Q4 2019 Earnings Call

February 20, 2020

You're in this quarter our top account by robust rate of 41.2% year-over-year and the remaining client together also reported an impressive growth at more than 30% year-over-year regarding full year Revenue in 2019. We brought in 659.3 million representing a solid 26.5% year-over-year growth. I'm beating the upper end of our Revenue guidance range.

Amit Singh: Thank you, operator, and thanks everyone for joining us today on our call to review our 2019 full year and Q4 financial results. By now, you should have received a copy of the earnings release. If you have not, a copy is available on our website, investors.globant.com. Our speakers today are Martin Migoya, Co-founder and Chief Executive Officer, Juan Urthiague, Chief Financial Officer, and Mercedes MacPherson, Chief Talent and Diversity Officer. Before we begin, I would like to remind you that some of the comments on our call today may be deemed forward-looking statements. This includes our business and financial outlook and the answers to some of your questions. Such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Please note that we follow IFRS accounting rules in our financial statements.

Revenue growth

In 2019 was broad-based with our top account growing at a solid rate of 25.5% year-over-year and the remaining clients together growing at 26.3% a year over year as in previous periods. We continue to expand our relationship with our key clients during the full year of 2019. We had fourteen accounts page ten million in annual revenues compared to 9 during the previous year in constant currency terms you for Revenue increase by 32% while. When you increase by 27.4% year-over-year

We're proud of our queue for an 2019 growth and motivated for more this year and with Governors estimate of 3.9 trillion dollars to be spent on a t alone in 2020. There's more than enough opportunity for fantastic growth We Believe however that the only way to do so is a building a sustainable and empathetic organization. We need to be conscious of the impact. We generate on our clients employees Humanity as a whole and even on the planet itself with that in mind. We have unveiled our ability approach Under A New Concept known as be kind be kind is our plan for the next five years that aim to generate a positive impact for all of our stakeholders by setting specific goals to fight climate change and to work even harder on diversity inclusion and cultural Wellness.

Amit Singh: During our call today, we will report non-IFRS or adjusted measures, which is how we track performance internally and the easiest way to compare Globant to our peers in the industry. You'll find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published on our investor relations website announcing this quarter's results. I'd now like to turn the call over to Martin Migoya, our CEO.

Martin Migoya: Thanks, Amit. Hello, everyone. Yet again, I'm happy to say that Q4 broke new records for Globant, closing at $184.3 million in revenue, representing an outstanding 31.5% year-over-year growth. During this quarter, our top account grew by a robust rate of 41.2% year-over-year, and the remaining clients together also reported an impressive growth at more than 30% year-over-year. Regarding full year revenue, in 2019, we brought in $659.3 million, representing a solid 26.2% year-over-year growth and beating the upper end of our revenue guidance range.

2% this initial

I like to introduce Mercedes McPherson globant Chief talent and diversity officer.

Thanks marteen. And hello, everyone as Mateen mentioned today. We're facing new challenges that go beyond our business. Our planet demands us to be United and responded to age limit change at the same time. We need to take a stand and regards to inclusion and diversity. We need to change the status quo by building a more fair in Des page one that can provide equal treatment and opportunities for all Talent regardless of their origin gender religion or any other orientation or Thursday would be kind we're making sure this issue is our top priority organized under the following three pillars.

Martin Migoya: Revenue growth in 2019 was broad-based, with our top account growing at a solid rate of 25.5% year-over-year, and the remaining clients together growing at 26.3% year-over-year. As in previous periods, we continued to expand our relationship with our key clients. During the full year of 2019, we had 14 accounts above $10 million in annual revenues, compared to 9 during the previous year. In constant currency terms, Q4 revenue increased by 32%, while full year revenue increased by 27.4% year-over-year. We're proud of our Q4 and 2019 growth and motivated for more this year. With Gartner's estimate of $3.9 trillion to be spent on IT alone in 2020, there's more than enough opportunity for fantastic growth.

First be kind to the planet Dolan has made the commitment that a hundred percent of our energy consumption will derive from renewable sources by the end of 2020. We're also measuring our scope three Admissions and aim to become a carbon-neutral corporation in the near future second be kind to your peers regarding our focus on diversity and inclusion. We have committed to have women and non-binary people hold 50% of our management positions by 28.5. We are also going to train and Inspire 10,000 women around the world in technology by that year and finally being kind to Humana Choice. We want to transform the world with technology and apply our work for good one step at a time to do so, we must consider the ethical implications of wage.

Martin Migoya: We believe, however, that the only way to do so is by building a sustainable and empathetic organization. We need to be conscious of the impact we generate on our clients, employees, humanity as a whole, and even on the planet itself. With that in mind, we have unveiled our sustainability approach under a new concept known as Be Kind. Be Kind is our plan for the next five years that aim to generate a positive impact for all of our stakeholders by setting specific goals to fight climate change and to work even harder on diversity, inclusion, and cultural wellness. To present this initiative, I'd like to introduce Mercedes MacPherson, Globant's Chief Talent and Diversity Officer.

We do we have there.

Or create a Vai Manifesto as a guideline for companies do some don'ts regarding this technology and we will encourage other companies to get on board wage these three pillars of the big kind initiative are designed to focus in the future to discover more. I encourage you to visit be kind of tough as glow ones first Chief talent and diversity officer. I look forward to sharing with you the progress of this initiative as it develops off.

Mercedes MacPherson: Thanks, Martin, and hello, everyone. As Martin mentioned, today we're facing new challenges that go beyond our business. Our planet demands us to be united in responding to climate change. At the same time, we need to take a stand in regards to inclusion and diversity. We need to change the status quo by building a more fair industry, one that can provide equal treatment and opportunities for all talent, regardless of their origin, gender, religion, or any other orientation or background. With Be Kind, we're making sure these issues are a top priority, organized under the following three pillars. First, be kind to the planet. Globant has made the commitment that 100% of our energy consumption will derive from renewable sources by the end of 2020. We're also measuring our scope three emissions and aim to become a carbon neutral corporation in the near future.

Thanks Mercedes is only for our company's operations. But also with respect to all our stakeholders now. Let me share with you some news on how we continue building long-term Partnerships with our clients through Innovation several years ago. We began our relationship with Disney to help them create the next generation of their own life experience for their parks and Resorts overtime. Our partnership has grown to an array of services that connect the company not only with customers but with its own employees through Globe and unique mobile apps.

I'm very proud to announce.

This quarter the Walt Disney Company renewed their trust in Us by recognizing low. And once again as a trusted preferred partner for another five years, this win is one that I'm happy to see also with several of our other clients as well including one of the world's top Global Banks. We're already working with them to remachine they're using experience with a goal to capture additional market share and address their ever-increasing user demand as our preferred partner. We expect to work with them as they tackle new challenges as the bank is already talked to leader. We see large opportunities for growth for both of our companies over the next quarter's.

Mercedes MacPherson: Second, be kind to your peers. Regarding our focus on diversity and inclusion, we have committed to have women and non-binary people hold 50% of our management positions by 2025. We are also going to train and inspire 10,000 women around the world in technology by that year. Finally, being kind to humanity. We want to transform the world with technology and apply our work for good, one step at a time. To do so, we must consider the ethical implications of what we do. We have therefore created the AI Manifesto as a guideline for our company's dos and don'ts regarding this technology, and we will encourage other companies to get on board as well. These three pillars of the Be Kind initiative are designed to focus in the future. To discover more, I encourage you to visit bekind.globant.com.

As a global player we have war with client who situations are emblematic of today's Global challenges right now. Our teams are working for the oil company ypf. We're creating a multi-platform digital experience. We developed a new app for them so that their customers can pay through a simplified and unify method in the past 3 weeks. The mobile app has been downloaded an average of 4300 times per day reaching a total of 1.2 million.

last year

We expanded our relationship with a global auto maker. We are developing new online experiences for their customers. We're designing and building in nobody web and mobile products and hands the end-to-end experience from considering a vehicle right through to owning a new breed of connected electric vehicles redefining the idea of what Mobility means off to customers through our partnership also aimed to enhance and quickened the companies concept to Market process so that they can adapt to technological innovation off with greater agility.

Mercedes MacPherson: As Globant's first Chief Talent and Diversity Officer, I look forward to sharing with you the progress of this initiative as it develops.

