities similar to the expected term of the options.

Dividend yield: The Company has never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.

| 6. | Recoverability of internally generated intangible assets

If any impairment indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs of disposal and value in use.The discount rate use is the appropriate weighted average cost of capital.

During the year, the Company considered the recoverability of its internally generated intangible asset which are included in the consolidated financial statements as of December 31, 2019 and 2018 with a carrying amount of 9,388 and 7,855, respectively.

A detailed recoverability analysis has been carried out by the Company, considering both, revenue from customers in case of the assets sold to third parties and internal usage for those assets that are used internally, and, as a result, the Company has recognized an impairment of 720 and 306 as of December 31, 2019 and 2018. In 2017 no impairment losses were recorded. The impairment was recognized as a result of the Company's evaluation of such internal developments, upon which the Company projected lower future cash flows from the related intangible assets.

| 7. | Fair value measurement and valuation processes

Certain assets and liabilities of the Company are measured at fair value for financial reporting purposes.

In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company estimates the fair value of an asset or a liability by converting future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount. If necessary the Company engages third party qualified valuers to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 28.8.

| 8. | Useful lives of property, equipment and intangible assets

The Company reviews the estimated useful lives of property, equipment and intangible assets at the end of each reporting period. The Company determined that the useful lives of the assets included as property, equipment and intangible assets are in accordance with their expected lives.

F-47

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| 9. | Provision for contingencies

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

| 10. | Recoverability of intangible assets acquired in business combinations, other than goodwill

The Company evaluates intangible assets acquired in business combinations for impairment at least annually or more frequently when there is an indication that the asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs of disposal and value in use. The determination of the fair value of intangible assets acquired in business combinations involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. When determining the fair value, we utilize the income approach using discounted cash flow.

A total amount of 4,708 of impairment loss related to the intangible assets acquired in business combinations was recognized as of December 31, 2017 and is included as other operating expense. The impairment was recognized as a result of the Company's evaluation of such intangible assets, upon which the Company projected lower future cash flows from the related customer relationships. In 2019 and 2018 no impairment losses were recorded.

NOTE 5 – REVENUE

The following tables present the Company’s revenues disaggregated by type of contracts, by revenue source regarding the industry vertical of the client and by currency. The Company provides technology services to enterprises in a range of industry verticals including media and entertainment, travel and hospitality, professional services, technology and telecommunications, banks, financial services and insurance and consumer, retail and manufacturing, among others. The Company understands that disaggregating revenues into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenues may be affected by economic factors. However, this information is not considered by the chief operating decision-maker to allocate resources and in assessing financial performance of the Company. As noted in the business segment reporting information in note 26, the Company operates in a single operating and reportable segment.

F-48

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | For the year ended December 31, |
By Industry vertical |  | 2019 |  |  | 2018 |  |  | 2017 |
Media and Entertainment |  |  | 156,292 |  |  |  | 133,093 |  |  |  | 99,640 |
Travel & Hospitality |  |  | 92,773 |  |  |  | 89,212 |  |  |  | 68,400 |
Banks, Financial Services and Insurance |  |  | 143,788 |  |  |  | 114,439 |  |  |  | 94,994 |
Technology & Telecommunications |  |  | 88,183 |  |  |  | 67,310 |  |  |  | 60,648 |
Professional Services |  |  | 73,282 |  |  |  | 52,318 |  |  |  | 40,660 |
Consumer, Retail & Manufacturing |  |  | 85,698 |  |  |  | 54,087 |  |  |  | 36,025 |
Other Verticals |  |  | 19,309 |  |  |  | 11,851 |  |  |  | 13,072 |
TOTAL |  |  | 659,325 |  |  |  | 522,310 |  |  |  | 413,439 |

|  | For the year ended December 31, |
By Currency |  | 2019 |  |  | 2018 |  |  | 2017 |
United States dollar (USD) |  |  | 563,747 |  |  |  | 447,314 |  |  |  | 354,824 |
European euro (EUR) |  |  | 28,237 |  |  |  | 30,087 |  |  |  | 23,518 |
Pound sterling (GBP) |  |  | 3,012 |  |  |  | 6,550 |  |  |  | 4,107 |
Argentine peso (ARS) |  |  | 26,948 |  |  |  | 20,651 |  |  |  | 12,856 |
Mexican peso (MXN) |  |  | 19,939 |  |  |  | 11,711 |  |  |  | 6,942 |
Colombian peso (COP) |  |  | 6,831 |  |  |  | 4,068 |  |  |  | 2,341 |
Brazilian real (BRL) |  |  | 8,030 |  |  |  | 46 |  |  |  | 126 |
Others |  |  | 2,581 |  |  |  | 1,883 |  |  |  | 8,725 |
TOTAL |  |  | 659,325 |  |  |  | 522,310 |  |  |  | 413,439 |

|  | For the year ended December 31, |
By Contract Type |  | 2019 |  |  | 2018 |  |  | 2017 |
Time and material contracts |  |  | 544,131 |  |  |  | 431,295 |  |  |  | 376,718 |
Fixed-price contracts |  |  | 106,386 |  |  |  | 90,980 |  |  |  | 36,687 |
Subscription resales |  |  | 8,525 |  |  |  | — |  |  |  | — |
Others |  |  | 283 |  |  |  | 35 |  |  |  | 34 |
TOTAL |  |  | 659,325 |  |  |  | 522,310 |  |  |  | 413,439 |

F-49

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 6 – COST OF REVENUES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

6.1 – Cost of revenues

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Salaries, employee benefits and social security taxes |  |  | (366,594 | ) |  |  | (293,171 | ) |  |  | (239,013 | )
Shared-based compensation expense |  |  | (4,976 | ) |  |  | (4,248 | ) |  |  | (5,666 | )
Depreciation and amortization expense |  |  | (7,350 | ) |  |  | (4,022 | ) |  |  | (4,339 | )
Travel and housing |  |  | (17,115 | ) |  |  | (6,623 | ) |  |  | (6,631 | )
Office expenses |  |  | (2,583 | ) |  |  | (2,082 | ) |  |  | (1,692 | )
Professional services |  |  | (4,440 | ) |  |  | (5,248 | ) |  |  | (5,005 | )
Promotional and marketing expenses |  |  | (252 | ) |  |  | (1,575 | ) |  |  | (244 | )
Recruiting, training and other employee expenses |  |  | (1,854 | ) |  |  | (1,382 | ) |  |  | (415 | )
Taxes |  |  | — |  |  |  | (203 | ) |  |  | (166 | )
TOTAL |  |  | (405,164 | ) |  |  | (318,554 | ) |  |  | (263,171 | )

6.2 – Selling, general and administrative expenses

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Salaries, employee benefits and social security taxes |  |  | (69,056 | ) |  |  | (47,805 | ) |  |  | (41,956 | )
Share-based compensation expense |  |  | (14,912 | ) |  |  | (8,665 | ) |  |  | (8,798 | )
Rental expenses (1) |  |  | (5,260 | ) |  |  | (17,185 | ) |  |  | (13,739 | )
Office expenses |  |  | (10,733 | ) |  |  | (11,602 | ) |  |  | (11,800 | )
Professional services |  |  | (13,167 | ) |  |  | (13,754 | ) |  |  | (9,885 | )
Travel and housing |  |  | (7,259 | ) |  |  | (6,259 | ) |  |  | (4,460 | )
Taxes |  |  | (16,201 | ) |  |  | (6,126 | ) |  |  | (6,140 | )
Depreciation and amortization expense |  |  | (16,905 | ) |  |  | (16,521 | ) |  |  | (11,789 | )
Depreciation expense of right-of-use assets |  |  | (14,584 | ) |  |  | — |  |  |  | — |
Recruiting, training and other employee expenses |  |  | (2,299 | ) |  |  | (1,507 | ) |  |  | (941 | )
Promotional and marketing expenses |  |  | (2,102 | ) |  |  | (3,763 | ) |  |  | (1,305 | )
TOTAL |  |  | (172,478 | ) |  |  | (133,187 | ) |  |  | (110,813 | )

(1) Includes rental expenses from short–term leases and leases of low–value assets due to the impact of the adoption of IFRS 16 since January 1, 2019.

F-50

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

(1) Includes rental expenses from short–term leases and leases of low–value assets due to the impact of the adoption of IFRS 16 since January 1, 2019.

NOTE 7 – FINANCE INCOME / EXPENSE

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Finance income |  |  |  |  |  |  |  |  |  |  |  |
Interest gain |  |  | 958 |  |  |  | 407 |  |  |  | 479 |
Gain arising from financial assets measured at fair value through PL |  |  | 4,977 |  |  |  | 3,869 |  |  |  | 923 |
Gain arising from financial assets measured at fair value through OCI (*) |  |  | 72 |  |  |  | 258 |  |  |  | 240 |
Gain arising from financial assets measured at amortised cost |  |  | 120 |  |  |  | — |  |  |  | — |
Foreign exchange gain |  |  | 7,516 |  |  |  | 6,884 |  |  |  | 6,314 |
Subtotal |  |  | 13,643 |  |  |  | 11,418 |  |  |  | 7,956 |
Finance expense |  |  |  |  |  |  |  |  |  |  |  |
Interest expense on borrowings |  |  | (1,226 | ) |  |  | (152 | ) |  |  | (95 | )
Interest expense on lease liabilities |  |  | (3,464 | ) |  |  | — |  |  |  | — |
Loss arising from financial assets measured at fair value through PL |  |  | (3,770 | ) |  |  | (1,106 | ) |  |  | (620 | )
Loss arising from financial assets measured at amortised cost |  |  | (21 | ) |  |  | — |  |  |  | — |
Foreign exchange loss |  |  | (16,357 | ) |  |  | (14,321 | ) |  |  | (9,043 | )
Other interest |  |  | (419 | ) |  |  | (525 | ) |  |  | (788 | )
Other |  |  | (1,544 | ) |  |  | (864 | ) |  |  | (490 | )
Subtotal |  |  | (26,801 | ) |  |  | (16,968 | ) |  |  | (11,036 | )
TOTAL |  |  | (13,158 | ) |  |  | (5,550 | ) |  |  | (3,080 | )

(*) As of December 31, 2019, 2018 and 2017 includes 373, 12 and 27, respectively, related to the gain recognized as Other comprehensive income.

NOTE 8 – INCOME TAXES

8.1 – INCOME TAX RECOGNIZED IN PROFIT AND LOSS

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Tax expense: |  |  |  |  |  |  |  |  |  |  |  |
Current tax expense |  |  | (19,327 | ) |  |  | (23,324 | ) |  |  | (14,053 | )
Deferred tax gain (1) |  |  | 4,310 |  |  |  | 7,456 |  |  |  | 5,972 |
TOTAL INCOME TAX EXPENSE |  |  | (15,017 | ) |  |  | (15,868 | ) |  |  | (8,081 | )

| (1) | As of December 31, 2017, includes 1,004 of deferred tax gain related to changes in tax rates.

Most of the revenues are generated through subsidiaries located in the U.S. The Company's workforce is mainly located in Latin America and to a lesser extent in India and U.S.

F-51

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The following table provides a reconciliation of the statutory tax rate to the effective tax rate. As the operations of the Argentine subsidiaries are the most significant source of net taxable income of the Company, the following reconciliation has been prepared using the Argentine tax rate:

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Profit before income tax |  |  | 69,032 |  |  |  | 67,464 |  |  |  | 38,544 |
Tax rate (note 3.7.1.1) |  |  | 30 | % |  |  | 30 | % |  |  | 35 | %
Income tax expense |  |  | (20,710 | ) |  |  | (20,239 | ) |  |  | (13,490 | )
Permanent differences |  |  |  |  |  |  |  |  |  |  |  |
Argentine Software Promotion Regime (note 3.7.1.1) |  |  | 3,256 |  |  |  | 6,844 |  |  |  | 3,541 |
Effect of different tax rates of subsidiaries operating in countries other than Argentina |  |  | 7,996 |  |  |  | 4,352 |  |  |  | 2,019 |
Non-deductible expenses |  |  | 925 |  |  |  | 1,130 |  |  |  | 1,187 |
Tax loss carry forward not recognized |  |  | (2,402 | ) |  |  | (1,462 | ) |  |  | (374 | )
Exchange difference |  |  | (4,365 | ) |  |  | (8,777 | ) |  |  | (860 | )
Other |  |  | 283 |  |  |  | 2,284 |  |  |  | (104 | )
INCOME TAX EXPENSE RECOGNIZED IN PROFIT AND LOSS |  |  | (15,017 | ) |  |  | (15,868 | ) |  |  | (8,081 | )

8.2 – DEFERRED TAX ASSETS AND LIABILITIES

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Share-based compensation plan |  |  | 11,587 |  |  |  | 4,731 |
Provision for vacation and bonus |  |  | 6,533 |  |  |  | 6,624 |
Intercompany trade payables |  |  | 3,553 |  |  |  | 2,207 |
Property and equipment |  |  | 1,163 |  |  |  | 716 |
Goodwill |  |  | (1,752 | ) |  |  | (1,005 | )
Contingencies |  |  | 714 |  |  |  | 546 |
Others |  |  | 3,031 |  |  |  | 1,236 |
Loss carryforward (1) |  |  | 2,039 |  |  |  | 1,861 |
TOTAL DEFERRED TAX ASSETS |  |  | 26,868 |  |  |  | 16,916 |

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Other Assets |  |  | (1,028 | ) |  |  | — |
TOTAL DEFERRED TAX LIABILITIES |  |  | (1,028 | ) |  |  | — |

| (1) | As of December 31, 2019 and 2018, the detail of the loss carryforward is as follows:

F-52

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | 2019 |  |  | 2018
Company |  | Loss carryforward |  |  | Expiration date |  |  | Loss carryforward |  |  | Expiration date
Globant S.A. |  |  | — |  |  |  |  |  |  |  | 547 |  |  | does not expire
Dynaflows S.A. |  |  | 138 |  |  |  | 2024 |  |  |  | 96 |  |  | 2020
Dynaflows S.A. |  |  | 53 |  |  |  | 2023 |  |  |  | — |  |  |
Dynaflows S.A. |  |  | 4 |  |  |  | 2022 |  |  |  | — |  |  |
IAFH Global S.A |  |  | 594 |  |  |  | 2024 |  |  |  | — |  |  |
Globant Brasil Consultoría Ltda. (2) |  |  | 767 |  |  |  | does not expire |  |  |  | 887 |  |  | does not expire
Sistemas UK Limited |  |  | — |  |  |  | — |  |  |  | 116 |  |  | does not expire
We Are London Limited |  |  | 163 |  |  |  | does not expire |  |  |  | 215 |  |  | does not expire
Difier S.A |  |  | 3 |  |  |  | does not expire |  |  |  | — |  |  |
Sistemas Globales S.A. |  |  | 25 |  |  |  | 2023 |  |  |  | — |  |  |
Avanxo S.A. |  |  | 129 |  |  |  | 2024 |  |  |  | — |  |  |
BSF S.A. |  |  | 140 |  |  |  | 2024 |  |  |  | — |  |  |
Avanxo - Sucursal del Perú |  |  | 20 |  |  |  | 2022 |  |  |  | — |  |  |
Globant France S.A.S. |  |  | 3 |  |  |  | does not expire |  |  |  | — |  |  |
|  |  | 2,039 |  |  |  |  |  |  |  | 1,861 |  |  |

| (2) | The amount of the carryforward that can be utilized for Globant Brasil Consultoría Ltda. is limited to 30% of taxable income in each carryforward year.

As of December 31, 2019, no deferred tax liability has been recognised on investments in subsidiaries. The Company has concluded it has the ability and intention to control the timing of any distribution from its subsidiaries and it is probable that will be no reversal in the foreseeable future in a way that would result in a charge to taxable profit.

The roll forward of the deferred tax assets/(liabilities) presented in the consolidated financial position is as follows:

F-53

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  |  |  |  | Recognised |  |  | Recognised in |  |  |  |  |  |  |  |  | Additions |  |  |  |
|  |  |  |  | in |  |  | other |  |  | Recognised |  |  |  |  |  | from |  |  |  |
|  | Opening |  |  | profit or |  |  | comprehensive |  |  | directly in |  |  | Acquisitions/ |  |  | business |  |  | Closing |
2019 |  | balance |  |  | loss (*) |  |  | income |  |  | equity |  |  | disposals |  |  | combinations |  |  | balance |
Deferred tax assets/(liabilities) in relation to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share-based compensation plan |  |  | 4,731 |  |  |  | 718 |  |  |  | — |  |  |  | 9,864 |  |  |  | (3,726 | ) |  |  | — |  |  |  | 11,587 |
Provision for vacation and bonus |  |  | 6,624 |  |  |  | (275 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 184 |  |  |  | 6,533 |
Intercompany trade payables |  |  | 2,207 |  |  |  | 1,346 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,553 |
Property and equipment |  |  | 716 |  |  |  | 447 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,163 |
Goodwill |  |  | (1,005 | ) |  |  | (747 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,752 | )
Contingencies |  |  | 546 |  |  |  | 168 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 714 |
Other assets |  |  | — |  |  |  | (389 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (639 | ) |  |  | (1,028 | )
Others |  |  | 1,236 |  |  |  | 1,795 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,031 |
Subtotal |  |  | 15,055 |  |  |  | 3,063 |  |  |  | — |  |  |  | 9,864 |  |  |  | (3,726 | ) |  |  | (455 | ) |  |  | 23,801 |
Loss carryforward |  |  | 1,861 |  |  |  | 876 |  |  |  | (698 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,039 |
TOTAL |  |  | 16,916 |  |  |  | 3,939 |  |  |  | (698 | ) |  |  | 9,864 |  |  |  | (3,726 | ) |  |  | (455 | ) |  |  | 25,840 |

(*) Includes foreign exchange loss of 371.

|  |  |  |  | Recognised |  |  | Recognised in |  |  |  |  |  |  |  |  |  |
|  |  |  |  | in |  |  | other |  |  | Recognised |  |  |  |  |  |  |
|  | Opening |  |  | profit or loss |  |  | comprehensive |  |  | directly in |  |  | Acquisitions/ |  |  | Closing |
2018 |  | balance |  |  | (*) |  |  | income |  |  | equity |  |  | disposals |  |  | balance |
Deferred tax assets/(liabilities) in relation to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share-based compensation plan |  |  | 5,772 |  |  |  | 915 |  |  |  | — |  |  |  | 2,367 |  |  |  | (4,323 | ) |  |  | 4,731 |
Provision for vacation and bonus |  |  | 1,309 |  |  |  | 5,315 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,624 |
Intercompany trade payables |  |  | 3,126 |  |  |  | (919 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,207 |
Property and equipment |  |  | 756 |  |  |  | (40 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 716 |
Goodwill |  |  | (479 | ) |  |  | (526 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,005 | )
Contingencies |  |  | — |  |  |  | 546 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 546 |
Others |  |  | 297 |  |  |  | 939 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,236 |
Subtotal |  |  | 10,781 |  |  |  | 6,230 |  |  |  | — |  |  |  | 2,367 |  |  |  | (4,323 | ) |  |  | 15,055 |
Loss carryforward |  |  | 2,405 |  |  |  | 321 |  |  |  | (165 | ) |  |  | — |  |  |  | (700 | ) |  |  | 1,861 |
TOTAL |  |  | 13,186 |  |  |  | 6,551 |  |  |  | (165 | ) |  |  | 2,367 |  |  |  | (5,023 | ) |  |  | 16,916 |

(*) Includes foreign exchange loss of 905.

NOTE 9 – EARNINGS PER SHARE

The earnings and weighted average number of shares used in the calculation of basic and diluted earnings per share are as follows:

F-54

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Net income for the year attributable to owners of the Company |  |  | 54,015 |  |  |  | 51,677 |  |  |  | 30,539 |
Weighted average number of shares (in thousands) for the purpose of basic earnings per share |  |  | 36,586 |  |  |  | 35,746 |  |  |  | 34,919 |
Weighted average number of shares (in thousands) for the purpose of diluted earnings per share |  |  | 37,674 |  |  |  | 36,685 |  |  |  | 36,094 |
BASIC EARNINGS PER SHARE |  | $ | 1.48 |  |  | $ | 1.45 |  |  | $ | 0.87 |
DILUTED EARNINGS PER SHARE |  | $ | 1.43 |  |  | $ | 1.41 |  |  | $ | 0.84 |

The following potential ordinary shares are anti-dilutive and are therefore excluded from the weight average number of ordinary shares for the purpose of diluted earnings per share:

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Shares deemed to be issued in respect of employee options |  |  | 4,470 |  |  |  | 205,940 |  |  |  | 603,159 |

NOTE 10 – CASH AND CASH EQUIVALENTS

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Cash and bank balances |  |  | 62,426 |  |  |  | 63,574 |
Time deposits |  |  | 295 |  |  |  | 14,032 |
TOTAL |  |  | 62,721 |  |  |  | 77,606 |

NOTE 11 – INVESTMENTS

11.1 – Investments

|  | As of December 31, |
Current |  | 2019 |  |  | 2018 |
Mutual funds (1) |  |  | 19,384 |  |  |  | 4,050 |
Bills issued by the Treasury of the Argentine Republic ("LETEs") (2) |  |  | 396 |  |  |  | 1,015 |
Bills issued by the Treasury Department of the U.S. ("T-Bills") (2) |  |  | — |  |  |  | 3,493 |
Capitalizable bills issued by the Treasury of the Argentine Republic ("LECAPs") (2) |  |  | — |  |  |  | 77 |
TOTAL |  |  | 19,780 |  |  |  | 8,635 |

| (1) | Measured at fair value through profit or loss.

| (2) | Measured at fair value through other comprehensive income.

F-55

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, |
Non current |  | 2019 |  |  | 2018 |
Contribution to risk funds (3) |  |  | 418 |  |  |  | 527 |
TOTAL |  |  | 418 |  |  |  | 527 |

| (3) | On December 27, 2018, the Company signed an agreement pursuant to which the Company made a contribution to the risk fund of a Mutual Guarantee Company. Such contribution accrues an interest which is collectible on a quarterly basis. As of December 31, 2019 and 2018, the Company has recorded 418 and 527, respectively, as a non current investment, measured at amortised cost.

11.2 – Investments in associates

CHVG investment

As of December 31, 2018, the Company owned the 40% of total shares of CHVG S.A. ("CHVG") and accounted for this investment using the equity method. On January 15, 2019, the Company sold the shares of CHVG S.A for a total amount of 10 (ARS 390).

Collokia investment

As of December 31, 2019 and 2018, the Company has a 19.5% of participation in Collokia LLC.

On February 25, 2016, the Company signed a subscription agreement with Collokia LLC, through which Collokia LLC agreed to increase its capital by issuing 55,645 preferred units, from which the Company acquired 20,998 at the price of $23.81 per share for a total amount of 500. After this subscription, the Company has a 19.5% of participation in Collokia LLC for a total amount of 800 and accounted for this investment using the equity method considering that the Company has significant influence over the operating and governance decisions of Collokia LLC, as the participation in the board of director, the approval of budget and business plan, among other decisions.

As of December 31, 2018, indicators that the investment in Collokia may not be recovered arose and the Company performed an impairment test. As a consequence, an impairment loss of 800 was recognized and is included in Other income, net.

Acamica investment

On January 26, 2016, the Company signed a subscription agreement with Ignacio Moreno, Tomás Escobar, Gonzalo Orsi and Juan Badino (jointly "the Founders"); Fitory S.A., a company organized under the laws of Uruguay; Wayra Argentina S.A., a corporation organized under the laws of Argentina; Stultum Pecuniam Ventures LLC, a limited liability company organized under the laws of the state of Washington, United States; Ms. Eun Young Hwang ("Rebecca"); Acamica S.A., a company organized under the laws of Argentina ("Acamica Argentina") and Acamica Inc, a corporation organized under the laws of the state of Delaware, United States ("Acamica US" and together with Acamica Argentina, the "Acamica Group Companies") whereas the Founders own 100% of the capital share of Acamica Group Companies and formed a new company organized under the laws of Spain ("Holdco") which owned 100% of the capital shares of Acamica US and 97% of the capital shares of Acamica Argentina.

F-56

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

On January 3, 2017, pursuant to the terms of the subscription agreement the Company made a capital contribution of 750 to the Acamica Tecnologías S.L. (previously referred as Holdco) in exchange for a 20% ownership stake in the entity. On May 17, 2018, the Company signed a new share purchase and subscription agreement with Fitory S.A., Stultum Pecunian Ventures, LLC, Wayra Argentina S.A., Eun Young Hwang and Acámica Tecnologías S.A. Pursuant to such agreement, the Company purchased additional shares for an amount of 3,250. As of December 31, 2019, the Company has a 47.5% of participation in Acámica Tecnologías S.L. The investment is accounted using the equity method considering that the Company has significant influence over the operating and governance decisions of Acamica Tecnologías S.L., as the participation in the board of director, the approval of budget and business plan, among other decisions.

The Company's share on the profit or loss or other comprehensive income of all the above-mentioned investments for the years ended 2018 and 2017 were not significant individually nor in the aggregate, except for the impairment recognized in Collokia in 2018. For the year ended December 31, 2019 the Company's share on the profit or loss of the investment in Acamica amounted to a loss of 224.

NOTE 12 – TRADE RECEIVABLES

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Accounts receivable (1) |  |  | 146,382 |  |  |  | 101,754 |
Unbilled revenue |  |  | 13,970 |  |  |  | 13,101 |
Subtotal |  |  | 160,352 |  |  |  | 114,855 |
Less: Allowance for doubtful accounts |  |  | (3,676 | ) |  |  | (3,957 | )
TOTAL |  |  | 156,676 |  |  |  | 110,898 |

| (1) | Includes amounts due from related parties of 91 and 993 as of December 31, 2019 and 2018 (see note 23.1).

Allowance for doubtful accounts

The following tables detail the risk profile of trade receivables based on the Company's provision matrix as of December 31, 2019 and 2018.

December 31, 2019 |  | Trade receivables - days past due |
|  | < 30 |  |  | 31 - 60 |  |  | 61 - 90 |  |  | 91-120 |  |  | 121-180 |  |  | > 180 |  |  | Total |
Expected credit loss rate |  |  | 0.80 | % |  |  | 2.00 | % |  |  | 3.50 | % |  |  | 7.80 | % |  |  | 20.30 | % |  |  | 79.50 | % |  |  |  |
Estimated total gross carrying amount at default |  |  | 21,165 |  |  |  | 8,852 |  |  |  | 3,091 |  |  |  | 829 |  |  |  | 410 |  |  |  | 3,867 |  |  |  | 38,214 |
Lifetime ECL |  |  | 169 |  |  |  | 177 |  |  |  | 108 |  |  |  | 65 |  |  |  | 83 |  |  |  | 3,074 |  |  |  | 3,676 |

December 31, 2018 |  | Trade receivables - days past due |
|  | < 30 |  |  | 31 - 60 |  |  | 61 - 90 |  |  | 91-120 |  |  | > 120 |  |  | Total |
Expected credit loss rate |  |  | 0.06 | % |  |  | 1.90 | % |  |  | 4.40 | % |  |  | 11.90 | % |  |  | 85.90 | % |  |  |  |
Estimated total gross carrying amount at default |  |  | 17,815 |  |  |  | 6,843 |  |  |  | 2,814 |  |  |  | 2,778 |  |  |  | 3,801 |  |  |  | 34,051 |
Lifetime ECL |  |  | 107 |  |  |  | 130 |  |  |  | 124 |  |  |  | 331 |  |  |  | 3,265 |  |  |  | 3,957 |

The movements in the allowance are calculated based on lifetime expected credit loss model for 2019 and 2018, and incurred loss model for 2017.

F-57

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The following table shows the movement in ECL that has been recognised for trade receivables in accordance with the simplified approach:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of year |  |  | (3,957 | ) |  |  | (609 | ) |  |  | (617 | )
Additions, net of recoveries (note 4.4) |  |  | (275 | ) |  |  | (3,421 | ) |  |  | 5 |
Write-off of receivables |  |  | 556 |  |  |  | 73 |  |  |  | 3 |
Balance at end of year |  |  | (3,676 | ) |  |  | (3,957 | ) |  |  | (609 | )

The average credit period on sales is 78 days. No interest is charged on trade receivables. The Company always measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected credit losses on trade receivables are estimated using the provision matrix by reference to past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

NOTE 13 – OTHER RECEIVABLES

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Other receivables |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |
Tax credit - VAT |  |  | 2,592 |  |  |  | 5,202 |
Tax credit - Software Promotion Regime (note 3.7.1.1) |  |  | 4,504 |  |  |  | 3,555 |
Income tax credits |  |  | 4,534 |  |  |  | 1,410 |
Other tax credits |  |  | 577 |  |  |  | 276 |
Advances to suppliers |  |  | 1,666 |  |  |  | 611 |
Prepaid expenses |  |  | 4,268 |  |  |  | 3,982 |
Loans granted to employees |  |  | 211 |  |  |  | 49 |
Other |  |  | 956 |  |  |  | 256 |
TOTAL |  |  | 19,308 |  |  |  | 15,341 |

F-58

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Non-current |  |  |  |  |  |  |  |
Advances to suppliers (1) |  |  | 3,579 |  |  |  | 28,799 |
Tax credit - VAT |  |  | 1,004 |  |  |  | 1,031 |
Income tax credits |  |  | 1,516 |  |  |  | 1,259 |
Tax credit - Software Promotion Regime (note 3.7.1.1) |  |  | — |  |  |  | 749 |
Other tax credits |  |  | 209 |  |  |  | 170 |
Guarantee deposits |  |  | 2,683 |  |  |  | 1,681 |
Loans granted to employees |  |  | 152 |  |  |  | 208 |
Prepaid expenses |  |  | 45 |  |  |  | 475 |
Other |  |  | — |  |  |  | 500 |
Subtotal |  |  | 9,188 |  |  |  | 34,872 |
Allowance for impairment of tax credits |  |  | (378 | ) |  |  | (675 | )
TOTAL |  |  | 8,810 |  |  |  | 34,197 |

| (1) | Includes advances to acquire buildings as of December 31, 2018 (Note 22).

Roll forward of the allowance for impairment of tax credits

|  | As of December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of year |  |  | 675 |  |  |  | 1,300 |  |  |  | — |
(Recovery) additions (note 4.4) |  |  | (47 | ) |  |  | 48 |  |  |  | 1,586 |
Foreign exchange |  |  | (250 | ) |  |  | (673 | ) |  |  | (286 | )
Balance at end of year |  |  | 378 |  |  |  | 675 |  |  |  | 1,300 |

F-59

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 14 – PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2019 included the following:

|  | Computer equipment and software |  |  | Furniture and office supplies |  |  | Office fixtures |  |  | Vehicles |  |  | Buildings |  |  | Lands |  |  | Properties under construction |  |  | Total |
Useful life (years) |  |  | 3 |  |  |  | 5 |  |  |  | 3 |  |  |  | 5 |  |  |  | 50 |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Values at beginning of year |  |  | 30,053 |  |  |  | 7,142 |  |  |  | 41,904 |  |  |  | 37 |  |  |  | 13,401 |  |  |  | 2,354 |  |  |  | 4,365 |  |  |  | 99,256 |
Additions related to business combinations (note 25.12) |  |  | 878 |  |  |  | 727 |  |  |  | 1,585 |  |  |  | 71 |  |  |  | 420 |  |  |  | — |  |  |  | — |  |  |  | 3,681 |
Additions |  |  | 8,397 |  |  |  | 570 |  |  |  | 1,055 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 37,015 |  |  |  | 47,037 |
Transfers |  |  | 48 |  |  |  | 1,369 |  |  |  | 5,787 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,204 | ) |  |  | — |
Disposals |  |  | (268 | ) |  |  | (42 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5 | ) |  |  | (315 | )
Translation |  |  | (169 | ) |  |  | (167 | ) |  |  | 26 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (310 | )
Values at end of year |  |  | 38,939 |  |  |  | 9,599 |  |  |  | 50,357 |  |  |  | 108 |  |  |  | 13,821 |  |  |  | 2,354 |  |  |  | 34,171 |  |  |  | 149,349 |
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accumulated at beginning of year |  |  | 18,873 |  |  |  | 4,296 |  |  |  | 23,997 |  |  |  | 21 |  |  |  | 609 |  |  |  | — |  |  |  | — |  |  |  | 47,796 |
Additions |  |  | 6,759 |  |  |  | 1,225 |  |  |  | 6,283 |  |  |  | 7 |  |  |  | 268 |  |  |  | — |  |  |  | — |  |  |  | 14,542 |
Disposals |  |  | (191 | ) |  |  | (46 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (237 | )
Translation |  |  | (164 | ) |  |  | (131 | ) |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (285 | )
Accumulated at end of year |  |  | 25,277 |  |  |  | 5,344 |  |  |  | 30,290 |  |  |  | 28 |  |  |  | 877 |  |  |  | — |  |  |  | — |  |  |  | 61,816 |
Carrying amount |  |  | 13,662 |  |  |  | 4,255 |  |  |  | 20,067 |  |  |  | 80 |  |  |  | 12,944 |  |  |  | 2,354 |  |  |  | 34,171 |  |  |  | 87,533 |

Property and equipment as of December 31, 2018 included the following:

|  | Computer equipment and software |  |  | Furniture and office supplies |  |  | Office fixtures |  |  | Vehicles |  |  | Buildings |  |  | Lands |  |  | Properties under construction |  |  | Total |
Useful life (years) |  |  | 3 |  |  |  | 5 |  |  |  | 3 |  |  |  | 5 |  |  |  | 50 |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Values at beginning of year |  |  | 23,381 |  |  |  | 5,810 |  |  |  | 33,275 |  |  |  | 37 |  |  |  | 6,981 |  |  |  | 2,354 |  |  |  | 11,167 |  |  |  | 83,005 |
Additions related to business combinations (note 25.12) |  |  | — |  |  |  | 5 |  |  |  | 43 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 48 |
Additions |  |  | 7,055 |  |  |  | 719 |  |  |  | 1,083 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,065 |  |  |  | 18,922 |
Transfers |  |  | 6 |  |  |  | 845 |  |  |  | 9,596 |  |  |  | — |  |  |  | 6,420 |  |  |  | — |  |  |  | (16,867 | ) |  |  | — |
Disposals |  |  | (353 | ) |  |  | (229 | ) |  |  | (2,005 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,587 | )
Translation |  |  | (36 | ) |  |  | (8 | ) |  |  | (88 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (132 | )
Values at end of year |  |  | 30,053 |  |  |  | 7,142 |  |  |  | 41,904 |  |  |  | 37 |  |  |  | 13,401 |  |  |  | 2,354 |  |  |  | 4,365 |  |  |  | 99,256 |
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accumulated at beginning of year |  |  | 14,609 |  |  |  | 3,694 |  |  |  | 20,421 |  |  |  | 13 |  |  |  | 389 |  |  |  | — |  |  |  | — |  |  |  | 39,126 |
Additions |  |  | 4,641 |  |  |  | 832 |  |  |  | 5,529 |  |  |  | 8 |  |  |  | 220 |  |  |  | — |  |  |  | — |  |  |  | 11,230 |
Disposals |  |  | (346 | ) |  |  | (224 | ) |  |  | (1,868 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,438 | )
Translation |  |  | (31 | ) |  |  | (6 | ) |  |  | (85 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (122 | )
Accumulated at end of year |  |  | 18,873 |  |  |  | 4,296 |  |  |  | 23,997 |  |  |  | 21 |  |  |  | 609 |  |  |  | — |  |  |  | — |  |  |  | 47,796 |
Carrying amount |  |  | 11,180 |  |  |  | 2,846 |  |  |  | 17,907 |  |  |  | 16 |  |  |  | 12,792 |  |  |  | 2,354 |  |  |  | 4,365 |  |  |  | 51,460 |

F-60

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 15 – INTANGIBLE ASSETS

Intangible assets as of December 31, 2019 included the following:

|  | Licenses and internal developments |  |  | Customer relationships and contracts |  |  | Non- compete agreement |  |  | Total |
Useful life (years) |  |  | 5 |  |  |  | 1 - 4 |  |  |  | 3 |  |  |  |  |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Values at beginning of year |  |  | 36,957 |  |  |  | 10,896 |  |  |  | 586 |  |  |  | 48,439 |
Additions related to business combinations (note 25.12) |  |  | — |  |  |  | 14,389 |  |  |  | — |  |  |  | 14,389 |
Additions from separate acquisitions |  |  | 4,188 |  |  |  | — |  |  |  | — |  |  |  | 4,188 |
Additions from internal development |  |  | 7,212 |  |  |  | — |  |  |  | — |  |  |  | 7,212 |
Disposals |  |  | (26 | ) |  |  | — |  |  |  | — |  |  |  | (26 | )
Translation |  |  | (13 | ) |  |  | — |  |  |  | — |  |  |  | (13 | )
Values at end of year |  |  | 48,318 |  |  |  | 25,285 |  |  |  | 586 |  |  |  | 74,189 |
Amortization and impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accumulated at beginning of year |  |  | 26,179 |  |  |  | 9,896 |  |  |  | 586 |  |  |  | 36,661 |
Additions |  |  | 8,589 |  |  |  | 1,124 |  |  |  | — |  |  |  | 9,713 |
Impairment loss recognised in profit or loss (note 4.6) |  |  | 720 |  |  |  | — |  |  |  | — |  |  |  | 720 |
Disposals |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | (2 | )
Translation |  |  | (13 | ) |  |  | — |  |  |  | — |  |  |  | (13 | )
Accumulated at end of year |  |  | 35,473 |  |  |  | 11,020 |  |  |  | 586 |  |  |  | 47,079 |
Carrying amount |  |  | 12,845 |  |  |  | 14,265 |  |  |  | — |  |  |  | 27,110 |

F-61

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Intangible assets as of December 31, 2018 included the following:

|  | Licenses and internal developments |  |  | Customer relationships and contracts |  |  | Non- compete agreement |  |  | Total |
Useful life (years) |  |  | 5 |  |  |  | 1 - 4 |  |  |  | 3 |  |  |  |  |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Values at beginning of year |  |  | 27,381 |  |  |  | 10,153 |  |  |  | 586 |  |  |  | 38,120 |
Additions related to business combinations (note 25.12) |  |  | — |  |  |  | 173 |  |  |  | — |  |  |  | 173 |
Additions from separate acquisitions |  |  | 3,480 |  |  |  | — |  |  |  | — |  |  |  | 3,480 |
Additions from internal development |  |  | 6,104 |  |  |  | — |  |  |  | — |  |  |  | 6,104 |
Translation |  |  | (8 | ) |  |  | 570 |  |  |  | — |  |  |  | 562 |
Values at end of year |  |  | 36,957 |  |  |  | 10,896 |  |  |  | 586 |  |  |  | 48,439 |
Amortization and impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accumulated at beginning of year |  |  | 17,325 |  |  |  | 8,844 |  |  |  | 586 |  |  |  | 26,755 |
Additions |  |  | 8,556 |  |  |  | 757 |  |  |  | — |  |  |  | 9,313 |
Impairment loss recognised in profit or loss (note 4.6) |  |  | 306 |  |  |  | — |  |  |  | — |  |  |  | 306 |
Translation |  |  | (8 | ) |  |  | 295 |  |  |  | — |  |  |  | 287 |
Accumulated at end of year |  |  | 26,179 |  |  |  | 9,896 |  |  |  | 586 |  |  |  | 36,661 |
Carrying amount |  |  | 10,778 |  |  |  | 1,000 |  |  |  | — |  |  |  | 11,778 |

NOTE 16 – OTHER ASSETS

The Company bills customers and receives invoices from suppliers based on a billing schedule established in the subscription resales contracts. Therefore, the outstanding balance of other assets includes the right to consideration related to subscriptions that have not yet been invoiced by the Company, and trade payables includes the expenses accrual for the cost that have not yet been invoiced by the suppliers.