Martin Migoya: Thanks, Mercedes. Be Kind is a guide not only for our company's operations, but also with respect to all our stakeholders. Now, let me share with you some news on how we continue building long-term partnerships with our clients through innovation. Several years ago, we began our relationship with Disney to help them create the next generation of their online experience for their parks and resorts. Over time, our partnership has grown to an array of services that connect the company not only with its customers, but with its own employees through Globant's unique mobile apps. I'm very proud to announce that this quarter, The Walt Disney Company renewed their trust in us by recognizing Globant once again as a trusted preferred partner for another 5 years.

We continue to grab a I by the horns to deliver better solutions for our clients. We don't just keep them this technology to Quicken the process but rather apply this technology to their business strategy and redefine it our most recent example has been our new Endeavor with a measure cpg provider. We employ artificial intelligence so that I could better interpret sales data this enabled them to build Rai workbench and adopt the best practices for scalable algorithm development. Let me double click on a iPhone a moment. We apply AI to accelerate the way our Engineers generate code we call this augmented coding augmenting the capabilities and the efficiency of our Engineers through a I bought enable them to be more creative productive and intuitive while reducing the dispersion on code and enhancing utilization and performance.

Martin Migoya: This win is one that I'm happy to see also with several of our other clients as well, including one of the world's top global banks. We're already working with them to re-imagine their user experience with a goal to capture additional market share and address their ever-increasing user demand. As their preferred partner, we expect to work with them as they tackle new challenges. As the bank is already a sector leader, we see large opportunities for growth for both of our companies over the next quarters. As a global player, we have worked with clients whose situations are emblematic of today's global challenges. Right now, our teams are working for the oil company, YPF. We are creating a multi-platform digital experience. We developed a new app for them so that their customers can pay through a simplified and unified method.

the tool has been trained to understand new programming languages expanding the number of

Where you can be applied every day. The secondary used for this tool is generate documentation for undocumented code 2019 also marked our fifth anniversary as a public company when we first went public we were seen as the first Latin American software services company to list on the New York Stock Exchange. We're really proud of how much we have reinvented ourselves since then. We're now almost 12000 Global's working from 17 countries all over the world and we are guiding the most successful Brands through a complete transformation. We are a pure play in the ongoing digital and cognitive revolutions and our expertise has thrown into 21 different stores. Today. We're launching TuneIn Studios to better address our clients current and future needs first, the intelligent Enterprise Studio that helps our clients using sap.

Martin Migoya: In the past three weeks, the mobile app has been downloaded an average of 4,300 times per day, reaching a total of 1.2 million. Last year, we expanded our relationship with a global automaker. We are developing new online experiences for their customers. We're designing and building innovative web and mobile products that will enhance the end-to-end experience, from considering a vehicle, right through to owning a new breed of connected electric vehicles, redefining the idea of what mobility means to customers. Through our partnership, we also aim to enhance and quicken the company's concept-to-market process, so that they can adapt to technological innovation with greater agility. We continue to grab AI by the horns to deliver better solutions for our clients. We don't just give them this technology to quicken a process, but rather apply this technology to their business strategy and redefine it.

To use and leverage the data inside the e r p to create better experiences for their customers and stakeholders with the same Innovation and Agility that we have in all our Studios by creating this new studio. We consolidate what we have learned from sap Innovations created by our teams and we look forward to helping many more unlock the full bag of sap. Also, we have lunch the conversational interfaces Studio the studio enables our customers to quickly adapt to the changes. We see in the market today nowadays 74% of the US smartphone users the low just one up or less every month. Meanwhile, the usage of virtual assistant has increased by 14% in just the past year.

Martin Migoya: Our most recent example has been our new endeavor with a major CPG provider. We employ artificial intelligence so that they could better interpret sales data. This enabled them to build their AI workbench and adopt the best practices for scalable algorithm development. Let me double-click on AI for a moment. We apply AI to accelerate the way our engineers generate code. We call this Augmented Coding. Augmenting the capabilities and the efficiency of our engineers through AI enables them to be more creative, proactive, and intuitive, while reducing the dispersion on code and enhancing reutilization and performance. The tool has been trained to understand new programming languages, expanding the number of projects where it can be applied every day. The secondary use for this tool is to generate documentation for undocumented code. 2019 also marked our fifth anniversary as a public company.

Is positioned to create seamless multi-platform experiences to allow companies to interact directly with their customers creating better conversations?

I'm sure many of you listening have her that for us as for pretty much every other company. Our most valuable asset is our people but I can confidently say that we see you neaked in that we intentionally put them front and center of everything. We do. Our actual Parts have direct interaction with our clients. We value their autonomy and I'm consistently remind our Glover's that I work for them the absence of a command-and-control organization speeds up response times and create better engagement with our clients.

Martin Migoya: When we first went public, we were seen as the first Latin American software services company to list on the New York Stock Exchange. We're really proud of how much we have reinvented ourselves since then. We're now almost 12,000 Globers, working from 17 countries all over the world. We are guiding the most successful brands through a complete transformation. Our expertise has grown into 21 different studios. Today, we're launching 2 new studios to better address our clients' current and future needs. First, the Intelligent Enterprise Studio, that helps our clients using SAP to use and leverage the data inside the ERP to create better experiences for their customers and stakeholders, with the same innovation and agility that we have in all our other studios.

We can only create this value by attracting developing and retaining the right talent in such a competitive industry. We have managed to lower our attrition rate reaching just 15.6% in 2019 four points down from our previous year and I'm happy to say that we will see more clients engage with our glowers as our list of clients continue to grow we have added Dropbox American Airlines American Century Investments, Crystal Cruises plastic and several more just in quarter for

We're very proud.

To be working with them to find new technological solutions for their challenges. Finally our Pipeline and backlog remains strong with a number of high potential new clients home and several long-term projects within our current client. We continue investing in our Studios to remain at the Forefront of innovation while at the same time expanding geography lead to better serve organizations around the globe. We're optimistic about our ability to deliver sustainable growth in the future.

Martin Migoya: By creating this new studio, we consolidate what we have learned from SAP innovations created by our teams, and we look forward to helping many more unlock the full value of SAP. We have launched the Conversational Interfaces Studio. This studio enables our customers to quickly adapt to the changes we see in the market today. Nowadays, 74% of the US smartphone users download just 1 app or less every month. Meanwhile, the usage of virtual assistant has increased by 14% in just the past year. Globant is positioned to create seamless, multi-platform experiences to allow companies to interact directly with their customers, creating better conversations. I'm sure many of you listening have heard that for us, as for pretty much every other company, our most valuable asset is our people.

With that, I'll turn over the call to our CFO for the detail financial review on the fourth quarter and full-year 2019 and also to provide guidance office q1 and the full year 2021, please thank you very much. Thanks Martin and good afternoon everyone. Let me start by summarizing the results of our fourth-quarter and full-year 2019. I will then discuss our guidance for the first quarter and the full year 2020.

I am very

Pleased to announce another quarter of record revenues and strong financial performance our revenues for Q4 amounted to 184.3 million dollars bit in the upper end of a guidance range and representing a solid 31.5% year-over-year growth Q4. Revenue growth was 32% year-over-year in constant currency off during Q4. 2019. Disney was once again our largest customer and displayed an impressive growth of 41.2% year-over-year. We are excited with the fact that high potential accounts are scaling up and become enlarged and meaningful within our customer portfolio.

Martin Migoya: I can confidently say that we are unique in that we intentionally put them front and center of everything we do. Our Agile Pods have direct interaction with our clients. We value their autonomy, and I consistently remind our Globers that I work for them. The absence of a command and control organization speeds up response times and create better engagement with our clients. We can only create this value by attracting, developing, and retaining the right talent. In such a competitive industry, we have managed to lower our attrition rate, reaching just 14.6% in 2019, four points down from our previous year. I'm happy to say that we will see more clients engage with our Globers as our list of clients continue to grow.

You know isn't too strong growth of Disney our second and Beyond client together also displayed robust growth of 3.3% year-over-year with clients Bath & Beyond growing at 41.2% year-over-year moreover during the quarter. We continue to successfully cross cell services with the companies. We acquired during the week our 2019 Acquisitions are fully integrated right now and Performing extremely well, our fifty Square strategy to have a diversified vase of multi-million dollar counts is progressing in line with our expectations during the last twelve months ended December 31st, 2019. We had fourteen accounts above ten million in annual revenue age compared to nine accounts for the same period last year and we had 107 accounts with more than 1 million dollar of annual revenues compared to ninety one year ago dead.