The outstanding balance of other assets as of December 31, 2019 and 2018 is as follows:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Other assets |  |  |  |  |  |  |  |
Current |  |  | 13,439 |  |  |  | — |
Non-current |  |  | 7,796 |  |  |  | — |
TOTAL |  |  | 21,235 |  |  |  | — |

NOTE 17 – TRADE PAYABLES

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Current |  |  |  |  |  |  |  |
Suppliers |  |  | 10,623 |  |  |  | 6,137 |
Advanced payments from customers |  |  | — |  |  |  | 291 |
Expenses accrual |  |  | 20,864 |  |  |  | 11,150 |
TOTAL |  |  | 31,487 |  |  |  | 17,578 |

F-62

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Non current |  |  |  |  |  |  |  |
Expenses accrual |  |  | 5,500 |  |  |  | — |
TOTAL |  |  | 5,500 |  |  |  | — |

NOTE 18 – PAYROLL AND SOCIAL SECURITY TAXES PAYABLE

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Salaries |  |  | 8,376 |  |  |  | 4,434 |
Social security tax |  |  | 13,564 |  |  |  | 7,548 |
Provision for vacation, bonus and others |  |  | 49,909 |  |  |  | 46,181 |
Directors fees |  |  | 281 |  |  |  | 315 |
Other |  |  | 122 |  |  |  | 57 |
TOTAL |  |  | 72,252 |  |  |  | 58,535 |

NOTE 19 – BORROWINGS

The principal balances of outstanding borrowings under lines of credit with banks and financial institutions were as follows:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
HSBC Bank and Citibank - Syndicated loan (United States) |  |  | 50,363 |  |  |  | — |
Banco Santander (Colombia) |  |  | 549 |  |  |  | — |
Banco Supervielle (Argentina) |  |  | 309 |  |  |  | — |
Banco ICBC (Argentina) |  |  | 96 |  |  |  | — |
Others |  |  | 69 |  |  |  | — |
TOTAL |  |  | 51,386 |  |  |  | — |

Such balances were included as current and non-current borrowings in the consolidated statement of financial position as follows:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Current borrowings |  |  | 1,198 |  |  |  | — |
Non-current borrowings |  |  | 50,188 |  |  |  | — |
TOTAL |  |  | 51,386 |  |  |  | — |

On November 1, 2018, Globant LLC, the Company's U.S. subsidiary, entered into an Amended and Restated Credit Agreement by and among certain financial institutions, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. The A&R Credit Agreement amends and restates the existing Credit Agreement dated as of August 3, 2017, which provided for a secured revolving credit facility under which the Company may borrow up to 40,000 in advances. Under the A&R Credit Agreement, Globant LLC may borrow (i) up to 50,000 in a single borrowing on or prior to May 1, 2019 under a delayed-draw term loan facility and (ii) up to 150,000 under a revolving credit facility. In addition, Globant, LLC may request increases of the maximum amount available under the revolving facility in an agregament amount not to exceed 100,000. The maturity date of the facilities is October 31, 2023. Pursuant to the terms of the A&R Credit Agreement, interest on loans extended thereunder shall accrue at a rate per annum equal to London Interbank Offered Rate ("LIBOR") plus 1.75%. Globant LLC’s obligations under the A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of Globant LLC’s now owned and after-acquired assets. The A&R Credit Agreement also contains the following covenants: delivery of certain financial information; payment of obligations, including tax liabilities; use of proceeds only for transaction costs payments, for lawful general corporate purposes and working capital; Globant LLC's Fixed Charge Coverage Ratio shall not be less than 1.25 to 1.00; Globant LLC's Maximum Total Leverage Ratio shall not exceed 2.50 to 1.00; Globant LLC or any of its subsidiaries shall not incur in any indebtedness; Globant LLC or any of its subsidiaries shall not assume any Lien; restricted payments not to exceed 10,000 per year; advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed 50 outstanding at any time; Globant LLC shall not maintain intercompany payables owed to any of its Argentina Affiliates except to the extent (i) such payables are originated in transactions made in the ordinary course of business and (ii) the aggregate amount of such payables do not exceed an amount equal to five times the average monthly amount of such Affiliates’ billings for the immediately preceding 12 month period; Globant LLC's capital expenditures limited to 10% the Company's consolidated net revenue per year and Globant LLC's annual revenue is to remain at no less than 60% of the Company's consolidated annual revenue.

F-63

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Movements in borrowings are analyzed as follows:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at the beginning of year |  |  | — |  |  |  | 6,011 |  |  |  | 217 |
Borrowings related to business combination (note 25.12) (1) (4) |  |  | 1,290 |  |  |  | — |  |  |  | — |
Proceeds from new borrowings (2) (5) |  |  | 90,523 |  |  |  | — |  |  |  | 22,000 |
Payment of borrowings (3) (5) |  |  | (41,570 | ) |  |  | (6,163 | ) |  |  | (16,293 | )
Accrued interest (4) |  |  | 1,226 |  |  |  | 152 |  |  |  | 95 |
Foreign exchange (4) |  |  | (83 | ) |  |  | — |  |  |  | (8 | )
TOTAL |  |  | 51,386 |  |  |  | — |  |  |  | 6,011 |

| (1) | Corresponds to borrowings with Banco de Bogotá and BBVA, with maturity date in September 2019, ICBC with maturity date November 2020 and Supervielle with maturity date in July 2022. These borrowings do not have covenants.

| (2) | On April 12, 2019, August 6, 2019, August 8, 2019 and October 28, 2019 Globant LLC borrowed 25,000, 30,000, 10,000 and 25,000, respectively under the Amended and Restated Credit Agreement. From the loans mentioned, 50,000 will mature on October 31, 2023 and 40,000 before December 31, 2019. On September 26, 2019, Avanxo borrowed 523 from Banco Santander with maturity date on March 26, 2020. During 2017, Sistemas Globales S.A. and IAFH Global S.A., entered into 6 loan agreements with Santander Rio for a total amount of 16,000. These loans matured before December 31, 2017. On December 19, 2017, Globant LLC has borrowed 6,000 under the credit facility mentioned above. This loan matured on July 23, 2018.

| (3) | During the year ended on December 31, 2019, the principal payments were as follows, Globant LLC paid 40,301 of the 40,000 borrowed under the Amended and Restated Credit Agreement. In September 2019, Avanxo Colombia paid 520 related to the borrowing with BBVA and paid 37 in interests regarding the borrowing with Santander in November 2019. During the year ended in December 31, 2019, BSF, S.A paid 52 and 39 regarding the borrowings with Supervielle and ICBC, respectively. On July 23, 2018, Globant LLC paid 6,163 borrowed in December 2017, under de A&R Credit Agreement. During December 2017, the Company through its Argentine subsidiary, Sistemas Globales S.A and IAFH Global S.A., paid 16,293 of the loan agreements acquired with Santander Rio in 2017.

| (4) | Non-cash transactions.

| (5) | Cash transactions.

F-64

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 20 – TAX LIABILITIES

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Income tax |  |  | 4,612 |  |  |  | 4,526 |
Periodic payment plan |  |  | 17 |  |  |  | 28 |
Software Promotion Law - Annual and monthly rates |  |  | 366 |  |  |  | 523 |
VAT payable |  |  | 2,558 |  |  |  | 1,208 |
Wage withholding taxes |  |  | 1,266 |  |  |  | 558 |
Sales taxes payable |  |  | 1,576 |  |  |  | — |
Other |  |  | 2,115 |  |  |  | 556 |
TOTAL |  |  | 12,510 |  |  |  | 7,399 |

NOTE 21 – PROVISIONS FOR CONTINGENCIES

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. The Company has recorded a provision for labor, regulatory and commercial claims where the risk of loss is considered probable. The final resolution of these potential claims is not likely to have a material effect on the results of operations, cash flow or the financial position of the Company.

Breakdown of reserves for lawsuits claims and other disputed matters include the following:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Reserve for labor claims |  |  | 91 |  |  |  | 678 |
Reserve for commercial claims |  |  | 1,000 |  |  |  | — |
Reserve for regulatory claims |  |  | 1,511 |  |  |  | 2,184 |
TOTAL |  |  | 2,602 |  |  |  | 2,862 |

Roll forward is as follows:

|  | As of December 31, |
Reserve for labor claims |  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of year |  |  | 678 |  |  |  | 49 |  |  |  | 1,138 |
Additions |  |  | 907 |  |  |  | 926 |  |  |  | 187 |
Recovery |  |  | (1,247 | ) |  |  | — |  |  |  | — |
Utilization of provision for contingencies |  |  | (99 | ) |  |  | (222 | ) |  |  | (1,288 | )
Foreign exchange |  |  | (148 | ) |  |  | (75 | ) |  |  | 12 |
Balance at end of year |  |  | 91 |  |  |  | 678 |  |  |  | 49 |

F-65

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, |
Reserve for regulatory claims |  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of year |  |  | 2,184 |  |  |  | 1,130 |  |  |  | 807 |
Additions (1) |  |  | 219 |  |  |  | 1,144 |  |  |  | 340 |
Recovery |  |  | (879 | ) |  |  | — |  |  |  | — |
Utilization of provision for contingencies |  |  | (95 | ) |  |  | — |  |  |  | (32 | )
Foreign exchange |  |  | 82 |  |  |  | (90 | ) |  |  | 15 |
Balance at end of year |  |  | 1,511 |  |  |  | 2,184 |  |  |  | 1,130 |

|  | As of December 31, |
Reserve for commercial claims |  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of year |  |  | — |  |  |  | — |  |  |  | — |
Additions (2) |  |  | 1,000 |  |  |  | — |  |  |  | — |
Balance at end of year |  |  | 1,000 |  |  |  | — |  |  |  | — |

| (1) | As of December 31, 2019, the Company's Colombian subsidiary is currently under examination by the Unidad de Gestión Pensional y Parafiscales ("UGPP") regarding social contribution payments for the year 2016. On November 6, 2019, the UGPP issued a demand letter to the Company's Colombian subsidiary proposing a preliminary assessment of $2.1 million plus penalties and interest for social contribution payments during such year and requesting to revert with its own assessment. The response letter was presented on February 5, 2020, after which the UGPP will have six months to issue its final determination. Also, certain of the Company's non-U.S. subsidiaries are currently under examination by the U.S. Internal Revenue Service (“IRS”) regarding payroll and employment taxes primarily in connection with services performed by employees of the Company's subsidiaries in the United States from 2013 to 2015. On May 1, 2018, the IRS issued 30-day letters to those subsidiaries proposing total assessments of $1.4 million plus penalties and interest for employment taxes for those years. The Company's subsidiaries filed protests of these proposed assessments with the IRS on July 16, 2018 and as of December 31, 2019 the Company has not received an answer.

| (2) | On August 8, 2019, Certified Collectibles Group, LLC (“CCG”) and its affiliates filed a complaint in the U.S. District Court for the Middle District of Florida, Tampa Division, (Civil Action No. 19-CV-1962) against Globant S.A. and Globant, LLC. The complaint, arising from a dispute relating to a service contract, alleges nine causes of action against Globant, LLC: (1) fraudulent inducement of contract; (2) fraud; (3) fraudulent concealment; (4) negligent misrepresentation; (5) breach of contract and breach of express warranty; (6) violation of Florida’s Deceptive and Unfair Trade Practices Act; (7) professional negligence; (8) declaratory judgment; and (9) unjust enrichment. The complaint names Globant S.A. as a defendant with respect to several of these causes of action (counts 2-4, 6-7, and 9), on the alleged theory that Globant S.A. was an “alter ego” or agent of Globant, LLC. Globant, LLC has filed a motion to dismiss the complaint for failure to state a claim, and Globant S.A. has filed a motion to dismiss for lack of personal jurisdiction. CCG has opposed these filings. The court has not yet ruled on the motions to dismiss.

NOTE 22 – ADVANCES TO ACQUIRE BUILDINGS

On December 4, 2015, our Argentine subsidiaries Sistemas Globales S.A. and IAFH Global S.A., entered into a Purchase Agreement with IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”) to acquire four floors representing approximately 4,896 square meters in a building to be constructed in a premium business zone of the City of Buenos Aires, Argentina.

F-66

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

In consideration for the property the subsidiaries agreed to pay IRSA the following purchase price: (i) AR$ 180,279 on the date of signing of the purchase agreement, equivalent to 18,779 at such date; (ii) 8,567 during a three-year term beginning in June 2016; and (iii) the remaining 3,672 at the moment of transfer of the property ownership, after finalization of the building.

As explained in note 4.4, during the years 2019 and 2018, the Company estimated the future use of some tax credits and concluded that the value-added tax related to the advance payments to IRSA which amounted to 70 and 363, respectively, will not be recoverable and were included as advances to suppliers paid to IRSA.

As of December 31, 2018, 28,799 are included in these consolidated financial statements as other receivables non-current. As of December 31, 2019, the building was finalized and the property ownership was transferred. Consequently, a total amount of 30,661 was reclassified from other receivables non-current to property and equipment.

NOTE 23 – RELATED PARTIES BALANCES AND TRANSACTIONS

23.1 – Related parties

The Company provides software and consultancy services to certain WPP subsidiaries and other related parties. WPP was a shareholder of the Company with significant influence, until it sold its shares of the Company on June 20, 2018. The Company also provides software services to Morgan Stanley, which holds a share over 5% on the Company. Outstanding receivable balances as of December 31, 2019 and 2018 are as follows:

|  | As of December 31,
|  | 2019 |  |  | 2018
Mercado Libre S.R.L. |  |  | — |  |  |  | 440
TNS |  |  | — |  |  |  | 56
Morgan Stanley Investment Management Inc. |  |  | 91 |  |  |  | 497
Total |  |  | 91 |  |  |  | 993

During the year ended December 31, 2019, 2018 and 2017, the Company recognized revenues for 1,419, 5,937 and 5,590, respectively, as follows:

F-67

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | For the year ended December 31,
|  | 2019 |  |  | 2018 |  |  | 2017
Added Value |  |  | — |  |  |  | — |  |  |  | 13
Grey Global Group Inc.(*) |  |  | — |  |  |  | 472 |  |  |  | 1,238
Group M Worldwide Inc(*) |  |  | — |  |  |  | 102 |  |  |  | 521
JWT(*) |  |  | — |  |  |  | 204 |  |  |  | 1,043
Kantar Group(*) |  |  | — |  |  |  | 216 |  |  |  | 791
Kantar Retail(*) |  |  | — |  |  |  | 39 |  |  |  | 93
Ogilvy & Mather Brasil Comunication(*) |  |  | — |  |  |  | 82 |  |  |  | 1,677
JP Morgan Chase & Co.(*) |  |  | — |  |  |  | 1,784 |  |  |  | —
JP Morgan Chase S.A.(*) |  |  | — |  |  |  | 48 |  |  |  | —
JP Morgan Services Argentina S.R.L.(*) |  |  | — |  |  |  | 1,503 |  |  |  | —
TNS(*) |  |  | — |  |  |  | 8 |  |  |  | 30
Morgan Stanley Investment Management Inc. |  |  | 1,257 |  |  |  | 964 |  |  |  | —
Mercado Libre S.R.L. |  |  | 162 |  |  |  | 515 |  |  |  | 143
Mirum Inc. |  |  | — |  |  |  | — |  |  |  | 41
Total |  |  | 1,419 |  |  |  | 5,937 |  |  |  | 5,590

(*) WPP and JP Morgan subsidiaries were no longer considered related parties as of December 31, 2019.

23.2 – Compensation of key management personnel

The remuneration of directors and other members of key management personnel during each of the three years are as follows:

|  | For the year ended December 31,
|  | 2019 |  |  | 2018 |  |  | 2017
Salaries and bonuses |  |  | 6,914 |  |  |  | 5,140 |  |  |  | 4,507
Total |  |  | 6,914 |  |  |  | 5,140 |  |  |  | 4,507

The remuneration of directors and key executives is determined by the Board of Directors based on the performance of individuals and market trends.

During 2017, the Company granted 12,836 and 62,162 restricted stock units at a grant price of $34.96 and $37.00, respectively.

During 2018, the Company granted 115,000 and 6,000 share options at a strike price of $46.00 and $50.92, respectively.

During 2018, the Company granted 93,000, 10,000 and 4,054 restricted stock units at a grant price of $46.00, $50.92 and $45.50, respectively.

During 2019, the Company granted 4,000 share options at a strike price of $52.10.

During 2019, the Company granted 82,800, 2,400 and 2,390 restricted stock units at a grant price of $87.44, $52.10 and $69.77, respectively.

F-68

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 24 – EMPLOYEE BENEFITS

24.1 – Share-based compensation plan

Share-based compensation expense for awards of equity instruments to employees and non-employee directors is determined based on the grant-date fair value of the awards. Fair value is calculated using Black & Scholes model.

In June 2012, the Company decided to replace its Stock Appreciation Rights ("SAR") program with a new share-based compensation program. The 2012 share-based compensation agreement was signed by the employees on June 30, 2012, considering the actual grant dates of the SARs to employees.

Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry (seven years after the effective date).

All options vested on the date of modification of the plan or all other non-vested options expire within seven years after the effective date or seven years after the period of vesting finalizes.

In July 2014, the Company adopted a new Equity Incentive Program, the 2014 Plan.

Pursuant to this plan, on July 18, 2014, the first trading day of the Company common shares on the NYSE, the Company made the annual grants for 2014 Plan to certain of the executive officers and other employees. The grants included share options with a vesting period of 4 years, becoming exercisable a 25% of the options on each anniversary of the grant date through the fourth anniversary of the grant. Share-based compensation expense for awards of equity instruments is determined based on the fair value of the awards at the grant date.

Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry (ten years after the effective date).

Under this share-based compensation plan, during the years 2019 and 2018, other share-based compensation agreements were signed for a total of 4,000 and 221,000 options granted, respectively.

During the years 2019 and 2018, as part of the 2014 Equity Incentive Plan, the Company granted awards to certain employees in the form of Restricted Stock Units ("RSUs"), having a par value of $1.20 each, with a specific period of vesting. Each RSU is equivalent in value to one share of the company´s common stock and represents the Company´s commitment to issue one share of the Company's common stock at a future date, subject to the term of the RSU agreement.

Until the RSUs vest, they are an unfunded promise to issue shares of stock to the recipient at some point in the future. The RSUs carry neither rights to dividends nor voting rights. RSU's vesting is subject to the condition that the employee must remain in such condition at of the vesting date.

The Company may determine a percentage of RSU, as part of the full year compensation package payment.

These RSUs agreements have been recorded as Equity Settled transactions in accordance to IFRS 2, and they were measured at fair value of shares at the grant date.

F-69

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The following shows the evolution of the share options for the years ended at December 31, 2019 and 2018:

|  | As of December 31, 2019 |  |  | As of December 31, 2018
|  | Number of options |  |  | Weighted average exercise price |  |  | Number of options |  |  | Weighted average exercise price
Balance at the beginning of year |  |  | 1,786,467 |  |  |  | 27.96 |  |  |  | 2,155,851 |  |  |  | 23.02
Options granted during the year |  |  | 4,000 |  |  |  | 52.10 |  |  |  | 221,000 |  |  |  | 46.45
Forfeited during the year |  |  | (21,625 | ) |  |  | 31.77 |  |  |  | (78,716 | ) |  |  | 36.89
Exercised during the year |  |  | (717,240 | ) |  |  | 22.06 |  |  |  | (511,668 | ) |  |  | 13.76
Balance at end of year |  |  | 1,051,602 |  |  |  | 31.82 |  |  |  | 1,786,467 |  |  |  | 27.96

The following shows the evolution of the RSUs for the years ended at December 31, 2019 and 2018:

|  | As of December 31, 2019 |  |  | As of December 31, 2018
|  | Number of RSU |  |  | Weighted average grant price |  |  | Number of RSU |  |  | Weighted average grant price
Balance at the beginning of year |  |  | 535,838 |  |  |  | 44.70 |  |  |  | 164,859 |  |  |  | 37.58
RSU granted during the year |  |  | 309,539 |  |  |  | 85.80 |  |  |  | 564,995 |  |  |  | 46.29
Forfeited during the year |  |  | (38,621 | ) |  |  | 47.69 |  |  |  | (30,783 | ) |  |  | 44.14
Issued during the year |  |  | (181,860 | ) |  |  | 37.00 |  |  |  | (163,233 | ) |  |  | 43.13
Balance at end of year |  |  | 624,896 |  |  |  | 64.05 |  |  |  | 535,838 |  |  |  | 44.70

The following tables summarizes the RSU at the end of the year:

F-70

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Grant date |  | Grant price ($) |  |  | Number of Restricted Stock Units |  |  | Fair value at grant date ($) |  |  | Expense as of December 31, 2019 ($) (*)
2017 |  |  | 36.30 |  |  |  | 1,000 |  |  |  | 36 |  |  |  | 18
|  |  | 37.00 |  |  |  | 45,242 |  |  |  | 1,674 |  |  |  | 2,217
|  |  | 42.00 |  |  |  | 3,250 |  |  |  | 137 |  |  |  | 77
2018 |  |  | 46.00 |  |  |  | 281,180 |  |  |  | 12,934 |  |  |  | 5,221
|  |  | 50.92 |  |  |  | 7,500 |  |  |  | 382 |  |  |  | 129
|  |  | 52.74 |  |  |  | 3,000 |  |  |  | 158 |  |  |  | 54
|  |  | 55.07 |  |  |  | 3,000 |  |  |  | 165 |  |  |  | 56
|  |  | 56.87 |  |  |  | — |  |  |  | — |  |  |  | 67
2019 |  |  | 52.10 |  |  |  | 2,400 |  |  |  | 125 |  |  |  | 61
|  |  | 87.44 |  |  |  | 268,750 |  |  |  | 23,500 |  |  |  | 6,450
|  |  | 94.93 |  |  |  | 4,000 |  |  |  | 380 |  |  |  | 116
|  |  | 69.77 |  |  |  | — |  |  |  | — |  |  |  | 446
|  |  | 103.75 |  |  |  | 3,000 |  |  |  | 311 |  |  |  | 20
Subtotal |  |  |  |  |  |  | 622,322 |  |  |  | 39,802 |  |  |  | 14,932
Non employees RSU |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2018 |  |  | 46.00 |  |  |  | — |  |  |  | — |  |  |  | 35
|  |  | 57.39 |  |  |  | — |  |  |  | — |  |  |  | 18
2019 |  |  | 87.44 |  |  |  | 2,574 |  |  |  | 225 |  |  |  | 126
Subtotal |  |  |  |  |  |  | 2,574 |  |  |  | 225 |  |  |  | 179
Total |  |  |  |  |  |  | 624,896 |  |  |  | 40,027 |  |  |  | 15,111

F-71

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The following tables summarizes the share options at the end of the year:

Grant date |  | Exercise price ($) |  |  | Number of stock options |  |  | Number of stock options vested as of December 31, 2019 |  |  | Fair value at grant date ($) |  |  | Fair value vested ($) |  |  | Expense as of December 31, 2019 (*)
2012 |  |  | 0.95 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5
|  |  | 2.48 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9
|  |  | 3.38 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 85
|  |  | 12.22 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | —
2014 |  |  | 10.00 |  |  |  | 107,826 |  |  |  | 107,826 |  |  |  | 359 |  |  |  | 359 |  |  |  | 500
2015 |  |  | 22.77 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | —
|  |  | 28.31 |  |  |  | 205,748 |  |  |  | 205,748 |  |  |  | 1,426 |  |  |  | 1,426 |  |  |  | 1,422
|  |  | 29.34 |  |  |  | 3,875 |  |  |  | 3,875 |  |  |  | 26 |  |  |  | 26 |  |  |  | —
|  |  | 34.20 |  |  |  | 5,500 |  |  |  | 5,500 |  |  |  | 47 |  |  |  | 47 |  |  |  | 39
2016 |  |  | 29.01 |  |  |  | 117,480 |  |  |  | 52,480 |  |  |  | 810 |  |  |  | 362 |  |  |  | 888
|  |  | 32.36 |  |  |  | 338,173 |  |  |  | 211,798 |  |  |  | 2,740 |  |  |  | 1,716 |  |  |  | 1,487
2017 |  |  | 38.16 |  |  |  | 30,000 |  |  |  | 20,000 |  |  |  | 273 |  |  |  | 182 |  |  |  | 91
|  |  | 36.30 |  |  |  | 15,000 |  |  |  | 7,500 |  |  |  | 127 |  |  |  | 64 |  |  |  | 32
2018 |  |  | 44.97 |  |  |  | 15,000 |  |  |  | — |  |  |  | 268 |  |  |  | — |  |  |  | 118
|  |  | 46.00 |  |  |  | 170,000 |  |  |  | 36,250 |  |  |  | 3,434 |  |  |  | 732 |  |  |  | 1,349
|  |  | 55.07 |  |  |  | 7,500 |  |  |  | — |  |  |  | 181 |  |  |  | — |  |  |  | 97
|  |  | 50.92 |  |  |  | 4,500 |  |  |  | — |  |  |  | 101 |  |  |  | — |  |  |  | 61
2019 |  |  | 52.10 |  |  |  | 4,000 |  |  |  | — |  |  |  | 89 |  |  |  | — |  |  |  | 43
Subtotal |  |  |  |  |  |  | 1,024,602 |  |  |  | 650,977 |  |  |  | 9,881 |  |  |  | 4,914 |  |  |  | 6,226
Non employees stock options |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2016 |  |  | 39.37 |  |  |  | 27,000 |  |  |  | 20,250 |  |  |  | 248 |  |  |  | 186 |  |  |  | 62
Subtotal |  |  |  |  |  |  | 27,000 |  |  |  | 20,250 |  |  |  | 248 |  |  |  | 186 |  |  |  | 62
Total |  |  |  |  |  |  | 1,051,602 |  |  |  | 671,227 |  |  |  | 10,129 |  |  |  | 5,100 |  |  |  | 6,288

(*) Includes social security taxes.

Deferred income tax asset arising from the recognition of the share-based compensation plan amounted to 11,587 and 4,731 for the years ended December 31, 2019 and 2018, respectively.

F-72

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

24.2 - Share options exercised and RSU vested during the year:

|  | As of December 31, 2019 |  |  | As of December 31, 2018 |
|  | Number of options exercised |  |  | Exercise price |  |  | Number of options exercised |  |  | Exercise price |
Granted in 2006 |  |  | — |  |  |  | 0.95 |  |  |  | 9,900 |  |  |  | 0.95 |
Granted in 2007 |  |  | — |  |  |  | 0.71 |  |  |  | 200,000 |  |  |  | 0.71 |
Granted in 2007 |  |  | — |  |  |  | 1.40 |  |  |  | 616 |  |  |  | 1.40 |
Granted in 2010 |  |  | — |  |  |  | 2.48 |  |  |  | 1,793 |  |  |  | 2.48 |
Granted in 2010 |  |  | — |  |  |  | 3.38 |  |  |  | 19,732 |  |  |  | 3.38 |
Granted in 2011 |  |  | — |  |  |  | 2.71 |  |  |  | 6,031 |  |  |  | 2.71 |
Granted in 2012 |  |  | 22,170 |  |  |  | 6.77 |  |  |  | — |  |  |  | 6.77 |
Granted in 2012 |  |  | 1,103 |  |  |  | 0.95 |  |  |  | — |  |  |  | 0.95 |
Granted in 2012 |  |  | 1,304 |  |  |  | 2.48 |  |  |  | — |  |  |  | 2.48 |
Granted in 2012 |  |  | 13,223 |  |  |  | 3.38 |  |  |  | — |  |  |  | 3.38 |
Granted in 2012 |  |  | 22,170 |  |  |  | 10.00 |  |  |  | — |  |  |  | 10.00 |
Granted in 2012 |  |  | 47,169 |  |  |  | 12.22 |  |  |  | — |  |  |  | 12.22 |
Granted in 2014 |  |  | 173,211 |  |  |  | 10.00 |  |  |  | 66,146 |  |  |  | 10.00 |
Granted in 2014 |  |  | — |  |  |  | 13.20 |  |  |  | 3,769 |  |  |  | 13.20 |
Granted in 2015 |  |  | 163,834 |  |  |  | 28.31 |  |  |  | 111,843 |  |  |  | 28.31 |
Granted in 2015 |  |  | 8,000 |  |  |  | 34.20 |  |  |  | 3,000 |  |  |  | 34.20 |
Granted in 2015 |  |  | 12,097 |  |  |  | 29.34 |  |  |  | 1,200 |  |  |  | 29.34 |
Granted in 2015 |  |  | 30,000 |  |  |  | 22.77 |  |  |  | — |  |  |  | 22.77 |
Granted in 2016 |  |  | 105,020 |  |  |  | 29.01 |  |  |  | 18,750 |  |  |  | 29.01 |
Granted in 2016 |  |  | 98,939 |  |  |  | 32.36 |  |  |  | 68,888 |  |  |  | 32.36 |
Granted in 2018 |  |  | 5,000 |  |  |  | 44.97 |  |  |  | — |  |  |  | 44.97 |
Granted in 2018 |  |  | 10,000 |  |  |  | 46.00 |  |  |  | — |  |  |  | 46.00 |
Granted in 2018 |  |  | 1,500 |  |  |  | 50.92 |  |  |  | — |  |  |  | 50.92 |
Granted in 2018 |  |  | 2,500 |  |  |  | 55.07 |  |  |  | — |  |  |  | 55.07 |
Balance at end of the year |  |  | 717,240 |  |  |  |  |  |  |  | 511,668 |  |  |  |  |

The average market price of the share amounted to 88.51 and 52.82 for years 2019 and 2018, respectively.

F-73

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The following tables summarizes the RSU vested during the years 2019 and 2018:

|  | December 31, 2019 |  |  | December 31, 2018 |
|  | Number of RSUs vested |  |  | Grant price |  |  | Number of RSUs vested |  |  | Grant price |
Granted in 2017 |  |  | 500 |  |  |  | 36.30 |  |  |  | 500 |  |  |  | 36.30 |
Granted in 2017 |  |  | 45,283 |  |  |  | 37.00 |  |  |  | 45,906 |  |  |  | 37.00 |
Granted in 2017 |  |  | — |  |  |  | 38.21 |  |  |  | 2,671 |  |  |  | 38.21 |
Granted in 2017 |  |  | 2,250 |  |  |  | 42.00 |  |  |  | 2,250 |  |  |  | 42.00 |
Granted in 2018 |  |  | — |  |  |  | 45.50 |  |  |  | 107,463 |  |  |  | 45.50 |
Granted in 2018 |  |  | — |  |  |  | 53.29 |  |  |  | 4,443 |  |  |  | 53.29 |
Granted in 2018 |  |  | 100,206 |  |  |  | 46.00 |  |  |  | — |  |  |  | 46.00 |
Granted in 2018 |  |  | 1,000 |  |  |  | 55.07 |  |  |  | — |  |  |  | 55.07 |
Granted in 2018 |  |  | 436 |  |  |  | 57.39 |  |  |  | — |  |  |  | 57.39 |
Granted in 2018 |  |  | 1,000 |  |  |  | 52.74 |  |  |  | — |  |  |  | 52.74 |
Granted in 2018 |  |  | 2,500 |  |  |  | 50.92 |  |  |  | — |  |  |  | 50.92 |
Granted in 2018 |  |  | 1,500 |  |  |  | 56.87 |  |  |  | — |  |  |  | 56.87 |
Granted in 2019 |  |  | 27,185 |  |  |  | 69.77 |  |  |  | — |  |  |  | 69.77 |
Balance at end of the year |  |  | 181,860 |  |  |  |  |  |  |  | 163,233 |  |  |  |  |

24.3 - Fair value of share-based compensation granted

Determining the fair value of the stock-based awards at the grant date requires judgment. The Company calculated the fair value of each option award on the grant date using the Black-Scholes option pricing model. The Black-Scholes model requires the input of highly subjective assumptions, including the fair value of the Company's shares, expected volatility, expected term, risk-free interest rate and dividend yield.

The Company estimated the following assumptions for the calculation of the fair value of the share options:

Assumptions |  | Granted in 2019 for 2014 plan |  |  | Granted in 2018 for 2014 plan |  |  | Granted in 2017 for 2014 plan |
Stock price |  |  | 52.10 |  |  |  | 46.45 |  |  |  | 39.69 |
Expected option life |  |  | 6 years |  |  |  | 6 years |  |  |  | 6 years |
Volatility |  |  | 40% |  |  |  | 40% |  |  |  | 19% |
Risk-free interest rate |  |  | 3.10% |  |  |  | 3.00% |  |  |  | 2.00% |

See Note 4.5 for a description of the assumptions.

F-74

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 25 – BUSINESS COMBINATIONS

25.1 Acquisition of Clarice Technologies

On May 14, 2015 ("closing date"), Globant España S.A. acquired Clarice Technologies PVT, Ltd ("Clarice"), a company organized and existing under the laws of India. Clarice is an innovative software product development services company that offers product engineering and user experience (UX) services and has operations in the United States and India. As of the closing date, the total headcount of Clarice was 337 employees distributed in India and United States. The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Clarice.

On August 5, 2015 the Company changed the legal name from Clarice to Globant India Private Limited ("Globant India").

The aggregate purchase price under the Stock Purchase Agreement ("SPA") amounted to 20,184.

On May 16, 2017, the Company signed an amendment to the SPA. Based on this amendment, purchase price may be subject to adjustments based on the future performance of Clarice and was payable to the sellers as follows:

| 1. | First Closing: As of the closing date, the sellers transferred 10,200 shares representing 76.13% of the shares to the Company for an aggregate consideration of 9,324 paid by the Company to the sellers on May 14, 2015.

| 2. | Staggered Acquisition: The remaining 23.87% of the shares shall be transferred to the Company and the remaining purchase price shall be paid to each of the Sellers in three tranches, in the following manner, provided that the remaining purchase price paid out to each of the sellers shall be the higher of the following:

| 2.1 | Fair Market Value of such shares, calculated in accordance with the methodology prescribed by the Reserve Bank of India by an appointed chartered accountant; or

| 2.2 | The consideration as detailed below:

| 2.2.1 | The second share transfer tranche, comprising 1,249 shares representing 9.32% of the shares of Globant India was transferred by the sellers to the Company on July 15, 2016. Based on the targets achieved by Globant India for the period between May 15, 2015 and May 15, 2016, the Company paid on July 15, 2016, 4,208 and recognized as of December 31, 2016 a gain of 418 arisen on the remeasurement of the liability, included in "Other income, net".

| 2.2.2 | The third Share transfer tranche, comprising 920 of the shares representing 6.87% of the shares of Globant India, was transferred by the sellers to the Company on March, 2018. Based on the targets achieved by Globant India for the period between January 1, 2017 and December 31, 2017, the Company paid on March 2018, 3,128.

| 2.2.3 | The fourth share transfer tranche comprising the transfer of 550 shares representing 4.11% of the shares of Globant India was transferred by the sellers to the Company on March 14, 2019. Based on the targets achieved by Globant India for the period between January 1, 2018 and December 31, 2018, the Company paid on March 14, 2019, 3,135.

| 2.2.4 | The fifth share transfer tranche comprising the transfer of 277 shares representing 2.07% of the shares of Globant India shall be transferred by the sellers to the Company no later than on March 31, 2020, in consideration for payment of the minimum share price for such shares, defined as 971 per share for this tranche, plus an amount of 1,316, subject to the achievement of certain targets by Globant India.

F-75

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The Company has concluded that as in the same SPA all parties have agreed the transfer of the 100% of the shares of Clarice in different stages, the transaction should be considered as one, and therefore the Company has accounted the acquisition for the 100% of the shares of Clarice and the consideration involved is the sum of the amount paid at closing date and the installments payables in years 2016, 2017, 2018, 2019 and 2020.

The consideration transferred for Globant India acquisition was calculated as follows:

Purchase price |  | Amount |  |  |  |
Down payment |  |  | 9,324 |  |  |  |  |
Installment payment |  |  | 2,483 | (a) |  |  |  |
Contingent consideration |  |  | 8,377 | (a) |  |  |  |
Total consideration |  |  | 20,184 |  |  |  |  |

| (a) | As of December 31, 2019 and 2018 included 1,580 and 3,127 as Other financial liabilities current, respectively, and as of December 31, 2018 included 1,527 as Other financial liabilities non-current.

On February 23, 2017, the Company signed an amendment of the SPA with one of the shareholders where they agreed on the acquisition of the shares held by the employee for an amount of 600 and the termination of the employment agreement.

As a consequence of the amendments to the SPA and remeasurement of the fair value of the contingent considerations, the Company recorded a gain of 1,173 as of December 31, 2017.

Clarice sellers' subscription agreement

On May 14, 2015, the Company signed two agreements whereas agreed to issue to the subscribers, as detailed below, and the subscribers agree to subscribe from the Company the number of shares set forth below:

First agreement

First tranche

The first tranche for 38,984 common shares were subscribed by two employees and their spouses for a total amount of 800.

Second and third tranches

Regarding the second and third tranches, on July 25, 2016 and April 5,2019, the Company issued 20,896 and 7,654 common shares for an amount of 800 and 400, respectively.

Second agreement

First tranche

The first tranche for 4,873 common shares was subscribed by one employee for a total amount of 100.

Second and third tranches

F-76

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Regarding second tranche, on July 25, 2016, the Company issued 2,612 common shares for an amount of 100.

Based on the amendment to the SPA signed on February 23, 2017, third tranche was canceled and no shares were issued.

Fourth tranche

Regarding fourth tranche, on April 5, 2019, the Company issued 7,654 common shares for an amount of 400.

Both agreements are forward contracts to issue and sell a variable number of shares for a fixed amount of cash, thus according to IFRS 9, the Company recorded a financial liability and a financial asset for the shares to be issued and the payment to be received, respectively, for an amount of 400 as of December 31, 2018. As of December 31, 2019 the financial asset and the financial liability were fully settled.

25.2 Acquisition of Dynaflows

On October 22, 2015, the Company acquired from Alfonso Amat, Wayra Argentina S.A., BDCINE S.R.L., Laura A. Muchnik, Facundo Bertranou, Mora Amat and Fabio Palioff (jointly "the Sellers) 9,014 shares, which represents 38.5% of the capital stock of Dynaflows S.A. Before this acquisition, the Company had 22.7% of the capital stock of Dynaflows and classified it as investment in associates. Through this transaction, the Company gained the control of Dynaflows S.A. As a consequence, the Company accounted for this acquisition in accordance with IFRS 3 as a business combination achieved in stages and as such, the Company remeasured its previously held equity interest in Dynaflows at its acquisition date fair value and recognize the resulting gain for an amount of 625 in Other income and expense, net.

The aggregate purchase price under the Stock Purchase Agreement ("SPA") amounted to ARS 13,316 (1,402) and 414, payable in two installments, as following:

- The first installment amounted to ARS 13,316 (1,402) paid at the closing date.

- The second installment amounted to 414 paid on April 22, 2016.

On the same date, the Company made a capital contribution of 868 (ARS 8,250) to Dynaflows by issuing 9,190 shares.