Martin Migoya: We have added Dropbox, American Airlines, American Century Investments, Crystal Cruises, Plastique, and several more just in Q4. We're very proud to be working with them to find new technological solutions for their challenges. Finally, our pipeline and backlog remains strong, with a number of high-potential new clients and several long-term projects within our current clients. We continue investing in our studios to remain at the forefront of innovation, while at the same time expanding geographically to better serve organizations around the globe. We're optimistic about our ability to deliver sustainable growth in the future. With that, I'll turn over the call to Juan Urthiague, our CFO, for the detailed financial review on the Q4 and full year 2019, and also to provide guidance for Q1 and the full year 2020. Juan, please. Thank you very much.

We go.

Continue to expand our relationships with our key accounts the vase for our continuous growth.

Looking at diversification of our revenues by industry verticals. It is evident the globe and value proposition and service offerings are attractive to Enterprises across all Industries. Our top three industry verticals for the quarter. We are million entertainment with 23.4% of revenues banks financial services and insurance with 21.7% of revenues and technology and Telecommunications with 13.6% of revenues Professional Services consumer retail or manufacturing and technology and Telecommunications. We're on the fastest growing industry verticals in Q4 growing at 59.5% 55.9% and 45.6% year-over-year respectively.

Juan Urthiague: Thanks, Martin, good afternoon, everyone. Let me start by summarizing the results of our Q4 and full year 2019. I will then discuss our guidance for the Q1 and the full year 2020. I am very pleased to announce another quarter of record revenues and strong financial performance. Our revenues for Q4 amounted to $184.3 million, beating the upper end of our guidance range and representing a solid 31.5% year-over-year growth. Q4 revenue growth was 32% year-over-year in constant currency. During Q4 of 2019, Disney was once again our largest customer and displayed an impressive growth of 41.2% year-over-year. We are excited with the fact that high-potential accounts are scaling up and becoming large and meaningful within our customer portfolio.

Our customer concentration for Q4 2019 displays ongoing improvement with our top 10 account now representing 38.5% of revenues compared to forty 2.7% of revenues for the fourth quarter of 2018 in terms of geographic regions during the fourth quarter of 2019. 75% of our revenues were in North America 20% in Latin America and others and 5.1% were in Europe during this quarter. We continue to see strong growth and investment in digital transformation in Latin America during the fourth quarter of 2019. 86.7% of our revenues were denominated in u.s. Dollar providing good protection to our Top Line against currency fluctuations month.

Juan Urthiague: In addition to strong growth at Disney, our second and beyond clients together also displayed robust growth of 30.3% year-over-year, with clients 11 and beyond growing at 41.2% year-over-year. Moreover, during the quarter, we continued to successfully cross-sell services with the companies we acquired during the year. Our 2019 acquisitions are fully integrated by now and performing extremely well. Our 50 Squared strategy to have a diversified base of multimillion-dollar accounts is progressing in line with our expectations. During the last 12 months, ending 31 December 2019, we had 14 accounts above $10 million in annual revenues, compared to 9 accounts for the same period last year. We had 107 accounts with more than $1 million of annual revenues, compared to 91 year ago.

Turning now to profit are you?

He's related to the salary increases and promotions window of Q4. We finish the quarter with 11855 lovers 11021 of which Thursday professionals these represents a solid $559 increase quarter-over-quarter in the number of it professionals the Strong net hires in the quarter is driven by off by plane across Industries and geographies combined with low levels of attrition attrition for the past 12 months continued low at 14.6% compared to 15.2% in Q4 2018 showing a significant Improvement in most Talent Development Centers, particularly in Argentina as discussed in the last quarter's earnings Colby going forward with you fourteen to sixteen percent attrition rate as the normalized level for globant.

Juan Urthiague: We continue to expand our relationships with our key accounts, the base for our continuous growth. Looking at diversification of our revenues by industry verticals, it is evident that Globant's value proposition and service offerings are attractive to enterprises across all the industries. Our top three industry verticals for Q4 were media and entertainment, with 23.4% of revenues, banks, financial services, and insurance, with 21.7% of revenues, and technology and telecommunications, with 13.6% of revenues. Professional services, consumer retail and manufacturing, and technology and telecommunications were the fastest-growing industry verticals in Q4, growing at 59.5%, 55.9%, and 45.6% year-over-year, respectively.

Just see this ene accounted for 20.2% of our quarterly revenues increasing 90 basis points compared to Q4 2018. We continue investing for the future may need to expand our sales coverage in our Target markets doing 2019. We have been able to successfully slightly delete a CNA expenses despite the new tax on lack of service in Argentina included within this expense line as a result our adjusted operating income for the quarter amounted to Thirty point four million dollars or 16.5% of revenues compared to twenty three point four million dollars or 16.7% of revenues for the fourth quarter of 2018 as discussed in detail later. Our full-year 2019 adjusted operating margin was 17% in line with our near midterm Target. We are proud of this margin level for a company of our size.

Juan Urthiague: Our customer concentration for Q4 2019 displays ongoing improvement, with our top 10 accounts now representing 38.5% of revenues, compared to 42.7% of revenues for Q4 2018. In terms of geographic regions, during Q4 2019, 75% of our revenues were in North America, 20% in Latin America and others, and 5.1% were in Europe. During this quarter, we continued to see strong growth and investment in digital transformation in Latin America. During Q4 2019, 86.7% of our revenues were denominated in US dollar, providing good protection to our top line against currency fluctuations.

Sharon

An expense for the fourth quarter of 2019 amounted to 5.9 million dollars representing 3.2% of total revenues for the. This expense is mainly related not kind of restricted stock units granted to certain key employees and directors of the company as part of our long-term retention plan financial income and expense net amount of Los four point three million dollars. This net result is composed of FX gains and losses resulting from monetary assets and liabilities in local currencies costs related or hating a strategies interest expenses from our credit lines and listings and finally interest income from our portfolio of investments in the fourth quarter. We had gained a transaction with bonds took one point six million dollars of setting some of the impact on our margins from there isn't and peso performance. Our IFRS effective tax rate for the quarter was 22.3% fairly consistent.

Juan Urthiague: Turning now to profitability, our adjusted gross profit for the period increased to $73.5 million, representing 39.9% adjusted gross margin, compared to $58.4 million, representing 41.7% adjusted gross margin in Q4 2018. Year-over-year adjusted gross margin decline is explained by effects and active management of our business to maintain our adjusted gross margin in the 38% to 40% range, which give us sufficient room to invest in our business, in turn, helping us maintain a robust top-line growth trend. On a sequential basis, the slight decrease is related to the salary increases and promotions window of Q4. We finished the quarter with 11,855 Globers, 11,021 of which were IT professionals.

Would previous quarter's adjusting.

And for the fourth quarter of the year total, 24.2 million dollars representing 13.1% adjusting the link and margin compared to eighteen point five million dollars representing 15.2% adjusted net income. Margin for the fourth quarter of 2018 adjusted EPS for the quarter was very solid at $0.64 based on thirty-eight million average sales for the quarter above the upper end of our guidance range and compared to fifty cents for the fourth quarter of 2018 based on thirty six point nine million average Duty chairs for the quarter of moving on to the balance sheet our cash and Investments as of December 21st, 2019 amounted to eighty two point five million dollars while borrowings are mounted to fifty one point four million dollars for gas generation was mainly used for cupcakes and payments related to a rep positions earlier this month. We also expanded our credit facility to 350. Yep.

Juan Urthiague: This represents a solid 559 increase quarter-over-quarter in the number of IT professionals. The strong net hires in the quarter is driven by our robust pipeline across industries and geographies, combined with low levels of attrition. Attrition for the past 12 months continued low at 14.6%, compared to 18.2% in Q4 2018, showing a significant improvement in most talent development centers, particularly in Argentina. As discussed in the last quarter's earnings call, going forward, we view 14% to 16% attrition rate as the normalized level for Globant. Adjusted SG&A accounted for 20.2% of our quarterly revenues, increasing 90 basis points compared to Q4 2018. We continue investing for the future, primarily to expand our sales coverage in our target markets.