After both agreements and considering the previous equity interest held by the Company of 22.7%, the Company held the 66.73% of participation in Dynaflows.

The consideration transferred for Dynaflows acquisition was calculated as follows:

Purchase price |  | Amount |  |  |  |
Down payment |  | 1,402 |  |  |  |  |
Installment payment |  | 414 |  |  |  |  |
Total consideration |  | 1,816 | (a) |  |  |  |

| (a) | As of December 31, 2019 and 2018 the consideration was fully settled.

Minority interest purchase agreement

F-77

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

On October 22, 2015, the Company entered into a Shareholders Agreement (the "Minority Interest SHA") with Alfonso Amat and Mora Amat (the "non-controlling shareholders") to agree on a put option over the 33.27% of the remaining interest of Dynaflows effective on the third or fifth anniversary from the date of acquisition, pursuant to which the non-controlling shareholders shall have the right (the "Put Option") to sell and the Company shall purchase all, but not less than all the shareholder's non-controlling interest.

On October 26, 2018, the non-controlling shareholders exercised such option and the Company paid a total amount of 1,186 based on the EBITDA and Revenue of Dynaflows for the twelve months ended on September, 2018. Given that the exercise of the option occurred earlier than expected, a gain of 1,611 was recognized as of December 31, 2018 and disclosed as Other income, net.

As of December 31, 2017, the Company has recognized as non-current other financial liabilities the written put option for an amount of 2,797, equal to the present value of the amount that could be required to be paid to the counterparty discounted at an interest rate of 3.5%. Changes in the measurement of the gross obligation were recognized in profit or loss.

Pursuant to the shareholder's agreement, the Company also agreed on a call option over non-controlling interest effective after the fifth anniversary from the closing date till the sixth anniversary from the closing date pursuant to which the Company shall have the right to purchase and the non-controlling interest shareholders shall sell all but not less than all the shareholder's non-controlling interest then owned by the non-controlling shareholders.

During the year ended December 31, 2018, the call option was derecognized and a loss of 455 was recognized as Other income, net.

25.3 Acquisition of WAE

On May 23, 2016 (closing date), Globant España S.A. acquired 100% of shares of We Are London Limited (WAE UK), a company organized and existing under the laws of England and Wales and 100% of shares of We Are Experience, Inc. a corporation organized and existing under the Laws of the State of New York, United States (WAE US) (jointly WAE UK and WAE US are WAE). WAE is a service design consultancy, specialized in three distinct but complementary service offerings - Research, Strategy and Creative. Total headcount of WAE was 40 employees with operations in United States and United Kingdom. The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of WAE.

The aggregate purchase price under the Stock Purchase Agreement (SPA) amounted to 19,851, of which 12,131 relates to WAE UK and 7,720 relates to WAE US. Such purchase price may be subject to adjustments based on the future performance of WAE and is payable to the sellers as follows:

1. Up-front payment: As of the closing date, the Company paid an aggregate consideration of 8,500 to the sellers.

2. First earn-out payment: On August 16, 2017, the Company paid an amount of 5,000 to the sellers.

3. Second earn-out payment: Not later than August 20, 2018, the amount of 5,000, provided that such amount shall be reduced in proportion to the percentage of targets achievement by WAE during the period commencing on June 1, 2017 and ending on May 31, 2018. However, the Company and the sellers of WAE have entered into discussions concerning circumstances that may have impacted the calculation of targets on the base of which the final amount of Year 2 Deferred Consideration should have been calculated. For that reason, in July, 2018, the Company and the sellers of WAE signed a final settlement in order to avoid future claims on this matter. During the year ended December 31, 2018, the Company recognized a loss arising from the settlement agreement that amounted to 1,038 and is disclosed as Other income, net. In July, 2018, the Company paid a total amount of 1,867.

F-78

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Additionally, the Company shall pay to the sellers an amount of 575 in cash on the first earn-out payment date and/or the second earn-out payment date related to the corporation tax saved by WAE UK prior to such date as a result of any deduction obtained under income tax law applicable to United to Kingdom attributable to the exercise of the stock options plan granted by WAE UK to the option holders. This amount is considered by the Company as part of the consideration amount. On October 2017, the Company paid 436 in cash related to the corporation tax saved to be reimbursed to the sellers.

Finally, as part of the total consideration the Company computed the working capital adjustment defined in the SPA. Total adjustment amounted to 1,357.

Acquisition-related charges amounting to 515 have been excluded from the consideration transferred and have been recognized as an expense in profit or loss in the current year, within the Professional services line item.

The fair value of the consideration transferred for WAE acquisition at the acquisition date was calculated as follows:

Purchase price |  | Amount |  |  |  |
Down payment |  |  | 8,500 |  |  |  |  |
Working capital adjustment |  |  | 1,352 |  |  |  |  |
Installment payment |  |  | 551 | (a) |  |  |  |
Contingent consideration |  |  | 9,448 | (a) |  |  |  |
Total consideration |  |  | 19,851 |  |  |  |  |

(a) As of December 31, 2019 and 2018, the consideration was fully settled.

25.4 Acquisition of L4

On November 14, 2016 ("closing date"), Globant LLC acquired 100% of shares of L4 Mobile, LLC ("L4"), a limited liability company organized and existing under the laws of the State of Washington, United States. L4 offers the digital product consulting, design, development and quality assurance services necessary to build and manage robust digital products. Total headcount of L4 was 90 employees with operations in United States. The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of L4.

The aggregate purchase price under the Stock Purchase Agreement ("SPA") amounted to 20,388.

On January 30, 2018, the Company signed an amendment to the SPA. Considering this amendment, purchase price may be subject to adjustments based on the future performance of L4 and is payable to the seller as follows:

| 1. | Up-front payment: As of the closing date, the Company paid an aggregate consideration of 11,000 to the seller.

| 2. | First earn-out payment: On February 15, 2017, the Company paid an aggregate consideration of 990 to the sellers.

F-79

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| 3. | Second earn-out payment: On February 15, 2018, the Company paid an aggregate consideration of 1,850.

| 4. | Third and fourth earn-out payment: Not later than February 15, 2019, the amount of 1,160, provided that such amount shall be reduced in proportion to the percentage of targets achievement by L4 during the period commencing on January 1, 2018 and ending on December 31, 2018. Not later than February 15, 2020, the amount of 1,160, provided that such amount shall be reduced in proportion to the percentage of targets achievement by L4 during the period commencing on January 1, 2019 and ending on December 31, 2019. However, as of December 31, 2018, the Company remeasured the fair value of the contingent consideration related to these earn-outs, considering the non achievement of targets established by the Share Purchase Agreement. Gain arising from the change in fair amounted to 1,848 and is disclosed as Other income, net as of December 31, 2018.

The fair value of the consideration transferred for L4 acquisition at the acquisition date was calculated as follows:

Purchase price |  | Amount |  |  |  |
Down payment |  |  | 11,000 |  |  |  |  |
Working capital adjustment |  |  | 817 | (a) |  |  |  |
Contingent consideration |  |  | 8,571 | (a) |  |  |  |
Total consideration |  |  | 20,388 |  |  |  |  |

(a) As of December 31, 2019 and 2018 the fair value of the contingent consideration was zero.

Acquisition related expenses were not material and were recognized directly as expense.

25.5 Acquisition of Ratio

On February 28, 2017, Globant LLC acquired 100% of shares of Ratio Cypress, LLC ("Ratio"), a limited liability company organized and existing under the laws of the State of Washington, United States. Ratio offers design, development and quality assurance services necessary to build and manage robust digital products and video streaming solutions for major media companies. Total headcount of Ratio was 45 employees with operations in United States.

The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Ratio.

The aggregate purchase price under the Stock Purchase Agreement ("SPA"), amended on March 2, 2018, amounted to 9,529. Such purchase price may be subject to adjustments based on the future performance of Ratio and is payable to the seller as follows:

| 1. | Up-front payment: As of the closing date, the Company paid an aggregate consideration of 5,800 to the seller.

| 2. | First earn-out payment: On February 15, 2018, the Company paid the aggregate consideration 1,669 to the sellers.

| 3. | Second earn-out payment: On February 15, 2019, the Company paid the aggregate consideration of 2,019, to the sellers.

F-80

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| 4. | Third earn-out payment: On February 18, 2020, the Company paid the aggregate consideration of 1,783, considering the targets achievement by Ratio during the period commencing on January 1, 2019 and ending on December 31, 2019.

The fair value of the consideration transferred for Ratio acquisition was calculated as follows:

Purchase price at acquisition date |  | Amount |  |  |  |
Down payment |  |  | 5,800 |  |  |  |  |
Working capital adjustment |  |  | (97 | ) |  |  |  |
Contingent consideration |  |  | 3,826 | (a) |  |  |  |
Total consideration |  |  | 9,529 |  |  |  |  |

| (a) | As of December 31, 2019 includes 903 as Other financial liabilities current. As of December 31, 2018 included 1,992 and 851 as Other financial liabilities current and non-current, respectively.

Acquisition related expenses were not material and were recognized directly as expense.

25.6 Acquisition of PointSource

On June 1, 2017, Globant LLC acquired 100% of shares of PointSource, LLC ("PointSource"), a limited liability company organized and existing under the laws of the State of Florida, United States. PointSource offers digital solutions to its customers which include design, digital strategy, development and marketing services. Total headcount of PointSource was 97 employees with operations in United States.

The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of PointSource.

The aggregate purchase price under the Stock Purchase Agreement ("SPA") amounted to 28,629.

In May, 2018, the Company signed an amendment to the SPA, pursuant to which a new fixed-payment was established, in replacement of previous payment subject to targets achievements.The amended purchase price is payable to the seller as follows:

| 1. | Up-front payment: The Company paid the first payment of 15,500 in two installments:

| a. | As of the closing date, the Company paid an aggregate consideration of 3,100 to the seller.

| b. | On June 7, 2017, the Company paid the second portion of the first payment for a total amount of 12,400.

| 2. | First earn-out payment: On February 22, 2018, the Company paid the aggregate consideration of 2,206 to the sellers.

| 3. | Second earn-out payment: On February 28, 2019, the Company paid the aggregate consideration of 750 to the sellers.

| 4. | Third earn-out payment: Not later than February 29, 2020, the fixed-amount of 1,450 and 1,198 subject to the achievement of targets during the period commencing on January 1, 2019 and ending on December 31, 2019.

Additionally, as part of the total consideration the Company computed the working capital adjustment for a total amount of 3,756.

Equity purchase agreement

F-81

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

On June 1, 2017, the Company signed an equity purchase agreement to have the option to acquire the 100% of the shares of PointSource Limited Liability Company (PS Belarus), a company established in accordance with the laws of the Republic of Belarus and totally owned by Christopher L. Hugill, Chief Executive Officer (CEO) of PointSource.

Additionally, PointSource and PS Belarus are parties in a subcontractor agreement, dated as of July 1, 2015, pursuant to which PS Belarus performs services to PointSource as an independent contractor. Considering that the Company owned 100% of PointSource which is the only customer of PS Belarus and that the CEO of PointSource is the wholly-owned shareholder of PS Belarus, the Company concluded that has the control over PS Belarus and has to consolidated in 100% as the following factors are met:

(a) PointSource has power over PS Belarus;

(b) PointSource has the ability to use its power over PS Belarus to affect the amounts of its return as it is the only customer.

The fair value of the consideration transferred for PointSource acquisition was calculated as follows:

Purchase price at acquisition date |  | Amount |  |  |  |
Down payment |  |  | 15,500 |  |  |  |  |
Working capital adjustment |  |  | 3,756 |  |  |  |  |
Contingent consideration |  |  | 9,373 | (a) |  |  |  |
Total consideration |  |  | 28,629 |  |  |  |  |

| (a) | As of December 31, 2019 included 1,086 as Other financial liabilities current. As of December 31, 2018, included 746 and 1,040 as Other financial liabilities current and non-current, respectively.

Acquisition related expenses were not material and were recognized directly as expense.

25.7 Acquisition of Small Footprint

On August 20, 2018, Globant España S.A. (sociedad unipersonal) and Globant LLC signed a pre-closing Asset Purchase Agreement (“APA”) with Small Footprint Inc., a corporation organized and existing under the laws of the State of North Carolina, United States, pursuant to which Globant España acquired 100% of shares of Small Footprint S.R.L., a limited liability company organized and existing under the laws of Romania, and Globant LLC acquired the assets and properties used or held for use in connection with the business of Small Footprint Inc. Both transactions were treated as a single business combination according to IFRS 3. The closing date took place on October 15, 2018, which is the date the Company acquired control over Small Footprint.

The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Small Footprint.

The aggregate purchase price under the APA amounted to 7,397. Such purchase price may be subject to adjustments based on the future performance of Small Footprint and is payable to the seller as follows:

| 1. | Up-front payment: As of the closing date, the Company paid an aggregate consideration of 4,331 to the seller.

| 2. | First earn-out payment: On March 1, 2019, the Company paid the aggregate consideration of 3,066 to the sellers.

| 3. | Second earn-out payment: On February 13, 2020, the Company paid the aggregate consideration of 2,140 to the sellers given the achievement of billable headcount target during the year 2019 and such amount was recognized as remuneration expense.

F-82

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| 4. | Third earn-out payment: Not later than February 15, 2021, the amount of 1,610 considering the billable headcount target achievement by Small Footprint during the period commencing on January 1, 2020 and ending on December 31, 2020 which was identified as an arrangement that includes remuneration of former owners of the acquiree for future services and consequently, it was excluded from the business combination and will be recognized in expense during the required service period.

The fair value of the consideration transferred for Small Footprint acquisition at the acquisition date was calculated as follows:

Purchase price at acquisition date |  | Amount |
Down payment |  |  | 3,840 |
Working capital adjustment |  |  | 488 |
Contingent consideration |  |  | 3,029 | (a)
Total consideration |  |  | 7,357 |

(a) As of December 31, 2018, included 3,070 as other financial liabilities current.

Acquisition related expenses were not material and were recognized directly as expense for each period.

25.8 Acquisition of Avanxo

On January 17, 2019, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with the shareholders of Avanxo (Bermuda) Limited (“Avanxo”), pursuant to which the Company agreed to purchase all of Avanxo’s share capital subject to the terms and conditions set forth in the Purchase Agreement. Avanxo is a cloud consulting and implementation company headquartered in Bermuda, with operations in Brazil, Mexico, Colombia, Peru, Argentina and the United States. The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Avanxo.

The Purchase Agreement contains customary representations, warranties, covenants, indemnities and conditions to closing, including non-objection to the Acquisition by the Colombian antitrust authority (Superintendencia de Industria y Comercio), which was received in January, 2019. The transaction closed on February 1, 2019 (acquisition date).

Under the terms of the Purchase Agreement, the total consideration payable by the Company to Avanxo’s shareholders, assuming a debt-free and cash-free balance sheet, is 44,460. Such purchase price may be subject to a working capital adjustment, reduction for uncollected accounts receivables and the amounts of the Earn-Out Payments (as defined below) that become due and payable.

| • | Up-front payment: On February 1, 2019, the Company paid an aggregate consideration of 40,939 to the seller. The working capital and the minimum cash adjustments amounted to 1,205 and were paid in May, 2019.

| • | Earn-out payments: the total amount of the earn-out payments was 7,618 and will be payable in two installments, at the end of each of the years ending December 31, 2019 and 2020, and is subject to upwards or downwards adjustment based on Avanxo’s achievement of specified revenue, gross margin and operating margin targets for each of the years ending December 31, 2019 and 2020 (the “Earn Out Payments”) that apply only to certain sellers. Of total amount of the earn-out payments, 2,318 was considered part of the purchase price and 5,300 was identified as an arrangement that includes remuneration of former owners of the acquiree for future services and consequently, it was excluded from the business combination and will be recognized in expense during the required service period.

F-83

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

At the Company's sole option, the Company will be entitled to pay a portion of the Total Consideration through the issuance and delivery of common shares, as follows: (i) up to 865 of the amount payable on the closing of the Acquisition and (ii) at the time of payment of any Earn Out Payments, up to 25% of such Earn Out Payment. The number of common shares that may be issued and delivered to Avanxo´s selling shareholders will be determined based on the volume weighted average trading price for the 60 calendar day period prior to closing of each share subscription. Common shares issued pursuant to the exercise of this option will be subject to a 12-month lock-up period. These common shares are expected to be issued in reliance on the exemption from registration provided by Regulation S under the Securities Act of 1933, as amended. On February 1 and February 20, 2019, the Company issued 14,778 common shares for a total amount of 845 as part of this subscription agreement (note 29.1).

The fair value of the consideration transferred for Avanxo acquisition at the acquisition date was calculated as follows:

Purchase price |  | Amount |
Down payment |  |  | 42,144 |
Contingent consideration |  |  | 2,158 | (a)
Total consideration |  |  | 44,302 |

(a) As of December 31, 2019 included as 1,147 and 1,102 as Other financial liabilities current and non-current, respectively.

Acquisition related expenses were not material and were recognized directly as expensed.

25.9 Acquisition of Belatrix

On August 9, 2019, Globant S.A. (the “Company”), through certain of its wholly-owned subsidiaries, entered into an Equity Purchase Agreement (the “Purchase Agreement”) with the equityholders of Belatrix Global Corporation S.A., a Spanish stock company (“Belatrix”), pursuant to which the Company purchased all of the outstanding equity interests in Belatrix and its subsidiaries (the “Acquisition”). The transaction was simultaneously signed and closed. Belatrix is a software and applications development company with operations in Argentina, Peru, Colombia and the United States. The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Belatrix.

Upon the closing of the Acquisition, the Company paid 61,468 in cash to the sellers and, pursuant to the terms of the Purchase Agreement, the sellers subscribed for 5,000 of the Company’s common shares, which were valued based on the volume weighted average trading price of the Company’s common shares during the 60-day period until two days prior to the closing date. A portion of the upfront cash consideration is being held in escrow for potential adjustments related to working capital, accounts receivable, minimum cash and other matters. An additional amount of 3,000 is payable to the sellers by October 31, 2020, subject to Belatrix’s achievement of specified revenue targets for the period from August 1, 2019 through July 31, 2020, and it is subject to upwards adjustment based on overachievement of such targets. Of total amount of the earn-out payments, 2,091 was considered part of the purchase price and 909 was identified as an arrangement that includes remuneration of former owners of the acquiree for future services and consequently, it was excluded from the business combination and will be recognized in expense during the required service period.

The fair value of the consideration transferred for Belatrix acquisition at the acquisition date was calculated as follows:

F-84

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Purchase price |  | Amount |
Down payment |  |  | 61,468 |
Contingent consideration |  |  | 4,165 | (a)
Total consideration |  |  | 65,633 |

(a) As of December 31, 2019 included 4,221 as Other financial liabilities current.

Acquisition related expenses were not material and were recognized directly as expense.

25.10 Acquisition of BI Live

On October 16, 2019, Globant S.A. (the “Company”), through its subsidiary Sistemas Globales S.A., entered into an Purchase Agreement with BI Live S.R.L., an Argentine company, pursuant to which the Company purchased certain assets and rights of BI Live (the “Acquisition”). The transaction closed on November 11, 2019. The purpose of the acquisition is related to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of BI Live.

Upon the closing of the acquisition, the Company paid 366 in cash to the sellers. An additional amount of up to 3,000 is payable to the sellers by February 21, 2021, 2022 and 2023, subject to BI Live’s achievement of specified growth and operating margin targets for the years 2020, 2021 and 2022, and it is subject to adjustment based on the achievement of such targets. The fair value of the contingent payment is 512 as of December 31, 2019. The primarily reason for the purchase is to expand to SAP software consulting and innovation services.

The preliminary fair value of the consideration transfer for BI Live acquisition at the acquisition date was calculated as follows:

Purchase price |  | Amount |
Down payment |  |  | 366 |
Contingent consideration |  |  | 512 | (a)
Total consideration |  |  | 878 |

(a) As of December 31, 2019 includes 515 as Other financial liabilities non-current.