$10 from two hundred million

Dollars prior while lowering interest rates on drone amounts by 25 basis points. You can see the details in the six case. We filed on February 6 a.m. Our cash flow Generation profile satisfies our needs for investment in our business. This credit facility provides us with flexibility related to internal Investments while also suggest waiting sufficient Firepower for us to pursue any potential Mna this facility also helps us develop strong relationships with markee global financial institutions, which are part of this facility HSBC Bank BNP. Pariba, the VA JP Morgan Bank of America SunTrust US Bank and Silicon Valley Bank. We are very proud of closing this financing which was significantly oversubscribed as it supports our continuous growth and it is proof of our strong credit profile. Now, let's talk about the full-year table.

Juan Urthiague: During 2019, we have been able to successfully slightly dilute SG&A expenses, despite the new tax on export of services in Argentina, included within this expense line. As a result, our adjusted operating income for the quarter amounted to $30.4 million or 16.5% of revenues, compared to $23.4 million or 16.7% of revenues for the Q4 of 2018. As discussed in detail later, our full year 2019 adjusted operating margin was 17%, in line with our near midterm target. We are proud of this margin level for a company of our size. Share-based compensation expense for the Q4 of 2019 amounted to $5.9 million, representing 3.2% of total revenues for the period.

nineteen performance

Juan Urthiague: This expense is mainly related to the grant of restricted stock units granted to certain key employees and directors of the company as part of our long-term retention plan. Financial income and expense net amounted to a loss of $4.3 million. This net result is composed of FX gains and losses resulting from monetary assets and liabilities in local currencies, costs related to our hedging strategies, interest expenses from our credit lines and leasings, and finally, interest income from our portfolio of investments. In Q4, we had gain on transaction with bonds of $1.6 million, offsetting some of the impact on our margins from the Argentine peso performance. Our IFRS effective tax rate for the quarter was 22.3%, fairly consistent with previous quarters.

Revenue for 2019 will 659.3 million implying at 26.2% year-over-year growth and above the upper end of our guidance range. This increase was primarily boosted by 50 square accounts. But also new customer wins, as our portfolio of high potential customers continues to grow at a very healthy Pace our 2019 in my ideals perform strongly and we successfully cross sold services with our recently acquired companies blow and dedicated significant sales Technical and delivery capabilities to accelerate our expansion within the clients added to this positions at the same time. The new Services generated incremental revenues in love and customers.

I would adjust these gross profit for 219 was 266.5 million dollars representing 40.4% adjusted gross margin compared to two hundred twelve million dollars representing 4.6% of those martial for the full year 2018 adjusted gross margin for the year was our target range of 38 to 40% off this year showed a deletion of ten basis points year-over-year currently accounting for 19.9% of our revenues for 2019 adjusted profit from operations for 2019 was 112 million dollars or 17% adjusted profit from operations. Margin compared to eighty four point three million dollars or 16.1% adjusted personal choice martians for 2018 representing an improvement of 90 basis points share-based compensation expense for 2019 amounted to nineteen point nine million represent em,

Juan Urthiague: Adjusted net income for the Q4 of the year totaled $24.2 million, representing 13.1% adjusted net income margin, compared to $18.5 million, representing 13.2% adjusted net income margin for the Q4 of 2018. adjusted diluted EPS for the quarter was very solid at $0.64, based on 38 million average diluted shares for the quarter, above the upper end of our guidance range and compared to $0.50 for the Q4 of 2018, based on 36.9 million average diluted shares for the quarter. Moving on to the balance sheet, our cash and investments as of 31 December 2019, amounted to $82.5 million, while borrowings amounted to $51.4 million. Our cash generation was mainly used for CapEx and payments related to our acquisitions.

3% of revenues

Juan Urthiague: Earlier this month, we also expanded our credit facility to $350 million from $200 million prior, while lowering interest rates on drawn amounts by 25 basis points. You can see the details in the 6-K we filed on 6 February. While our cash flow generation profile satisfies our needs for investment in our business, this credit facility provides us with flexibility related to internal investments, while also generating sufficient firepower for us to pursue any potential M&A. This facility also helps us develop strong relationships with marquee global financial institutions, which are part of this facility: HSBC, Citibank, BNP Paribas, BBVA, JP Morgan, Bank of America, SunTrust, U.S. Bank, and Silicon Valley Bank. We are very proud of closing this financing, which was significantly oversubscribed as it supports our continuous growth and it is proof of our strong credit profile.

To twelve point nine million dollars representing 2.5% of revenues for 2018. This expense in language. Our Target was impacted by a strong share price and is mainly affect your long-term incentive programs as explained before Financial income and expense net for 2019 amounted to a loss of Thirteen point two million dollars compared to a loss of five point six million dollars in 2018. This higher expenses related to the adoption of IFRS 16 during 2019. Net effects impacts resulting from a local currencies costs related or hedging strategies and interest expense of for our new credit facility adjusted. Net income for 2019 was eighty-six on 1 million dollars or 13.1% adjusted net income margin compared to sixty three point seven million or 12.2% adjusted net income. Margin 4:20 a.m.

representing an improvement

Of 90 basis points. I just in an income increase 35.1% year-over-year eight point nine percentage points faster than revenues. I just bought in 2019 was $2.29 based on thirty seven point seven million average shares for this period compared to $1.74 for 2015 based on thirty six point seven million average Duty chairs for 2018 adjustability DPS in 2019 was evolved the upper end for a guidance range up. I would like to share with you our outlook for q1 and for the full year twenty-twenty. Let me start with the demand environment and its implications of all revenues. We continue to be bullish thousands of our service offering which we believe is fully aligned with market demand at the same time. We are very optimistic with the progress. We're witnessing in our fifties squared accounts page.

Juan Urthiague: Now, let's talk about the full year 2019 performance. Revenue for 2019 was $659.3 million, implying a 26.2% year-over-year growth and above the upper end of our guidance range. This increase was primarily boosted by 50 Squared accounts, also new customer wins, as our portfolio of high potential customers continues to grow at a very healthy pace. Our 2019 M&A deals performed strongly, we successfully cross-sold services with our recently acquired companies. Globant dedicated significant sales, technical, and delivery capabilities to accelerate our expansion within the clients added through these acquisitions. At the same time, the new services generated incremental revenues in Globant customers.

Juan Urthiague: Our adjusted gross profit for 2019 was $266.5 million, representing 40.4% adjusted gross margin, compared to $212 million, representing 40.6% adjusted gross margin for the full year 2018. Adjusted gross margin for the year was above our target range of 38% to 40%. Adjusted SG&A showed a dilution of 10 basis points year-over-year, currently accounting for 19.9% of our revenues for 2019. Adjusted profit from operations for 2019 was $112 million, or 17% adjusted profit from operations margin, compared to $84.3 million or 16.1% adjusted profit from operations margins for 2018, representing an improvement of 90 basis points.

darling front have

Billing remain strong. We are able to hire and retain highly-skilled professionals based on current disability. We expect q1 2020 revenues to Vietnam 188 million dollars. We currently Expect No Effects impact over q1 revenues q1 adjusted operating margin is expected to be in the 16 to 17,000 range and adjusted diluted EPS is expected to be at least $0.62 assuming 38.2 million chairs or standing for the quarter page ad in the full year twenty-twenty. We expect revenues to be at least eight hundred and ten million dollars. We currently assume No Effects impact to our full-year 2020 revenues with a guided tour de just the operating margins. We believe we have reached very healthy levels for a company of our size and expect to keep largely stable adjusted operating margins in the 16 and yep.

Juan Urthiague: Share-based compensation expense for 2019 amounted to $19.9 million, representing 3% of revenues, compared to $12.9 million, representing 2.5% of revenues for 2018. This expense, in line with our target, was impacted by a strong share price and is mainly driven by our long-term incentive programs, as explained before. Financial income and expense net for 2019 amounted to a loss of $13.2 million, compared to a loss of $5.6 million in 2018. This higher expense is related to the adoption of IFRS 16 during 2019, net effect impacts resulting from monetary assets and liabilities in local currencies, costs related to our hedging strategies, and interest expense for our new credit facility.