Acquisition related expenses were not material and were recognized directly as expense.

As of the date of issuance of these consolidated financial statements due to the recent of this acquisition, the accounting for this acquisition is incomplete; hence, pursuant the guidance in paragraph B66 of IFRS 3, the Company has included preliminary amounts in the below disclosures as required by such standard, as follows:

| • | Fair value of the total consideration transferred since the Company has not completed the fair value analysis of the contingent consideration as of the date of issuance of these financial statements.

| • | The amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed, the total amount of goodwill (including a qualitative description of the factors that make up the goodwill recognized and the amount of goodwill that will be deducted for tax purposes) and other intangibles, as applicable.

F-85

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

| • | The gross contractual amounts of the acquired receivables, and the best estimate at the acquisition date of the contractual cash flows not expected to be collected. For each contingent liability to be recognized, if any, an estimate of its financial effect, an indication of the uncertainties relating to the amount or timing of any outflow and the possibility of any reimbursement, and the reasons why the liability cannot be measured reliably, if applicable.

25.11 Outstanding balances

Outstanding balances of financial liabilities related to the above mentioned acquisitions as of December 31, 2019 and 2018 are as follows:

|  | As of December 31, 2019 |  |  | As of December 31, 2018 |
|  | Other financial liabilities - current |  |  | Other financial liabilities - non current |  |  | Other financial liabilities - current |  |  | Other financial liabilities - non current |
Clarice |  |  | 1,580 |  |  |  | — |  |  |  | 3,127 |  |  |  | 1,527 |
Subscription agreement |  |  | — |  |  |  | — |  |  |  | 400 |  |  |  | — |
Ratio |  |  | 903 |  |  |  | — |  |  |  | 1,992 |  |  |  | 851 |
PointSource |  |  | 1,086 |  |  |  | — |  |  |  | 746 |  |  |  | 1,040 |
Small Footprint |  |  | — |  |  |  | — |  |  |  | 3,070 |  |  |  | — |
Avanxo |  |  | 1,147 |  |  |  | 1,102 |  |  |  | — |  |  |  | — |
Belatrix |  |  | 4,221 |  |  |  | — |  |  |  | — |  |  |  | — |
BI Live |  |  | — |  |  |  | 515 |  |  |  | — |  |  |  | — |
Total |  |  | 8,937 |  |  |  | 1,617 |  |  |  | 9,335 |  |  |  | 3,418 |

The significant inputs are disclosed in note 28.9.1.

25.12 Purchase Price Allocation

As of December 31, 2019 and 2018, the fair values of the assets acquired, liabilities assumed and goodwill, and the preliminary fair values of the assets acquired and goodwill of BI Live determined at the date of acquisition in the business combinations are as follows:

F-86

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | 2019 acquisitions |  |  | 2018 acquisitions |
|  | Avanxo |  |  | Belatrix |  |  | BI Live |  |  | Small Footprint |
Current Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 2,749 |  |  |  | 3,929 |  |  |  | — |  |  |  | 191 |
Investments |  |  | 948 |  |  |  | 86 |  |  |  | — |  |  |  | — |
Trade receivables |  |  | 6,931 |  |  |  | 6,125 |  |  |  | 56 |  |  |  | 1,066 |
Other receivables |  |  | 3,624 |  |  |  | 1,119 |  |  |  | — |  |  |  | 45 |
Other assets |  |  | 11,015 |  |  |  | — |  |  |  | — |  |  |  | — |
Non current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other receivables |  |  | — |  |  |  | 206 |  |  |  | — |  |  |  | — |
Property and equipment |  |  | 500 |  |  |  | 3,181 |  |  |  | — |  |  |  | 48 |
Intangibles |  |  | 6,104 |  |  |  | 8,285 |  |  |  | — |  |  |  | 173 |
Right-of-use asset |  |  | — |  |  |  | 3,272 |  |  |  | — |  |  |  | — |
Deferred tax |  |  | — |  |  |  | 184 |  |  |  | — |  |  |  | — |
Goodwill (1) |  |  | 32,068 |  |  |  | 50,816 |  |  |  | 822 |  |  |  | 6,244 |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  |  | (14,123 | ) |  |  | (3,195 | ) |  |  | — |  |  |  | — |
Lease liabilities |  |  | — |  |  |  | (3,347 | ) |  |  | — |  |  |  | — |
Tax liabilities |  |  | (2,649 | ) |  |  | (1,138 | ) |  |  | — |  |  |  | — |
Payroll and social security |  |  | (1,582 | ) |  |  | (3,224 | ) |  |  | — |  |  |  | — |
Other liabilities |  |  | — |  |  |  | (20 | ) |  |  | — |  |  |  | (410 | )
Borrowings |  |  | (644 | ) |  |  | (646 | ) |  |  | — |  |  |  | — |
Deferred tax liabilities |  |  | (639 | ) |  |  | — |  |  |  | — |  |  |  | — |
Total consideration |  |  | 44,302 |  |  |  | 65,633 |  |  |  | 878 |  |  |  | 7,357 |

| (1) | As of December 31, 2019 and 2018, 83,706 and 6,244, are not deductible for tax purposes, respectively.

Goodwill has arisen because the consideration paid for these acquisitions included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of acquired companies. Only the customer contracts and relationships are recognized as intangible, in the acquisitions of Belatrix, Avanxo and Smallfootprint. The other benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

The fair values of the receivables acquired do not differ from their gross contractual amount.

Acquisition related expenses were not material and were recognized directly as expense for each period.

25.13 Impact of acquisitions on the results of the Company

Directors consider these "pro-forma" numbers to represent an approximate measure of the performance of the Company on an annualized basis and to provide a reference point for comparison in future periods.

F-87

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The net income for the year ended December 31, 2017 includes a gain of 812 and 383 attributable to the business generated by Ratio and Pointsource, respectively, determined based on the information available as of June 30, 2017. Revenue for the year ended December 31, 2017 includes 4,188 and 2,108 related to the business of Ratio and Pointsource, respectively, computed also with the information available as of June 30, 2017. Since then, the business of the two entities were fully integrated within the business of our subsidiary Globant LLC; furthermore, during the last semester of 2017 both entities were formally merged into our subsidiary Globant LLC. Consequently, it has not been possible to determine a reasonable estimate of the total amounts related to the revenue and net income attributable to the separate businesses of Ratio and Pointsource for the full year included in the consolidated income for the year ended December 31, 2017.

As explained in note 25.7, on October 15, 2018, the Company purchased the assets of Small Footprint Inc. and the shares of Small Footprint S.R.L. From the acquisition date and onwards, the business of Small Footprint Inc. was fully integrated within the business of the Company's subsidiary Globant LLC. Consequently, it has not been possible to determine a reasonable estimate of the total amounts related to the net income attributable to the separate business of Small Footprint as of December 31, 2018. Had the business combination been effected at January 1, 2018, the consolidated revenue of the Company would have been 523,114 and the net profit for the year ended December 31, 2018 would have been 52,910.

The net income for the year ended December 31, 2019 includes a gain of 2,023 attributable to the business generated by Avanxo. Revenue for the year ended December 31, 2019 included 23,971 related to the business of that company. Had the business combination of Avanxo been effected at January 1, 2019, the consolidated revenue of the Company would have been 661,777 the net income for the period ended December 31, 2019 would have been 56,105.

The net income for the year ended December 31, 2019 includes a gain of 2,481 attributable to the business generated by Belatrix. Revenue for the year ended December 31, 2019 included 15,572 related to the business of that company. Had the business combination of Belatrix been effected at January 1, 2019, the consolidated revenue of the Company would have been 680,318, the net income for the period ended December 31, 2019 would have been 50,331.

Had the two business combinations made in 2019, as described above, been performed on January 1, 2019, the consolidated revenue of the Company would have been 682,770 and the net profit for the year ended December 31, 2019, would have been 52,421.

25.14 Goodwill

A reconciliation of the goodwill from opening to closing balances is as follows:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Cost |  |  |  |  |  |  |  |
Balance at beginning of year |  |  | 104,846 |  |  |  | 98,926 |
Additions related to new acquisitions (note 25.12) |  |  | 83,706 |  |  |  | 6,244 |
Translation |  |  | (14 | ) |  |  | (324 | )
Balance at end of year |  |  | 188,538 |  |  |  | 104,846 |

F-88

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 26 – SEGMENT INFORMATION

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding on how to allocate resources and in assessing performance. The Company’s CODM is considered to be the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an entity level basis for purposes of making operating decisions and assessing financial performance. Therefore, the Company has determined that it operates in a single operating and reportable segment.

The Company provides services related to application development, testing, infrastructure management and application maintenance.

The following table summarizes revenues by geography, based on the customers' location:

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
North America |  |  |  |  |  |  |  |  |  |  |  |
United States of America |  |  | 483,228 |  |  |  | 400,029 |  |  |  | 322,658 |
Canada |  |  | 13,125 |  |  |  | 7,061 |  |  |  | 2,956 |
Subtotal North America |  |  | 496,353 |  |  |  | 407,090 |  |  |  | 325,614 |
Europe |  |  |  |  |  |  |  |  |  |  |  |
Spain |  |  | 26,134 |  |  |  | 30,298 |  |  |  | 23,831 |
Netherlands |  |  | 2,723 |  |  |  | 1,023 |  |  |  | 69 |
United Kingdom |  |  | 15,672 |  |  |  | 12,970 |  |  |  | 9,996 |
Luxembourg |  |  | 937 |  |  |  | 1,109 |  |  |  | 1,000 |
Germany |  |  | 437 |  |  |  | 623 |  |  |  | 1,540 |
Sweden |  |  | — |  |  |  | — |  |  |  | 1,317 |
Others |  |  | 881 |  |  |  | 217 |  |  |  | 731 |
Subtotal Europe |  |  | 46,784 |  |  |  | 46,240 |  |  |  | 38,484 |
Asia |  |  |  |  |  |  |  |  |  |  |  |
India |  |  | 2,157 |  |  |  | 1,063 |  |  |  | 673 |
Indonesia |  |  | 1,157 |  |  |  | 1,686 |  |  |  | — |
Japan |  |  | 1,062 |  |  |  | — |  |  |  | — |
Others |  |  | 277 |  |  |  | 318 |  |  |  | 27 |
Subtotal Asia |  |  | 4,653 |  |  |  | 3,067 |  |  |  | 700 |
Latin America and others |  |  |  |  |  |  |  |  |  |  |  |
Argentina |  |  | 32,295 |  |  |  | 24,241 |  |  |  | 14,886 |
Brazil |  |  | 7,964 |  |  |  | 238 |  |  |  | 358 |
Colombia |  |  | 14,355 |  |  |  | 5,362 |  |  |  | 3,553 |
Chile |  |  | 29,547 |  |  |  | 21,246 |  |  |  | 19,243 |
Uruguay |  |  | 17 |  |  |  | 529 |  |  |  | 231 |
Mexico |  |  | 20,623 |  |  |  | 11,949 |  |  |  | 7,418 |
Perú |  |  | 6,251 |  |  |  | 1,718 |  |  |  | 2,627 |
Others |  |  | 483 |  |  |  | 630 |  |  |  | 325 |
Subtotal Latin America and others |  |  | 111,535 |  |  |  | 65,913 |  |  |  | 48,641 |
TOTAL |  |  | 659,325 |  |  |  | 522,310 |  |  |  | 413,439 |

The revenues by geography were determined based on the country where the sale took place.

F-89

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

One single customer accounted for 11.2%, 11.3% and 10.2% of revenues for the years ended December 31, 2019, 2018 and 2017.

The following table summarizes non-current assets other than deferred taxes as stated in IFRS 8, paragraph 33.b, by jurisdiction:

|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Argentina |  |  | 85,346 |  |  |  | 70,349 |
Spain |  |  | 144,882 |  |  |  | 46,803 |
United States of America |  |  | 70,054 |  |  |  | 58,083 |
Brazil |  |  | 1,775 |  |  |  | 1,512 |
Uruguay |  |  | 1,808 |  |  |  | 781 |
Luxembourg |  |  | 4,289 |  |  |  | 4,353 |
Colombia |  |  | 42,589 |  |  |  | 12,942 |
México |  |  | 14,814 |  |  |  | 6,121 |
India |  |  | 9,817 |  |  |  | 4,159 |
Chile |  |  | 2,883 |  |  |  | 874 |
Peru |  |  | 4,686 |  |  |  | 458 |
Other countries |  |  | 1,502 |  |  |  | 718 |
TOTAL |  |  | 384,445 |  |  |  | 207,153 |

NOTE 27 – LEASES

The Company is obligated under various leases for office spaces and office equipment.

F-90

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Movements in right-of-use assets and lease liabilities as of December 31, 2019 were as follow:

|  | Office spaces |  |  | Office equipments |  |  | Total |
Right-of-use assets |  |  |  |  |  |  |  |  |
January 1, 2019 |  |  | 46,567 |  |  |  | — |  |  |  | 46,567 |
Additions |  |  | 16,778 |  |  |  | 6,812 |  |  |  | 23,590 |
Additions from business combinations (note 25.12) |  |  | 2,863 |  |  |  | 409 |  |  |  | 3,272 |
Depreciation (note 6) |  |  | (14,519 | ) |  |  | (65 | ) |  |  | (14,584 | )
Translation |  |  | (64 | ) |  |  | — |  |  |  | (64 | )
December 31, 2019 |  |  | 51,625 |  |  |  | 7,156 |  |  |  | 58,781 |
Lease liabilities |  |  |  |  |  |  |  |  |  |  |  |
January 1, 2019 |  |  | 46,887 |  |  |  |  |  |  |  |  |
Additions (1) |  |  | 23,590 |  |  |  |  |  |  |  |  |
Additions from business combinations (note 25.12) |  |  | 3,347 |  |  |  |  |  |  |  |  |
Foreign exchange difference (1) |  |  | (92 | ) |  |  |  |  |  |  |  |
Interest expense (1) |  |  | 3,464 |  |  |  |  |  |  |  |  |
Payments (2) |  |  | (15,833 | ) |  |  |  |  |  |  |  |
December 31, 2019 |  |  | 61,363 |  |  |  |  |  |  |  |  |

(1) Non-cash transactions.

(2) Cash transactions.

The outstanding balance of the lease liabilities as of December 31, 2019 is as follows:

Lease liabilities |  |  |
Current |  |  | 19,439 |
Non-current |  |  | 41,924 |
TOTAL |  |  | 61,363 |

The Company has some lease contracts that have not yet commenced as of December 31, 2019. The future lease payments for these lease contracts are disclosed as follows:

Year |  |  | Amount |
2020 |  |  |  | 1,413 |
2021 |  |  |  | 2,468 |
2022 |  |  |  | 2,731 |
2023 |  |  |  | 2,775 |
2024 |  |  |  | 2,855 |
2025 |  |  |  | 478 |

F-91

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The maturity analysis of lease liabilities is presented in note 28.5.

The expense related to short-term and low-value leases was not material.

As required by the IAS 17, the undiscounted amounts of future fixed minimum annual lease commitments are as follows at December 31, 2018:

Year |  |  | Amount |
2019 |  |  |  | 16,051 |
2020 |  |  |  | 14,097 |
2021 |  |  |  | 8,356 |
2022 |  |  |  | 6,500 |
2023 onwards |  |  |  | 10,218 |
Total |  |  |  | 55,222 |

NOTE 28 – FINANCIAL INSTRUMENTS

28.1 - Categories of financial instruments

|  | As of December 31, 2019 |
|  | FVTPL |  |  | FVTOCI |  |  | Amortised cost |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | — |  |  |  | — |  |  |  | 62,721 |
Investments |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | 19,384 |  |  |  | — |  |  |  | — |
LETEs |  |  | — |  |  |  | 396 |  |  |  | — |
Contribution to risk funds |  |  | — |  |  |  | — |  |  |  | 418 |
Trade receivables |  |  | — |  |  |  | — |  |  |  | 156,676 |
Other assets |  |  | — |  |  |  | — |  |  |  | 21,235 |
Other receivables |  |  | — |  |  |  | — |  |  |  | 28,118 |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |
Convertible notes |  |  | 3,536 |  |  |  | — |  |  |  | — |
Foreign exchange forward contracts |  |  | 1,220 |  |  |  | 71 |  |  |  | — |
Guarantee payments related to the future lease of a property under construction |  |  | — |  |  |  | — |  |  |  | 1,383 |

F-92

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, 2019 |
|  | FVTPL |  |  | FVTOCI |  |  | Amortised cost |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |
Trade payables |  |  | — |  |  |  | — |  |  |  | 36,987 |
Payroll and social security taxes payable |  |  | — |  |  |  | — |  |  |  | 72,252 |
Borrowings |  |  | — |  |  |  | — |  |  |  | 51,386 |
Other financial liabilities |  |  |  |  |  |  |  |  |  |  |  |
Other financial liabilities related to business combinations |  |  | 10,554 |  |  |  | — |  |  |  | — |
Lease liabilities |  |  | 61,363 |  |  |  | — |  |  |  | — |
Tax liabilities |  |  | — |  |  |  | — |  |  |  | 12,510 |
Other liabilities |  |  | — |  |  |  | — |  |  |  | 368 |

|  | As of December 31, 2018 |
|  | FVTPL |  |  | FVTOCI |  |  | Amortised cost |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | — |  |  |  | — |  |  |  | 77,606 |
Investments |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | 4,050 |  |  |  | — |  |  |  | — |
LETEs |  |  | — |  |  |  | 1,015 |  |  |  | — |
T-Bills |  |  | — |  |  |  | 3,493 |  |  |  | — |
LECAPs |  |  | — |  |  |  | 77 |  |  |  | — |
Contribution to risk funds |  |  | — |  |  |  | — |  |  |  | 527 |
Trade receivables |  |  | — |  |  |  | — |  |  |  | 110,898 |
Other receivables |  |  | — |  |  |  | — |  |  |  | 49,538 |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |
Convertible notes |  |  | 106 |  |  |  | — |  |  |  | — |
Foreign exchange forward contracts |  |  | 44 |  |  |  | — |  |  |  | — |
Other financial asset related to the acquisition of Clarice |  |  | 400 |  |  |  | — |  |  |  | — |
Guarantee payments related to the future lease of a property under construction |  |  | — |  |  |  | — |  |  |  | 345 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |
Trade payables |  |  | — |  |  |  | — |  |  |  | 17,578 |
Payroll and social security taxes payable |  |  | — |  |  |  | — |  |  |  | 58,535 |
Other financial liabilities |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forward contracts |  |  | 12 |  |  |  | — |  |  |  | — |
Other financial liabilities related to business combinations |  |  | 12,753 |  |  |  | — |  |  |  | — |
Tax liabilities |  |  | — |  |  |  | — |  |  |  | 7,399 |
Other liabilities |  |  | — |  |  |  | — |  |  |  | 44 |

F-93

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

28.2 - Market risk

The Company is exposed to a variety of risks: market risk, including the effects of changes in foreign currency exchange rates and interest rates, and liquidity risk.

The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Company does not use derivative instruments to hedge its exposure to risks, apart from those mentioned in note 28.10 and 28.11.

28.3 - Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

Except for the subsidiaries mentioned in the Note 3.5, the functional currency of the Company and its subsidiaries is the U.S. dollar. In 2019, 86.3% of the Company's revenues are denominated in U.S. dollars. Because the majority of its personnel are located in Latin America, the Company incurs the majority of its operating expenses and capital expenditures in non-U.S. dollar currencies, primarily the Argentine peso, Uruguayan peso, Brazilian Real, Mexican peso, Peruvian Sol and Colombian peso; however as of December 31,2019, the operating expenses in Argentine peso have decreased compared to December 31, 2018. Operating expenses are also significantly incurred in Indian Rupee and Great Britain Pound.