217 and a half percent

Range for the full-year twenty-twenty while we continue investing in our business including training programs and cutting-edge Technologies and sells coverage to expand our business page. As far as effective. Income tax rate is expected to remain in the 20 to 24% range both for q1 twenty-twenty and the full year twenty-twenty at this point. We expect them to be towards the lower end of the range finally in terms of adjusted EPS. We are expecting at least $2.74 for the full year twenty-twenty, assuming 38.5 million average pleaded shares outstanding for the full year. Thanks everyone for participating in the call for your courage and support operator. Can you please Ki questions. Thank you.

Juan Urthiague: Adjusted net income for 2019 was $86.1 million or 13.1% adjusted net income margin, compared to $63.7 million or 12.2% adjusted net income margin for 2018, representing an improvement of 90 basis points. Adjusted net income increased 35.1% year-over-year, 8.9 percentage points faster than revenues. Adjusted diluted EPS in 2019 was $2.29, based on 37.7 million average diluted shares for this period, compared to $1.74 for 2018, based on 36.7 million average diluted shares for 2018. Adjusted diluted EPS in 2019 was above the upper end of our guidance range. To wrap up, I would like to share with you our outlook for Q1 and for the full year 2020.

I will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you were using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.

The first question today comes from Timpson Hong of JPMorgan, please go ahead. Good afternoon. Thanks for all the details. I wanted to ask for Jose Martinez Juan just just curious you mentioned visibility yet. I was hoping maybe if you can give us an idea of of your visibility now versus this time last year over from a revenue perspective. I know you just re-up with Disney that's coming at a very high growth rate exiting the year. Can you just come in on just brought our visibility?

Juan Urthiague: Let me start with the demand environment and its implications to our revenues. We continue to be bullish in terms of our service offering, which we believe is fully aligned with market demand. At the same time, we are very optimistic with the progress we are witnessing in our 50 Squared accounts. On the talent front, hiring remains strong, and we are able to hire and retain highly skilled professionals. Based on current visibility, we expect Q1 2020 revenues to be at least $188 million. We currently expect no FX impact to our Q1 revenues. Q1 adjusted operating margin is expected to be in the 16% to 17% range, and adjusted diluted EPS is expected to be at least $0.62, assuming 38.2 million average diluted shares outstanding for the quarter.

Okay. Yeah, I did. This is Martin. Thank you for the question. The ability is pretty high as we as we have is pretty much the same as we have last year's around eighty percent of what's going on. It's already you know being seen by us. So this is this is the the current situation, you know, big accounts are are you know Traction in quite well, and we're we're very positive for the year.

Okay, great. And then on the on the margin front, I know you gave a a wide range. I know there's a lot of obviously a lot of volatility going on from an fx perspective you gave an at least comment on earnings wage which makes sense. So can we assume that if if margins come in on the lower end given the given external factors that you'll take Bond games to protect their earnings. Can you maybe just come in on those off on that on that potential? Thanks. Yes. Hello. How are you doing? So yes, you know in the guys in the we provided, you know, we have an assumption in terms of what can happen in terms of effects in terms of inflation different countries. And also of course depending on what happens in in Latin America. We may be using the one transaction, you know as a way to offset part of that impact at the end of the various, you know from this from from the from the past, you know when when there is dead.

Juan Urthiague: Regarding the full year 2020, we expect revenues to be at least $810 million. We currently assume no effects impact to our full year 2020 revenues. With regards to our adjusted operating margins, we believe we have reached very healthy levels for a company of our size and expect to keep largely stable adjusted operating margins in the 16.5% to 17.5% range for the full year 2020, while we continue investing in our business, including training programs in cutting-edge technologies and sales coverage to expand our business. IFRS effective income tax rate is expected to remain in the 22% to 24% range, both for Q1 2020 and the full year 2020. At this point, we expect the tax rate to be towards the lower end of the range.

Every day when there is a behavior in the FX Market where the to what they have to rate.

Um, you know, we may we may have some hiccups or some impact on the margins that gets offset by the transaction with bonds. But then when the two markets, then we have the movement from beginning transaction. We bounced back into the margin.

Juan Urthiague: Finally, in terms of adjusted diluted EPS, we are expecting at least $2.74 for the full year 2020, assuming 38.5 million average diluted shares outstanding for the full year. Thanks, everyone, for participating in the call, for your coverage and support. Operator, can you please queue questions? Thank you.

Understood I'm all set. Thank you.

The next question comes from Ashwin of City, please. Go ahead.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Tien-tsin Huang of J.P. Morgan. Please go ahead.

Sorry, I was on mute. Thank you. And hi Martin. Hi one questions on margins and just kind of thinking thinking about the the use of at least as mentioned in attendance question. Can you comment on Gross margins versus wage sg&a leverage which is as soon as they reach obviously has been a good driver in the past. Where are you leaning towards now and with regards to gross margins, do you do you expect any any comments on early in any positivity to do emerge from pricing?

Tien-tsin Huang: Good afternoon. Thanks for all the details. I wanted to ask for Martin and Juan, just curious, you mentioned visibility. I was hoping maybe if you can give us an idea of your visibility now versus this time last year overall from a revenue perspective. I know you just re-upped with Disney, that's coming at a very high growth rate exiting the year. Can you just comment on just broader visibility?

Tien-Tsin Huang: Good afternoon. Thanks for all the details. I wanted to ask for Martin and Juan, just curious, you mentioned visibility. I was hoping maybe if you can give us an idea of your visibility now versus this time last year overall from a revenue perspective. I know you just re-upped with Disney, that's coming at a very high growth rate exiting the year. Can you just comment on just broader visibility?

look

Hello, ask me, you know your party's four the fourth quarter ended up 39.9% you know close to the the top end of the historical guy took off the 8th to 40% we move now to operating income guys and you know to be able to to manage both invest as well as investments in the gross margin and and and effectively, you know, maintain the level of operating profit that we are showing, you know, we ended the year at 17% 1030 Marshall, which is pretty good for a company of our size. And we we are now driving sixteen and a half two Seventeen and a half for the full year. So big machine language with 2019. We don't we don't see operating. We don't see ghosts mushrooms above the range that we always provided we continue to see it in the state to 40% you know, most likely close to age.

Juan Urthiague: Okay. Yeah, hi, Tien-tsin, this is Martin. Thank you for the question. The visibility is pretty high as we, as we have. It's pretty much the same as we have last year. Around 80% of what's going on is already, you know, being seen by us. This is, this is the, the, the current situation, and, you know, big accounts are, are, you know, tractioning quite well, and we're ex- we're very positive for the year.

Martin Migoya: Okay. Yeah, hi, Tien-tsin, this is Martin. Thank you for the question. The visibility is pretty high as we, as we have. It's pretty much the same as we have last year. Around 80% of what's going on is already, you know, being seen by us. This is, this is the, the, the current situation, and, you know, big accounts are, are, you know, tractioning quite well, and we're ex- we're very positive for the year.

Tien-tsin Huang: Okay, great. On the, on the margin front, I know you gave a, a, a wide range. I know there's a lot of, obviously a lot of volatility going on from an FX perspective. You gave an at least comment on earnings, which makes sense. Can we assume that if, if margins come in on the lower end, given external factors, that you'll take bond gains to protect the earnings? Can you maybe just comment on those, on, on that, on that potential? Thanks.

Tien-Tsin Huang: Okay, great. On the, on the margin front, I know you gave a, a, a wide range. I know there's a lot of, obviously a lot of volatility going on from an FX perspective. You gave an at least comment on earnings, which makes sense. Can we assume that if, if margins come in on the lower end, given external factors, that you'll take bond gains to protect the earnings? Can you maybe just comment on those, on, on that, on that potential? Thanks.

representative of that

That number but the focus of the company even the Investments we are doing in sales the investment. We are doing to scale-up the company in business. We are doing in terms of technology and Investment Banking to hire more people and I'm praying more people we want to be able to manage that that's why there's more Focus now on on the operating margin as opposed to just you know, I'm focusing on gross margin on a stand-alone basis. Look at the two combined. I'm going to be able to invest in different areas of the businesses require. Okay now wage to understand the pieces and and just to clarify that those Investments seem to be all included in there. The other question is really on Karen's of lack of of of revenues. That is as we Revenue growth has been looked through the year as well as if you don't mind kind of going through sort of the inorganic impact that phone number

Juan Urthiague: Yes. hello, Tien-tsin. How are you doing? Yes, you know, in, in the guidance that we provided, you know, we have an assumption in terms of what can, can happen in terms of effects, in terms of inflation in the different countries. Also, of course, depending on what happens, in, in Latin America, we may be using the one transaction, you know, as, as a way to offset part of that impact.