Foreign exchange sensitivity analysis

The Company is mainly exposed to Argentine pesos, Chilean pesos, Colombian pesos, Indian rupees and Uruguayan pesos.

The following tables illustrate the Company's sensitivity to increases and decreases in the U.S. dollar against the relevant foreign currency. The following sensitivity analysis includes outstanding foreign currency denominated monetary items at December 31, 2019 and adjusts their translation at the year-end for changes in U.S. dollars against the relevant foreign currency.

|  |  |  |  |  |  | Gain/(loss) |
Account |  | Currency |  | Amount |  |  | % Increase |  |  | Amount |  |  | % Decrease |  |  | Amount |
Net balances |  | Argentine pesos |  |  | 8,023 |  |  |  | 40 | % |  |  | (2,292 | ) |  |  | 10 | % |  |  | 891 |
|  | Chilean pesos |  |  | (2,789 | ) |  |  | 10 | % |  |  | 254 |  |  |  | 10 | % |  |  | (310 | )
|  | Colombian pesos |  |  | (7,770 | ) |  |  | 10 | % |  |  | 706 |  |  |  | 10 | % |  |  | (863 | )
|  | Indian rupees |  |  | (252 | ) |  |  | 10 | % |  |  | 23 |  |  |  | 10 | % |  |  | (28 | )
|  | Uruguayan pesos |  |  | (4,034 | ) |  |  | 10 | % |  |  | 363 |  |  |  | 10 | % |  |  | (443 | )
|  | Total |  |  | (6,822 | ) |  |  |  |  |  |  | (946 | ) |  |  |  |  |  |  | (753 | )

As explained in note 28.10, the subsidiaries in Argentina, Chile, Colombia, India and Uruguay entered into foreign exchange forward and future contracts in order to mitigate the risk of fluctuations in the foreign exchange rate and reduce the impact in the financial statements.

The effect in equity of the U.S. dollar fluctuation against the relevant foreign currency as of December 31, 2019, is not material.

F-94

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Depreciation of the Argentine Peso

During 2019, the Argentine peso experienced a 59.02% devaluation from 37.60 Argentine peso per U.S dollar to 59.79 Argentine peso per U.S dollar.

During 2018, the Argentine peso experienced a 102.2% devaluation from 18.60 Argentine peso per U.S. dollar to 37.60 Argentine peso per U.S. dollar.

28.4 - Interest rate risk management

The Company's exposure to market risk for changes in interest rates relates primarily to its cash and bank balances and its credit facilities. The Company's credit line in the U.S. bear interest at a fixed rate of 1.75% and at variable rates linked to LIBOR. The Company does not use derivative financial instruments to hedge its risk of interest rate volatility.

28.5 - Liquidity risk management

The Company's primary sources of liquidity are cash flows from operating activities and borrowings under credit facilities. See note 19.

Management monitors rolling forecasts of the Company's liquidity position on the basis of expected cash flow.

The table below analyzes financial liabilities into relevant maturity groups based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

|  | Expected Maturity Date |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | Thereafter |  |  | Total |
Borrowings |  |  | 1,198 |  |  |  | — |  |  |  | 188 |  |  |  | 50,000 |  |  |  | 51,386 |
Lease liabilities |  |  | 20,002 |  |  |  | 15,263 |  |  |  | 11,552 |  |  |  | 28,164 |  |  |  | 74,981 |
Other financial liabilities |  |  | 8,937 |  |  |  | 1,617 |  |  |  | — |  |  |  | — |  |  |  | 10,554 |
TOTAL |  |  | 30,137 |  |  |  | 16,880 |  |  |  | 11,740 |  |  |  | 78,164 |  |  |  | 136,921 |

28.6 - Concentration of credit risk

The Company derives revenues from clients in the U.S. (approximately 73.3%) and clients related from diverse industries. For the years ended December 31, 2019, 2018 and 2017, the Company's top five clients accounted for 26.1%, 32.0% and 28.9% of its revenues, respectively. One single customer accounted for 11.2%, 11.3% and 10.2% of revenues for the years ended December 31, 2019, 2018 and 2017.

28.7 - Fair value of financial instruments that are not measured at fair value

Except as detailed in the following table, the carrying amounts of financial assets and liabilities included in the consolidated statement of financial position as of December 31, 2019 and 2018, are a reasonable approximation of fair value due to the short time of realization.

F-95

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, 2019 |  |  | As of December 31, 2018 |
|  | Carrying amount |  |  | Fair value |  |  | Carrying amount |  |  | Fair value |
Non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guarantee deposits |  |  | 2,683 |  |  |  | 2,571 |  |  |  | 1,681 |  |  |  | 1,539 |
Tax credit - VAT |  |  | 626 | (*) |  |  | 600 |  |  |  | 356 | (*) |  |  | 326 |
Income tax credits |  |  | 1,515 |  |  |  | 1,453 |  |  |  | 1,259 |  |  |  | 1,153 |
Tax credit - Software Promotion Regime |  |  | — |  |  |  | — |  |  |  | 749 | (*) |  |  | 686 |
Other tax credits |  |  | 210 |  |  |  | 200 |  |  |  | 170 |  |  |  | 157 |
Other assets |  |  | 7,796 |  |  |  | 7,140 |  |  |  | — |  |  |  | — |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade payables |  |  | 5,500 |  |  |  | 5,101 |  |  |  | — |  |  |  | — |
Borrowings |  |  | 50,188 |  |  |  | 51,070 |  |  |  | — |  |  |  | — |

(*) As of December 31, 2019 and 2018, is presented net of allowance for impairment of tax credit - VAT of 378 and 600, respectively. As of December 31, 2018 is presented net of 74 related to allowance of Tax credit - Software Promotion Regime.

28.8 - Fair value measurements recognized in the consolidated statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into a three-level fair value hierarchy as mandated by IFRS 13, as follows:

Level 1 fair value measurements are those derived from quoted market prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 fair value measurements are those derived from unobservable inputs for the assets or liabilities.

|  | As of December 31, 2019 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | — |  |  |  | 19,384 |  |  |  | — |  |  |  | 19,384 |
LETEs |  |  | — |  |  |  | 396 |  |  |  | — |  |  |  | 396 |
Foreign exchange forward contracts |  |  | — |  |  |  | 1,291 |  |  |  | — |  |  |  | 1,291 |
Convertibles notes |  |  | — |  |  |  | 111 |  |  |  | 3,425 |  |  |  | 3,536 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  |  | — |  |  |  | — |  |  |  | 9,252 |  |  |  | 9,252 |

F-96

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | As of December 31, 2018 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | — |  |  |  | 4,050 |  |  |  | — |  |  |  | 4,050 |
LETEs |  |  | — |  |  |  | 1,015 |  |  |  | — |  |  |  | 1,015 |
T-Bills |  |  | — |  |  |  | 3,493 |  |  |  | — |  |  |  | 3,493 |
LECAPs |  |  | — |  |  |  | 77 |  |  |  | — |  |  |  | 77 |
Foreign exchange forward contracts |  |  | — |  |  |  | 44 |  |  |  | — |  |  |  | 44 |
Convertibles notes |  |  | — |  |  |  | 106 |  |  |  | — |  |  |  | 106 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  |  | — |  |  |  | — |  |  |  | 9,767 |  |  |  | 9,767 |
Foreign exchange forward contracts |  |  | — |  |  |  | 12 |  |  |  | — |  |  |  | 12 |

There were no transfers of financial assets between Level 1, Level 2 and Level 3 during the period.

The Company has applied the market approach technique in order to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable (i.e., similar) assets, liabilities or a group of assets and liabilities.

When the inputs required by the market approach are not available, the Company applies the income approach technique. The income approach technique estimates the fair value of an asset or a liability by converting future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount. When the income approach is used, the fair value measurement reflects current market expectations about those future amounts.

28.9 Level 3

28.9.1 Contingent consideration

As explained in note 25.1, the acquisition of Clarice included a contingent consideration agreement which was payable on a deferred basis and which will be subject to the occurrence of certain events relating to the acquired company's capacity.

As of December 31, 2017, the Company remeasured the fair value of the contingent consideration related to Clarice described above, considering the new targets established by the amendment signed on May 16, 2017 to Globant India Private Ltd. (formerly Clarice Technologies PVT Ltd.) Share Purchase Agreement dated on May 14, 2015. Loss arising from the change in fair value amounted to 1,173 and includes a loss arising from the change in fair value of the contingent consideration for an amount of 1,401.

As of December 31, 2019 and 2018, the nominal value of contingent consideration related to Clarice amounted to 1,316 and 3,947, respectively. The potential undiscounted amount of all future payments that the Company could be required to make under this agreement was between 439 and 1,316 as of December 31, 2019, and 1,316 and 3,947 as of December 31, 2018. The fair value of the contingent consideration related to Clarice arrangement of 1,310 and 3,873 as of December 31, 2019 and 2018, respectively, was estimated by discounting to present value using a risk-adjusted discount rate.

F-97

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

As described in note 25.3, the acquisition of WAE (jointly We are London Limited and We are Experience, Inc.) included a contingent consideration agreement which was payable on a deferred basis and was subject to the occurrence of certain events relating to the acquired company's gross revenue and gross profit.

During 2018, the Company and the sellers of WAE have entered into discussions concerning circumstances that may have impacted the calculation of targets on the base of which the final amount of Year 2 Deferred consideration should have been calculated. For that reason, in July, 2018, the Company and the sellers of WAE signed a final settlement in order to avoid future claims on this matter. Loss arising from the settlement agreement amounted to 1,038 as of December 31, 2018 and was disclosed as Other income, net. In July, 2018, the Company paid a total amount of 1,867.

As described in note 25.4, the acquisition of L4 included a contingent consideration agreement which is payable on a deferred basis and which will be subject to certain events relating to the acquired company's gross revenue and gross profit.

As of December 31, 2018, the Company remeasured the fair value of the contingent consideration related to L4 described above, considering the non achievement of targets established by the Share Purchase Agreement. Gain arising from the change in fair value amounted to 1,848 and is included as Other income, net.

As described in note 25.5, the acquisition of Ratio, included a contingent consideration agreement which is payable on a deferred basis and which will be subject to the occurrence of certain events relating to the acquired company's gross revenue and gross margin.

As of December 31, 2019 and 2018, the nominal value of contingent consideration related to Ratio amounted to 750 and 2,860, respectively. The potential undiscounted amount of all future payments that the Company could be required to make under this agreement was between 525 and 2,570 as of December 31, 2019 and 2018, respectively, and an unlimited maximum amount for both years, given that such payment may be increased proportionally to the targets achievements. The fair value of the contingent consideration arrangement of 903 and 2,844 as of December 31, 2019 and 2018 was estimated by discounting to present value using a risk-adjusted discount rate.

As of December 31, 2018, the Company remeasured the fair value of the contingent consideration related to the acquisition of Ratio. Loss arising from the change in fair value amounted to 654 and is included as Other income, net.

As described in note 25.6, the acquisition of PointSource, included a contingent consideration agreement which was payable on a deferred basis and which was be subject to the occurrence of certain events relating to the acquired company's gross revenue and gross margin.

On May 2018, the Company signed an amendment to the SPA with the former shareholders, pursuant to which a new fixed-payment was established, in replacement of previous payments subject to targets achievements. As a consequence, the Company remeasured the fair value of the liability related to PointSource described above. Gain arising from the change in fair value of the liability amounted to 5,506 as of December 31, 2018. As of December 31, 2019 and December 31, 2018 the fixed payment liability amounted to 1,086 and 1,786, respectively, and are included in other financial liabilities.

As described in note 25.7, the acquisition of Small Footprint included a contingent consideration agreement which was payable on a deferred basis and which was subject to the occurrence of certain events relating to the acquired company's gross revenue, gross margin and billable headcount.

F-98

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

As of December 31, 2018, the nominal amount of the contingent consideration related to Small Footprint amounted to 3,066. Such amount was paid on March 1, 2019. The fair value of the contingent consideration arrangement of 3,070 as of December 31, 2018 was estimated by discounting to present value using a risk-adjusted discount rate.

As described in note 25.8, the acquisition of Avanxo (Bermuda) Limited ("Avanxo"), included a contingent consideration agreement which is payable on a deferred basis and which will be subject to the occurrence of certain events relating to the acquired company´s gross revenue, gross margin and operating margin.

As of December 31, 2019, the nominal value of contingent consideration related to Avanxo amounted to 2,318. The potential undiscounted amount of all future payments that the Company could be required to make under this agreement was between 370 and an unlimited maximum amount as of December 31, 2019. The fair value of the contingent consideration arrangement of 2,249 as of December 31, 2019 was estimated by discounting to present value using a risk-adjusted discount rate.

As described in note 25.9, the acquisition of Belatrix Global Corporation S.A, included a contingent consideration agreement which is payable on a deferred basis and which will be subject to the occurrence of certain events relating to the acquired company's revenue.

As of December 31, 2019, the nominal value of contingent consideration related to Belatrix amounted to 4,097. The potential undiscounted amount of all future payments that the Company could be required to make under this agreement was between 4,097 and a unlimited maximum amount, given that such payment may be increased proportionally to the targets achievements, as of December 31, 2019. The fair value of the contingent consideration arrangement of 4,221 as of December 31, 2019 was estimated by discounting to present value using a risk-adjusted discount rate.

As described in note 25.10, the acquisition of BI Live, included a contingent consideration agreement which is payable on a deferred basis and which will be subject to the occurrence of certain events relating to the acquired company's growth and operating margin.

As of December 31, 2019, the nominal value of contingent consideration related to BI Live amounted to 559. The potential undiscounted amount of all future payments that the Company could be required to make under this agreement was between 515 and 3,000 as of December 31, 2019. The fair value of the contingent consideration arrangement of 515 as of December 31, 2019 was estimated by discounting to present value using a risk-adjusted discount rate.

The following table shows the results from remeasurement of the contingent considerations described above:

|  | For the year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
(Loss) gain on remeasurement of the contingent consideration of PointSource |  |  | (16 | ) |  |  | 5,506 |  |  |  | — |
Loss on remeasurement of the contingent consideration of Avanxo |  |  | (4 | ) |  |  | — |  |  |  | — |
Loss on remeasurement of the contingent consideration of Clarice |  |  | (3 | ) |  |  | — |  |  |  | (1,173 | )
Gain on remeasurement of the contingent consideration of L4 |  |  | — |  |  |  | 1,848 |  |  |  | 4,058 |
Gain on remeasurement of the contingent consideration of WAE |  |  | — |  |  |  | — |  |  |  | 3,850 |
Loss on remeasurement of the contingent consideration of Ratio |  |  | (62 | ) |  |  | (654 | ) |  |  | — |
TOTAL |  |  | (85 | ) |  |  | 6,700 |  |  |  | 6,735 |

F-99

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

28.9.2 Put and call option on minority interests

As described in note 25.2, on October 22, 2015, the Company entered into a Shareholders Agreement (the "Minority Interest SHA") with the "non-controlling shareholders" to agree on a put option over the 33.27% of the remaining interest of Dynaflows.

On October 26, 2018, the non-controlling shareholders exercised such option and the Company paid a total amount of 1,186 based on the EBITDA and Revenue of Dynaflows for the twelve months ended on September 30, 2018. As of December 31, 2018, a gain of 1,611 was recognized as Other income, net, given that the exercise of the option occurred earlier than expected.

As of December 31, 2018, the call option was derecognized and a loss of 455 was recognized as Other income, net.

As of December 31, 2017, the Company recorded a gain of 1,726, related to the remeasurement at fair value of the put and call option described above.

28.9.3. Convertible notes

As described in notes 3.12.9.2, 3.12.9.3 and 3.12.9.4 the Company entered into several convertible notes that include the right to convert the outstanding amount into equity shares of the invested companies. The fair value of such convertible notes was estimated using unobservable inputs. The amounts of gains and losses for the period related to changes in the fair value of the convertible notes were not material.

28.9.4. Reconciliation of recurring fair value measurements categorized within Level 3

The following table shows the reconciliation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy:

|  | Financial Assets |  |  | Financial liabilities |
|  | Call option on minority interest |  |  | Contingent consideration |  |  | Put option on minority interest |
December 31, 2017 |  |  | 455 |  |  |  | 23,905 |  |  |  | 2,797 |
Fair value remeasurement (1) |  |  | — |  |  |  | (6,700 | ) |  |  | (1,611 | )
Reclassification to amortised cost (1) |  |  | — |  |  |  | (1,778 | ) |  |  | — |
Derecognition of call option (1) |  |  | (455 | ) |  |  | — |  |  |  | — |
Acquisition of business (1) |  |  | — |  |  |  | 3,029 |  |  |  | — |
Payments (2) |  |  | — |  |  |  | (8,947 | ) |  |  | (1,186 | )
Interests (1) |  |  | — |  |  |  | 258 |  |  |  | — |
December 31, 2018 |  |  | — |  |  |  | 9,767 |  |  |  | — |

F-100

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

|  | Financial Assets |  |  | Financial liabilities |
|  | Convertible notes |  |  | Contingent consideration |
December 31, 2018 |  |  | — |  |  |  | 9,767 |
Fair value remeasurement (1) |  |  | — |  |  |  | 85 |
Acquisition of business (1) |  |  | — |  |  |  | 6,835 |
Payments (2) |  |  | 3,350 |  |  |  | (7,695 | )
Interests (1) |  |  | 75 |  |  |  | 260 |
December 31, 2019 |  |  | 3,425 |  |  |  | 9,252 |

(1) Non-cash transactions.

(2) Cash transactions included in investing activities in the Consolidated Statement of Cash Flows.

28.10 Foreign exchange futures and forward contracts

During the years ended December 31, 2019, 2018 and 2017, the Argentinian subsidiaries, Sistemas Globales S.A. and IAFH Global S.A. acquired foreign exchange futures contracts with SBS Sociedad de Bolsa S.A. (SBS) in U.S. dollars, with the purpose of hedging the possible decrease of assets' value held in Argentine Pesos due to the risk of exposure to fluctuations in foreign currency. The foreign exchange futures contracts were recognized, according to IFRS 9, as financial assets at fair value through profit or loss. For the years ended December 31, 2019, 2018 and 2017 the Company recognized a gain of 383, 594 and a loss of 421, respectively.

These futures contracts have daily settlements, in which the futures value changes daily. Sistemas Globales S.A. and IAFH Global S.A. recognize daily variations in SBS primary accounts, and the gains or losses generated by each daily position through profit or loss. Thus, at the closing of each day, according to the future price of the exchange rate U.S. Dollar – Argentine peso, the companies perceive a gain or loss for the difference. As future contracts have daily settlements, hence fair value as of December 31, 2019, 2018 and 2017 was zero.

Pursuant to these contracts, Sistemas Globales S.A. and IAFH Global S.A. are required to maintain collaterals in an amount equal to a percentage of the notional amounts purchased until settlement of the contracts. As of December 31, 2018, IAFH Global S.A. held a 10% of the value of those collaterals in LETEs and LEBACs, respectively, in SBS primary account. This ensures minimal funding, in case SBS has to transfer funds to "Mercado a Término de Rosario S.A" (ROFEX) if losses are generated by daily settlements. This amount must also remain restricted during the term of the contracts. As of December 31, 2018, both collaterals regarding the transactions are restricted assets for an amount of 975 in LETEs included as investments. As of December 31, 2019 the Company does not maintain any collaterals for futures contracts.

During the year ended December 31, 2017, the subsidiary Globant LLC, acquired foreign exchange forward contracts with Bridge Bank in rupees currency, with the purpose of hedging the risk of exposure to fluctuations in that currency within the Group. Those contracts were recognized as financial assets at fair value through profit or loss. For the year ended December 31, 2017 the Company recognized a gain of 118.