Juan Urthiague: At the end of the day, as you know, from the past, you know, when there is a delay or when there is a behavior in the FX market where there are two rates, you know, we may, we may have some hiccups or some impact on the margins that get offset by the transaction with bonds. When the two markets converge, then we have the movement from the gain transaction with bonds back into the margins.

Through as we go through the as well. Yeah, so this was a kid, you know.

So, you know what is closer like you want to ride, you know with a lot more knowledge of Martin mention. We have 80% disability. So, of course this ability for the first two quarters is higher than for the rest of the year. We're guiding we guided all about 28.6% growth from 4 to 1 and wage almost 23% for the full year. So unlike every you know, in the last five years when we start the year, we like to ride based on the results based on you know, what we have seen right now in the market and then as the quarter progressed, we typically, you know, we might end up leaving the past changing a little bit over guys. I would like to go we feel comfortable when we are today, right? And then the second part of your question was organic and inorganic, you know was a very good quarter, you know, yep.

Tien-tsin Huang: Understood. I'm all set. Thank you.

Tien-Tsin Huang: Understood. I'm all set. Thank you.

Operator: The next question comes from Ashwin Shirvaikar of Citi. Please go ahead.

Ashwin Shirvaikar: Sorry, I was on mute. Thank you. Hi, Martin. Hi, Juan. Questions on margins. Just kind of thinking, thinking about the use of at least, as mentioned in Tingen's question. Can you comment on gross margins versus, you know, SG&A leverage, which is SG&A leverage obviously has been a good driver in the past. Where are you leaning towards now? With regards to gross margins, do you, do you expect any, any, any comments on, or, or any positivity to emerge from pricing?

Juan Urthiague: Look, hello, Ashwin. You know, gross margin for the Q4 ended at 39.9%, you know, close to the top end of the historical guidance of 38% to 40%. We move now to operating income guidance, you know, to be able to manage both SG&A investments as well as investments in the gross margin and, and, and effectively, you know, maintain the level of operating profit that we are showing. You know, we ended the year at 17% adjusted operating margin, which is pretty good for a company of our size. We, we are now guiding 16.5% to 17.5% for the full year, so pretty much in line with 2019. We don't, we don't see operating...

Can you record there are three 1.5% and and the ironic part including the you know, it was more than 20% or even a little bit more including off because selling that we are doing okay here you one we guided 28.6% and we are seeing the organic part off like in the 22% plus including the cross-selling and for the year, we are guiding from 3% where the organic part is more like 20.5% off list, you know about 2.5 percentage points coming from, you know, the revenues from the last week's which we acquired in the second part of last year.

Thank you.

Oh, you know what question comes from of William Blair.

Juan Urthiague: We don't see gross margins above the range that we always provide you. We continue to see it in the 38% to 40%, you know, most likely, close to the upper end of that number. The focus of the company, given the investments that we are doing in sales, the investments we are doing to scale up the company, the investments we are doing in terms of technology, and the investments we are doing to hire more people and train more people, we want to be able to manage that. That's why there is more focus now on the operating margin, as opposed to just, you know, focusing on gross margin and SG&A, on a standalone basis.

I just to kind of build up on that, you know visibility and and how you put together the guidance. Are there any considerations in place for any macro concerns or potential slowdowns wage? 2020 and how are you thinking about that for this 2020 guidance versus you know, how you may have thought of that about that when you put out initial 2019 guidance.

Take awhile you this is Martin. Look we have we're aware of the situation. We have no no specific signals from any of our customers around any issue on that on that front as we are, you know connected to too many things that are has nothing to do with that. So often I feel that the impact won't won't affect us and we haven't baked in any impact in the in the future because I think that you know from the disability office today, everything is fine. So that's everything I can say, but you never know. I mean future is something maybe in a few weeks. Nobody will be talking about this anymore money, or maybe it gets harder. We don't know. So from what we know now from what we have heard from our customers. The situation is normal and and what we consider

Juan Urthiague: We want to look at the two combined, and we want to be able to invest in the different areas of the business as required.

Ashwin Shirvaikar: Okay. No, that's good to understand the pieces and just to clarify that those investments seem to be all included in there. The other question is really on cadence of revenues as we or revenue growth as we look through the year, as well as if you don't mind kind of going through sort of the inorganic impact that flows through as we go through the year as well.

Juan Urthiague: Yeah. In terms of the cadence, you know, as always, you know, when it's closer, like Q1, we guide, you know, with a lot more knowledge. As Martin mentioned, we have 80% visibility, so of course, visibility for the first two quarters is higher than for the rest of the year. We guided all about 28.6% growth for Q1, and we guided almost 23% for the full year. Like every year, you know, in the last five years, when we start the year, we like to guide based on the visibility that we have, based on, you know, what we are seeing right now in the market.

to see if there is a spending that

You have seen and forecasted in this in this few few weeks.

Okay, and then congrats on on the continued status with Disney when you when you achieve preferred vendor status with you know Disney where other customers is that something that's going to open the door for you to negotiate more kind of multi-year msa's or any type of spend commitments. And then what does the the margin profile look like? Some of these larger accounts page versus on your smaller engagement?

Juan Urthiague: As the quarters progress, we typically, you know, we might end up, as we did in the past, changing a little bit our guidance. We like to guide where we feel comfortable where, where we are today, right? The second part of your question was organic and inorganic. Q4 was a very good quarter. You know, we ended the quarter at 21.5%. The organic part, including the, you know, it was more than 22% or even a little bit more, including the cross-selling that we are doing, okay?

Well, we have so many happy. Let me go first with the first part of the question. Then I would let want to go on the second extremely happy that we renewed that amazing commitment and partnership, you know that we have with with this thing overall. I think that will lead to too many more things together given that the past experiences we have and you know the rankings in which we are but against other vendors are extremely high for us. So we are really confident that that could lead to to do things and to new area off to keep on expanding the relationship we have and I think that there's still a lot a lot of room to do if we keep on performing The Way We Are performing also the the new video game master service agreement have like different like different, you know things that that is an improvement from what we've had in the past, but we will see how all those dead.

Steven Chang: Yes.

Martin Migoya: Yes.

Juan Urthiague: For the year, for Q1, we guided 28.6%, and we are seeing the organic part more like in the 22% plus, including the cross-selling. For the year, we are guiding 23%, where the organic part is more like 20.5%, and the rest, you know, about 2, 2.5 percentage points coming from, you know, the revenues from Bellatrix, which we acquired in the second part of last year.

Steven Chang: Understood. Thank you.

Martin Migoya: Understood. Thank you.

Juan Urthiague: Welcome. Thanks for the question.

So, I don't know. If one if you want to have something of that in terms of you know, the biggest customers on on on the matching profile.

Operator: The next question comes from Maggie Nolan of William Blair.

Maggie Nolan: Hi, just to kind of build up on that, you know, visibility and how you put together the guidance. Are there any considerations in place for any macro concerns or potential slowdowns in 2020? How are you thinking about that for this 2020 guidance versus, you know, how you may have thought about that when you put out initial 2019 guidance?

You know go and have a very no consistent matching profile among all customers. Typically what happens is that you know, whenever you are you are given a a a new contract with a new technology with a you know more. Let's say hot technology. I think in time those projects tend to have higher margins than other projects that you are doing in the past. So they typically have reach out. We don't have a big this person in terms of margins, you know, I can go from -5 to plus five. That's pretty much the range in which projects and margins move around so there is no big inspiration between the different customers and I'm not even purchase.

Martin Migoya: Hey, how are you? This is Martin. Look, we're aware of the situation. We have no, no specific signals from any of our customers around any issue on that, on that front. As we are, you know, connected to many things that are, has nothing to do with that. I feel that the impact won't affect us, and we haven't baked in any impact in the future because, I think that, you know, from the visibility we have today, everything is fine. That's everything I can say, but you never know. I mean, future is something, you know, maybe in a few weeks, nobody will be talking about this anymore, or maybe it gets harder. We don't know.

All right. Thank you both.

Thank you. The next question comes from Joseph Fitzgerald, please go ahead. This is Steven Chen coming on for Joe. Thanks for taking my question. I'm just more on the the Disney contract. So I was just wondering if the the new signed contract with Disney if there has if there are any I guess mature changes compared to what any contract you had historically with Disney, and also maybe if due to the strong growth in this one in this quarter compared to the beginning of 2019. Can you see Disney continued at continuing their growth and maybe if they if they had given any Outlook in the future due to be some macro turmoil anything. Thank you.

Martin Migoya: From what we know now, from what we have heard from our customers, the situation is normal, and what we continue to see is the spending that we have seen and forecasted in this few weeks.

Maggie Nolan: Okay. Congrats on the continued status with Disney. When you achieve preferred vendor status with, you know, Disney or other customers, is that something that's gonna open the door for you to negotiate more kind of multiyear MSAs or any type of spend commitments? What does the margin profile look like at some of these larger accounts versus on your smaller engagements?

Thank you. See them for a question. Umm, this is Martine. Look, I think that there's some just good situation with Disney. Our track record is amazing. So keep on having like, uh, good good good stuff going on with them the forecast we are seeing now is a pretty I would say Thursday. It's a it's a pretty good growth also for this for this year. Now the new terms of the MSA are very good. That's all I can say. I cannot reveal any other any other thing that seems that are they're they're very good and we hope that you know some things that were in the past and they may they was different and now are approved. So we are happy. We're extremely happy with that negotiation. I think it would be much better for both and ourselves. So you'll be dead.

Martin Migoya: Well, we're extremely happy. Let me go first with the first part of the question, then I will let Juan to go on the second. We're extremely happy that we renewed that amazing commitment and partnership, you know, that we have with Disney overall. I think that it will lead to many more things together, given that the past experience that we have and, you know, the rankings in which we are evaluating against other vendors are extremely high for us. We are really confident that that could lead to new things and to new areas and to keep on expanding the relationship we have. I think that there's still a lot, a lot of room to do if we keep on performing the way we are performing.

situation is

Martin Migoya: Also, the, the new, the new Master Service Agreement has like different, like different, you know, things that, that is an improvement from what we had in the past. We will see how, how all those things evolve. I don't know, Juan, if you want to add something on that.

Going good. I think Disney with all the things that you know around, you know, plus and and all the things that are happening in the company is having a great moment. It's only a great education. So we're very happy with that with field part of that and I think that will keep on growing and as I said always, you know, it will keep on performing everything is about how we perform and so far. Our teams has demonstrated are really world class doing what we do for them.

Juan Urthiague: Yes. In terms of, you know, the, the, the biggest customers on, on, on the margin profile, you know, Globant has a, a, a very, you know, consistent margin profile among all customers. Typically, what happens is that, you know, whenever you are, you are given a, a, a, a new contract with a new technology or with a, you know, more, let's say, hot technology, and then even working time, those projects tend to have higher margins than other projects that you were doing in the past. They typically average out. We don't have a, a big dispersion in terms of margins, you know. The margin profile can, can go from minus five to plus five. That's pretty much the range, in which projects and margins move around.

Okay, great. Thank you. If I could just squeeze one more quick one in so I'm sure the lower you had talked about the lower attrition and the the m&a pipeline had drove to your choice of ads for your um your head count. I'll just wondering if in the future with a continued strong pipeline. You would continue seeing that strong addition of headcount, especially in touch with that huge jump compared to 2018. Thank you. Yes, so this is one so, you know this year 2019 which has an amazing organic growth in terms of options and that is composed of you know, record hirings and lower and very low attrition. And also we have uh, you know, uh a number of developers and designers and Engineers through Acquisitions. So it was a very strong year overall in terms of medications for 20 20, you know what we are seeing dead.

Juan Urthiague: There is no big dispersion between the different customers and between the different projects.

Maggie Nolan: All right. Thank you both.

Juan Urthiague: Thank you, Maggie.

Operator: The next question comes from Joseph Foresi of Cantor Fitzgerald. Please go ahead.

Steven Chang: Hi, this is Steven Chang coming on for Joe. Thanks for taking my question. Just more on the Disney contract. So I was just wondering if the new signed contract with Disney, if there are any, I guess, material changes compared to any contract that you had historically with Disney? Also maybe if, due to its strong growth in this quarter, compared to the beginning of 2019, do you see Disney continuing their growth? Maybe if they had given any outlook in the future due to maybe some macro turmoil or anything? Thank you.

from pipeline from

Momentum that's reflected in our guidance for the year. And for the quarter and of course, we will continue hiring, you know, more lovers training them do to you know to be able to deliver on that pipeline that we have seen.

Right, that's helpful. Thanks so much.

The next question comes from Arturo langa of I tell bva please go ahead.

Hi Martin. Wanna thank you for taking my questions first. I was wondering how you think about, you know, Granny growth opportunities at this moment. I mean looking at took multiple, it's quite high. So I was thinking, you know, maybe do you look at options, you know such as debt to optimize your cost of capital. And and and it should is this a moment when you think more took the opportunity to to to look at Targets is more attractive relative to maybe some months ago. Just wondering how how you think about that internally and then second is regarding the knowledge log in Tina. The bill was submitted I think yesterday to Congress and I was wondering what you could share there in terms of how you see this proposal when you think you will get approved sort of the timing and all those details, that would be it. Thank you.

Martin Migoya: Thank you, Steven, for the question. This is Martin. Look, I think that there's, there's a good situation with Disney. Our track record is amazing, so we keep on having, like, good, good, good stuff going on with them. The forecast we are seeing now is a pretty, I would say, it, it's a, it's a pretty good growth, also for this, for this year. Now, the new terms of the MSA are very good. That's all I can say. I cannot reveal any other, any other thing that, things that are there. They're very good. And we hope that, you know, some things that were in the past in the MSA were different and now are, are improved.

Thank you for the quest.

I'll take it. So in this room until you know, we always when we do a real is because we find a company with a similar cultures that complement our service offering that gives us, you know, any geography and in skill set. So you are not necessary to make a decision off, you know, we need to find the right company and we need to pay the right mood too because you know, we we have always been very very strict in how we make a decision both in terms of which companies we Acquired and also in terms of how much we pay for those companies. We are not thinking about changing any of that in the near future. I'm going into the knowledge flowing in Argentina. You just want it out, you know, the new regulation was sent to the Congress yesterday. The new regulation has yep.

Martin Migoya: We are happy, we're extremely happy with that negotiation, and I think it would be much better for both Disney and ourselves. The overall situation is going good. I think Disney, with all the things that you know around, you know, Disney+ and all the things that are happening in the company, is having a great moment, is having a great, a great situation. We're very happy with that. We feel part of that. I think that we'll keep on growing and as I said always, you know, if we keep on performing. Everything is about how we perform, and so far our teams have demonstrated are really world-class, doing what we do for them.

Steven Chang: Okay, great. Thank you. If I could just squeeze one more quick one in.

Martin Migoya: Sure.

Steven Chang: I'm sure the lower, you had talked about the lower attrition and the M&A pipeline had drove to your net adds for your headcount. I was just wondering if in the future, with a continued strong pipeline, do you continue seeing that strong addition of headcount, especially in 2019, with that huge jump compared to 2018? Thank you.

They similar benefits to the previous.

So for promotion law, you know, it's supposed to be treated by by by the house in the near future. But I cannot you know how to say when it's going to happen. You know, this is really outside of our our control but it's a good it's good news that that regulation was sent again to the cover to the Congress. It also said that the country understands how important this industry is for the country, you know, it's an industry that generates a lot of employment. It's an industry that creates a lot of opportunities all over the country and that generates a lot of dollars for the country. So it's good that the government realize and send it back to the Congress so soon.

Juan Urthiague: Yes. This is Juan. You know, this year, 2019, we had an amazing organic growth in terms of net additions, and that is composed of, you know, record hirings and very low attrition. Also, we added, you know, a number of developers, designers, and engineers through acquisition. It was a very strong year overall in terms of net additions. For 2020, you know, what we are seeing is a strong pipeline, a strong business momentum, that's reflected in our guidance for the year and for the quarter. Of course, we will continue hiring, you know, more Globers, training them to, you know, to be able to deliver on that pipeline that we are seeing.