F-101

GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

During 2019 and 2018, the subsidiaries, Sistemas Globales S.A., IAFH Global S.A., Sistemas Colombia S.A., Sistemas Globales Chile Asesorías Ltda., Globant India Pvt. Ltd. and Sistemas Globales Uruguay S.A., acquired foreign exchange forward contracts with certain banks in U.S. dollars, with the purpose of hedging the possible decrease of assets' value held in Argentine Pesos, Colombian Pesos, Chilean pesos, Uruguayan pesos and Indian rupee, due to the risk of exposure to fluctuations in those foreign currencies. Those contracts were recognized, according to IFRS 9, as financial assets at fair value through profit or loss. For the years ended December 31, 2019 and 2018, the Company recognized a gain of 117 and 1,714, respectively. During 2017, the Argentine subsidiary, Sistemas Globales, entered into foreign exchange forward contracts with HSBC in U.S. dollars at a specified price with the purpose of reducing the risk of exposure to fluctuations in foreign currency. As of December 31, 2019 and 2018, the foreign exchange forward contracts that were recognized as financial assets and liabilities at fair value through profit or loss were as follows:

|  | Currency |  | Foreign currency |  |  | Notional foreign |  |  | Fair value assets / |
Settlement date |  | from contracts |  | rate from contracts |  |  | currency rate |  |  | (liabilities) |
January 27, 2020 |  | Indian Rupee |  |  | 72.36 |  |  |  | 71.56 |  |  |  | 11 |
January 31, 2020 |  | Chilean Peso |  |  | 747.68 |  |  |  | 751.57 |  |  |  | 5 |
January 31, 2020 |  | Colombian Peso |  |  | 3,323.65 |  |  |  | 3,281.28 |  |  |  | 39 |
January 31, 2020 |  | Colombian Peso |  |  | 3,515.42 |  |  |  | 3,281.94 |  |  |  | 356 |
January 31, 2020 |  | Colombian Peso |  |  | 3,512.66 |  |  |  | 3,281.93 |  |  |  | 422 |
January 31, 2020 |  | Uruguayan Peso |  |  | 38.09 |  |  |  | 37.73 |  |  |  | 29 |
February 25, 2020 |  | Indian Rupee |  |  | 71.45 |  |  |  | 71.77 |  |  |  | 7 |
February 28, 2020 |  | Colombian Peso |  |  | 3,518.27 |  |  |  | 3,288.08 |  |  |  | 351 |
Fair value as of December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  | 1,220 |

|  | Currency |  | Foreign currency |  |  | Notional foreign |  |  | Fair value assets / |
Settlement date |  | from contracts |  | rate from contracts |  |  | currency rate |  |  | (liabilities) |
January 31, 2019 |  | Argentine Peso |  |  | 40.06 |  |  |  | 39.67 |  |  |  | 26 |
February 28, 2019 |  | Argentine Peso |  |  | 41.54 |  |  |  | 41.17 |  |  |  | 15 |
April 30, 2019 |  | Argentine Peso |  |  | 44.44 |  |  |  | 44.30 |  |  |  | 3 |
Fair value as of December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  | 44 |
April 30, 2019 |  | Argentine Peso |  |  | 44.26 |  |  |  | 44.3 |  |  |  | (1 | )
May 31, 2019 |  | Argentine Peso |  |  | 45.74 |  |  |  | 45.92 |  |  |  | (5 | )
May 31, 2019 |  | Argentine Peso |  |  | 45.69 |  |  |  | 45.92 |  |  |  | (6 | )
Fair value as of December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  | (12 | )

The most frequently applied valuation techniques include forward pricing models. The models incorporate various inputs including: foreign exchange spot, interest rates curves of the respective currencies and the term of the contract.

28.11 Hedge accounting

During 2019, the Argentine subsidiaries, Sistemas Globales S.A. and IAFH Global S.A., and the Colombian subsidiary, Sistemas Colombia SAS, have entered into foreign exchange forward and future contracts to manage the foreign currency risk associated with the salaries payable in Argentine and Colombian pesos. The Company designated those derivatives as hedging instruments in respect of foreign currency risk in cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘finance income’ or ‘finance expense’ line items. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item (i.e. Salaries, employee benefits and social security taxes).

As of December 31, 2019, the Company has recognized a net gain of 54 included in Salaries, employee benefits and social security taxes and a gain of 352 included in other comprehensive income.

Foreign currency forward contract assets and liabilities are presented in the line ‘Other financial assets’ and ‘Other financial liabilities’ within the statement of financial position. As future contracts have daily settlements, hence fair value as of December 31, 2019 was zero.

The following table detail the foreign currency forward contracts outstanding as of December 31, 2019:

Hedging instruments - Outstanding contracts

|  | Currency |  | Foreign currency |  | Notional foreign |  | Fair value |
Settlement date |  | from contracts |  | rate from contracts |  | currency rate |  | assets |
January 31, 2020 |  | Argentine Peso |  | 66.45 |  | 62.2 |  |  | 71 |
Fair value as of December 31, 2019 |  |  |  |  |  |  |  |  | 71 |

NOTE 29 — CAPITAL AND RESERVES

29.1 Issuance of common shares

During the year ended December 31, 2019, 717,240 common shares were issued after vested options arising from the 2012 and 2014 share-based compensation plan were exercised by certain employees. Options were exercised at an average price of 22.06 per share amounting to a total of 15,822.

During the year ended December 31, 2019, 309,539 Restricted Stock Units (RSU) were granted to certain employees and directors of the Company. During 2019, 181,860 RSUs were vested at an average price of 37.00 per share amounting to a total of 6,732 (non-cash transaction).

On August 9, 2019, the Company issued 51,471 common shares for a total amount of 5,000 as part of the subscription agreement stated in the stock purchase agreement signed with Belatrix´s seller.

On April 5, 2019, the Company issued 7,654 common shares for a total amount of 400 as part of the subscription agreement stated in the stock purchase agreement signed with Clarice´s sellers.

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

On March 21 and March 18, 2019, the Company issued 7,517 common shares for a total amount of 449 as part of the subscription agreement stated in the stock purchase agreement signed with Ratio´s sellers.

On March 18, 2019, the Company issued 13,895 common shares for a total amount of 868 as part of the subscription agreement stated in the stock purchase agreement signed with Small Footprint´s sellers.

On February 20 and February 1, 2019, the Company issued 14,778 common shares for a total amount of 845 as part of the subscription agreement stated in the stock purchase agreement signed with Avanxo´s sellers.

On February 15, 2019, the Company issued 3,542 common shares for a total amount of 208 as part of the subscription agreement stated in the stock purchase agreement signed with Pointsource´s sellers.

During the year ended December 31, 2018, 511,668 common shares were issued after vested options arising from the 2012 and 2014 share-based compensation plan were exercised by some employees. Options were exercised at an average price of 13.76 per share amounting to a total of 7,040.

During the year ended December 31, 2018, 564,995 Restricted Stock Units (RSU) were granted to certain employees and directors of the Company. During 2018, 163,233 RSUs were vested at an average price of 43.13 per share amounting to a total of 7,040 (non-cash transaction). A total amount of 4,995 of such vested RSUs corresponds to a provision for bonus given to employees that was payable in RSUs and was included in the opening balance of additional paid in capital.

On October 16, 2018, the Company issued 16,315 common shares for a total amount of 960 as part of the subscription agreement with Small Footprint's sellers signed on October 15, 2018, pursuant to which the Company agreed to issue to the subscribers and the subscribers agreed to subscribe from the Company a certain amount of shares. For the second tranche due on March 1, 2019, the Company may require the subscribers to apply up to an amount of 25% of the first-earn out payment.

On July 20, 2018, the Company issued 18,692 common shares for a total amount of 982 as part of the subscription agreement with WAE's sellers signed on May, 23, 2016, pursuant to which the Company agreed to issue to the subscribers and the subscribers agreed to subscribe from the Company restricted common stock up to an amount of 30% of the Purchase Price.

On June 12, 2018, the Company issued 9,120 common shares for a total amount of 400 as part of the subscription agreement stated in the stock purchase agreement signed with Clarice´s sellers, explained in note 25.1.

On February 22, 2018, the Company issued 12,265 common shares for a total amount of 541 as part of the subscription agreement stated in the stock purchase agreement signed with Pointsource´s sellers, as part of the business combination explained in note 25.6.

On February 16, 2018, the Company issued 7,605 common shares for an amount of 334 as part of the subscription agreement signed with Ratio´s sellers, as part of the business combination explained in note 25.5.

During the year December 31, 2017, 338,709 common shares were issued after vested options arising from the 2012 and 2014 share-based compensation plan were exercised by some employees. Options were exercised at an average price of 15.63 per share amounting to a total of 5,296.

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

During the year December 31, 2017, 254,328 Restricted Stock Units (RSU) were granted to certain employees and director for the Company. During 2017, 86,931 RSUs were vested at an average price of 36.11 per share amounting to a total of 3,141 (non-cash transaction).

On August 17, 2017, the Company issued 34,219 common shares for a total amount of 1,435 as part of the subscription agreement stated in the stock purchase agreement signed with WAE´s sellers, as part of the business combination explained in note 25.3.

On June 1, 2017, the Company issued 84,953 common shares for a total amount of 3,100 as part of the subscription agreement stated in the stock purchase agreement signed with PointSource´s sellers, as part of the business combination explained in note 25.6.

On March 1, 2017, the Company issued 34,309 common shares for a total amount of 1,160 as part of the subscription agreement stated in the stock purchase agreement signed with Ratio´s sellers, as part of the business combination explained in note 25.5.

29.2 Public offerings & agreements

On August 2, 2016, the Company applied to the Luxembourg Stock Exchange for listing on the Official List of the Luxembourg Stock Exchange and for the admission to trading on its regulated market, on August 11, 2016, the Company applied to the Luxembourg Financial Sector Supervisory Authority (Commission de Surveillance du Secteur Financier) (the “CSSF”) in its capacity as competent authority, for the approval of the Company’s prospectus, which was approved in that same date.

On June 20, 2018, the Company and WPP Luxembourg Gamma Three S.à r.l. (the “Selling Shareholder”) entered into an underwriting agreement with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC relating to the offer and sale of an aggregate of 5,815,259 common shares of the Company, nominal value $1.20 per share, plus, at the option of the Underwriters, an additional 872,289 common shares pursuant to an option, at a public offering price of $52.00 per common share. On June 21, 2018, the Underwriters exercised their option to purchase an additional 872,289 common shares.

On July 31, 2019 the Luxembourg Stock Exchange approved the Company´s voluntarily request to delist the Company´s common shares from the Official List of the Luxembourg Stock Exchange ("Lux SE"), effective July 31, 2019. Following the Lux SE delisting, the Company´s common shares will continue to trade on the New York Stock Exchange (the "NYSE") in the United States under the symbol "GLOB".

As of December 31, 2019, 35,669,330 common shares of the Company's share capital are registered with the SEC and quoted in the New York Stock Exchange.

29.3 Cash flow hedge reserve

The movements in the cash flow hedge reserve were as follows:

|  | Foreign |
|  | currency risk |
Balance at January 1, 2019 |  |  | — |
Gain/(loss) arising on changes in fair value of hedging instruments during the period |  |  | 298 |
(Gain)/loss reclassified to profit or loss – hedged item has affected profit or loss |  |  | 54 |
Balance at December 31, 2019 |  |  | 352 |

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

NOTE 30 — APPROPRIATION OF RETAINED EARNINGS UNDER SUBSIDIARIES´ LOCAL LAWS AND RESTRICTIONS ON DISTRIBUTION OF DIVIDENDS

In accordance with Argentine and Uruguayan Law, the Argentine and Uruguayan subsidiaries of the Company must appropriate at least 5% of net income for the year to a legal reserve, until such reserve equals 20% of their respective share capital amounts.

On December 29, 2017, Argentine Law No. 27,430 amending the income tax law was enacted. According to the amendments, for fiscal years beginning on or after January 1, 2018 the distribution of dividends is now subject to a 7% withholding for 2018 and 2019 and 13% withholding for 2020 onwards. The Equalization Tax, which levied distributions made out of previously untaxed income, was eliminated.

On December 23, 2013, the Argentine government adopted a new double taxation treaty with Spain, which applied retroactively from January 1, 2013. According to this treaty, the tax applicable on dividends distributed by our Argentine Subsidiaries to the Spain Holdco, is limited to 10% on the gross amount of dividends distributed.

As of December 31, 2019, the legal reserve amounted to 772 for the Company´s Argentine subsidiaries, Sistemas Globales S.A, IAFH Global S.A, BSF S.A and Globers S.A, and as of that date was fully constituted. Dynaflows S.A, Globant Ventures S.A.S and Avanxo S.A, did not have a legal reserve as of December 31,2019.

As of December 31, 2019, the legal reserve amounted to 42 for Sistemas Globales Uruguay S.A and as of that date was fully constituted. The Company´s Uruguayan subsidiary, Difier S.A, did not have a legal reserve as of December 31, 2019.

According to the ByLaws of Sistemas Colombia S.A.S. and Belatrix Colombia, the Colombian subsidiaries of the Company must appropriate at least 10% of the net income of the year to a legal reserve until such reserve equal 50% of its share capital. As of December 31, 2019, there was a legal reserve of 296 that was fully constituted by Sistemas Colombia S.A.S and there was a legal reserve of 3 constituted by Belatrix Colombia S.A.S. Regarding Avanxo Colombia, the Colombian branch of Avanxo (Bermuda) Limited, there is no requirement for the Colombian branch to allocate profits for the creation of a legal reserve and, therefore, as of December 31, 2019, there was no legal reserve constituted.

Colombia Law No 1,819, published on December 29, 2016, introduced a withholding tax of 5% on dividend distributions to non-resident. This new fiscal obligation is not applicable to our shareholder due to the tax treaty agreement between Colombia and Spain, entered in force on October 28, 2008.

Under Spanish law, the Spanish subsidiaries of the Company must appropriate 10% of its standalone profit to a legal reserve until such reserve equals to 20% of their respective share capital amount. As of December 31, 2019, the legal reserve was partially constituted and amounted to 8,157 for all Spanish subsidiaries.

In accordance with Brazilian Law, there is no requirement for limited liability companies to allocate profits for the creation of a legal reserve. The Company's Brazilian subsidiaries, Globant Brasil Consultorias Ltda and Orizonta Consutoria de Negocios e Tecnologia Da Informacao Ltda did not have a legal reserve as of December 31, 2019. On the other hand, for Avanxo Brasil Tecnologia Da Informacao Ltda there was a legal reserve of 63 constituted as of December 31, 2019.

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Under Luxembourg law, at least 5% of our net profit per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve subsequently falls below the 10% threshold, at least 5% of net profit must be allocated toward the reserve. If the legal reserve exceeds 10% of our issued share capital, the legal reserve may be reduced in proportion so that it does not exceed 10% of our issued share capital. The legal reserve is not available for distribution. As of December 31, 2019, the legal reserve amounted to 496.

As for the restrictions on the distribution of dividends paid by the Company to the holders of our common shares are as a rule subject to a 15% withholding tax in Luxembourg, unless a reduced withholding tax rate applies pursuant to an applicable double tax treaty or an exemption pursuant to the application of the participation exemption, and, to the extent withholding tax applies, we are responsible for withholding amounts corresponding to such taxation at its source.

In accordance with Peru corporate law, the Peruvian subsidiaries of the Company must reserve at least 10% of its net income of the year to a legal reserve, until such reserve equals 20% of its respective amount capital stock. As of December 31, 2019, the legal reserve amounted to 116 for Belatrix Peru SAC which is fully constituted and 47 for Globant Peru SAC that is partially constituted. Regarding Avanxo Sucursal del Peru, the Peruvian branch of Avanxo (Bermuda) Limited, there is no requirement for the Peruvian branch to allocate profits for the creation of a legal reserve and, therefore, as of December 31, 2019, there was no legal reserve constituted.

In Bermuda there is no requirement for the Bermuda subsidiary of the Company to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

According to Mexican Law, the Mexican subsidiaries of the Company must appropriate at least 5% of net income of the year to a legal reserve, until such reserve equals the fifth portion of their respective share capital amounts. As of December 31, 2019, the legal reserve amounted to 139 for the Company's Mexican subsidiaries Global Systems Outsourcing S. de R.L. de C.V. and 37 for Avanxo Mexico S.A.P.I de C.V, regarding Avanxo Servicios S.A. de C.V. there was no legal reserve constituted as of December 31, 2019.

Regarding India Law, the Companies Act, 2013 does not mandate any fixed quantum of profits to be transferred or allocated to the reserves of a company. Despite there is no mandatory provision, as of December 31, 2019, the Indian subsidiary's general reserve amounted to 17 for the Company's Indian subsidiary.

In accordance with Indian law, our Indian subsidiary must set off all losses incurred by it (including carried over losses from the previous financial year) and make a provision for depreciation (including depreciation for the previous year if it was not already provided for) against the profits earned by it prior to declaring any dividends. Since the declaration of dividends under Indian law is discretionary, our Indian subsidiary is not required to allocate a specific portion of its annual profits to a designated legal reserve for purposes of declaring dividends.

In the United Kingdom there is no requirement for the UK´s subsidiaries to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted by the UK´s subsidiaries.

In Chile there is no requirement for the Chilean subsidiary of the Company to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

According to French law, a minimum of 5% of the profit of the year must be allocated to a reserve account named "legal reserve", until such reserve amounts 10% of the share capital of the French subsidiary of the Company. As of December 31, 2019, there was no legal reserve constituted.

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

In accordance with the law of Belarus, the Belorussian subsidiary of the Company must allocate an amount up to 25% of annual payroll to a reserve fund for salaries. The source for creating this fund is the profit remaining at the disposal of the subsidiary after paying taxes and other obligatory payments. As of December 31, 2019, there was no legal reserve constituted.

In the United States there is no requirement for the Company's U.S. subsidiaries to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

According to Romanian Companies Law, the Romanian subsidiary of the Company has the obligation to allocate each year at least 5% of its profit to a reserve fund, until the value of the fund is at least 20% of the Romanian Company's share capital. As of December 31, 2019, the reserve fund of the company was of Romanian Leu ("RON") 58.

In Canada there is no requirement for the Canada's Company subsidiary to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

In the United Arab Emirates there is no requirement for the Software Product Creation´s branch office in Dubai to allocate profits for the creation of a legal reserve. As of December 31, 2019, there was no legal reserve constituted.

NOTE 31 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events until February 19, 2020, date of approval of these consolidated financial statements, to assess the need for potential adjustments or disclosures in these consolidated financial statements in accordance with IAS 10 "Events after the reporting period".

31.1 Second Amended and Restated Credit Agreement

On February 6, 2020, Globant, LLC, our US subsidiary (the "Borrower"), entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”), by and among certain financial institutions listed therein, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. Under the Second A&R Credit Agreement, which amends and restates the existing A&R Credit Agreement dated as of November 1, 2018, the Borrower may borrow (i) up to $100 million in up to four borrowings on or prior to August 6, 2021 under a delayed-draw term loan facility and (ii) up to $250 million under a revolving credit facility. In addition, the Borrower may request increases of the maximum amount available under the revolving facility in an aggregate amount not to exceed $100 million. The maturity date of each of the facilities is February 5, 2025. Pursuant to the terms of the Second A&R Credit Agreement, interest on the loans extended thereunder shall accrue at a rate per annum equal to either (i) LIBOR plus 1.50%, or (ii) LIBOR plus 1.75%, determined based on the Borrower’s Maximum Total Leverage Ratio (as defined in the Second A&R Credit Agreement). The Borrower’s obligations under the Second A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of the Borrower’s now owned and after-acquired assets. The Second A&R Credit Agreement also contains certain customary negative and affirmative covenants, which compliance may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

Based on this evaluation, it was determined that there were no subsequent events requiring recognition or disclosure in the financial statements, except for the ones included above.

NOTE 32 – APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements were approved by the Board of Directors on February 19, 2020.

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GLOBANT S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 and 2018 and for the three years in the period ended December 31, 2019

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

Martín Migoya

President

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