Upon just just on the first point. Do you think about taking more debt on to get a lower cost of capital? Is that something you think about or is that out of question?

No, as you know a poodle two weeks ago. I mentioned is Nicole two weeks ago. We signed we amended the previous credit facilities that we have Thursday. We expanded the facility from 200 million to 350 million dollars and we increase the number of banks. We you know, now we have pretty much all these Banks or most of the big Banks behind behind up, you know backing us up. We we will take that only we need it for you know, uh in Chrome expansion into new locations. If you want to do an acquisition that you need some money. We are not just going to take data just for the effort to reduce the cost of capital, you know, when we take that is because we are seeing growth and opportunity to grow to grow the business and this is the plane that has not changed, you know that those are the drivers for

Steven Chang: Great. That's helpful. Thanks so much.

Operator: The next question comes from Arturo Langa of Itaú BBA. Please go ahead.

Arturo Langa: Hi, Martin, Juan, and Amit. Thank you for taking my questions. First, I was wondering how you think about inorganic growth opportunities at this moment? In looking at your multiple, it's quite high, so I was thinking, you know, maybe do you look at options, you know, such as debt to optimize your cost of capital? Is this a moment when you think more that the opportunity to look at targets is more attractive relative to maybe some months ago? Just wondering how you think about that internally. Then, second is regarding the Knowledge Law in Argentina.

Arturo Langa: The bill was submitted, I think, yesterday to Congress, and I was wondering what you could share there, in terms of how you see this proposal, when you think it will get approved, sort of the timing, and all those details. That would be it. Thank you.

using that in the future

Okay. Thank you.

You're welcome. The next question comes from Diego urrego of Goldman Sachs, please go ahead.

Juan Urthiague: Thank you, Arturo, for the question. I'll, I'll take it. In terms of M&A, you know, we always, when we do a deal, it's because we find a company with a similar culture that complements our service offering, that gives us, you know, a new geography, a new skill set. We're not in a hurry to make acquisitions. You know, we need to find the right company, and, and we need to pay the right multiple, you know. We, we have always been very, very strict in how we make acquisitions, both in terms of which companies we, we acquired, and also in terms of how much we pay for those companies. We are not thinking about changing any of that in, in the near future.

Yes, thank you. How you want to thank you for taking my question. The first question is related to the business diversification and your go to expand the thing to new regions if we could we would think about your business to 3 years from now. What are the main goals for for Global and in terms of global footprint, and maybe if you can also comment on how much can you benefit from, you know the location in the future. Let's say in terms of margins, that will be great. Thank you.

How are you? Thank you very much for the question. Look there's several answers to your multiple questions and the first name terms of diversification in terms of geography. Um, uh, we are going to other two other destinations in Asia and we are happy about that will still be in the very early days. But that's the plan we have for the next three five years to execute then in terms of diversification of different wage practices. We have lunch. I set on my on my script I we have lunch Tuesday to dioz, you know one which is really connected to what's going on with the sap implementations not because we're going to implement the city, but just because you're going to be using the sap information to log

Juan Urthiague: Second, going into the Knowledge Economy Law in Argentina, as you just pointed out, you know, the new regulation was sent to the Congress yesterday. The new regulation has very, very similar benefits to the previous Software Promotion Law. I, you know, it's supposed to be treated by the House in the near future, but I cannot, you know, say when it's gonna happen, you know? This is really outside of our control. It's good news that that regulation was sent again to the Congress. It also shows that the country understands how important this industry is for the country. You know, it's an industry that generates a lot of employment.

applications that really can be engaging with

The other Studio that diversifies a little bit what's going on in the in the technology Market is the conversational interfaces to you that studio for me. It's like next mobile and to synthesize what we do they're basically if we we create, you know, uh engines of artificial intelligence that connects the consumer real-time unconference act on the back while for example, you know having a banking application where you can connect through WhatsApp and then the bank and answer which is the balance that you have that you can make a transfer you can make, you know be charged with the QR or pay off your code things like that and all of those things without downloading any application hence reducing the friction we have with the with the consumer and and being off.

Juan Urthiague: It's an industry that creates a lot of opportunities all over the country, and that generates a lot of net dollars for the country. It's good that the government realized and send it back to the Congress so soon.

Arturo Langa: Great. Juan, just, just on the first point, do you think about taking more debt on to get a lower cost of capital? Is that something you think about, or is that out of question?

Juan Urthiague: You know, as, as you know, Arturo, two weeks ago, I, I mentioned this in the call. Two weeks ago, we signed, we amended the previous credit facility that we had. We expanded the facility from $200 million to $350 million, and we increased the number of banks. We, you know, now we have pretty much all the big banks, or most of the big banks behind, behind us, you know, backing us up. We, we, we will take debt only if we need it for, you know, incremental, expansion, into new locations. If we wanna do an acquisition, that we need some money, we are not just gonna take debt as, as, as just for the, for, for, for reducing the cost of capital, you know?

To expand that into many other places. So if you ask me the next three five years, I see global, you know a disruptor on the game. I see the industry is going to a place where not much Innovation is being done on how Professional Services are being rendered during the last twenty-five years and like we're innovating everything in every in every single aspect of that of that of that industry from how we are organized to how we use technology to decrease our mission to how we use technology and in artificial intelligence now to how we code to how we use technology to how we design how we talk how we recruit. So I think that there's a huge State like, you know other companies bid on on how to really find the taxi industry or how to really find a job.

Juan Urthiague: When we take debt, it's because we are seeing growth, we are seeing an opportunity to grow, to grow the business, and this is the plan that has not changed, you know. Those are the drivers for using debt in the future.

Arturo Langa: Okay. Thank you.

Juan Urthiague: You're welcome.

Operator: The next question comes from Diego Aragao of Goldman Sachs. Please go ahead.

Diego Aragao: Yes, thank you. Hi, Martin, Juan, thank you for taking my question. The first question is related to the business diversification and your goal to expand, let's say, into new regions. If we would think about your business 2, 3 years from now, what are the main goals for Globant in terms of global footprint? Maybe if you can also comment on how much can you benefit from, you know, this diversification in the future, let's say, in terms of margins, that would be great. Thank you.

hotel in this

We will have to really find the car industry. There's a huge state to create that next Generation player to reinvent the industry to reinvent the state wage. And and I think that low one given the scale our vision how we use technology and and how we think about that. It's in the best position to execute them. This is so that that that's what you're going to be you're going to see us doing are going to be successful on that. We don't know we hope yes and we are doing everything we can to to may happen. But I feel that that that's the huge space that you have in front of us in a market, which is really massive. Sorry for the long answer. It was a long question.

Martin Migoya: How are you? Thank you very much for the question. Look, there, there's, there's several answers to your multiple questions. The first one, in terms of diversification, in terms of geography, we are going to other, to other destinations, in Asia, and we are happy about that. We're still, you know, in the very early days, but that, that's the plan we have for the next three, five years to execute. In terms of diversification of different practices, we have launched, as I said on my, on my script, We have launched two new studios.

Yes, no, thank you for that. It was a very detailed answer. Thank you. So look at my my second question is also related to margene's my understanding of the square strategy is because you can keep focusing on let's say large accounts and hails their relationship with them and eventually grabbed a large share of quality within these clients by doing that you can, you know, also reduce the number of clients by closing a smaller contracts and concentrating your efforts within those large accounts. So my question is, can you help us to quantify how efficient this could be to your margins as well? Thank you.

Martin Migoya: Uno, one, which is really connected to what's going on with the SAP implementations, not because we're gonna implement SAP, but just because we're gonna be using the SAP information to create applications that really can be engaging with consumers. The other studio that diversifies a little bit what's going on in the technology market, is the Conversational Interfaces Studio. That studio, for me, it's like the next mobile. To synthesize what we do there, basically, is we create, you know, engines of artificial intelligence that connect the consumers real time and can transact on the back.

thanks for the

With him, you know, um, yes, we continue to believe that focusing on high-potential large corporations that are investing hundreds of millions of dead or sometimes a few millions in technology. Every year is is the right path to keep growing our company. We have grown the company primarily by farming those counts, but of course the oils are some laws here and they are you know companies, of course with hypertension that we believe can become multimillion-dollar accounts and and I'm going off doing that over time. What happens is that the smaller accounts, you know with no potential, you know, typically we end up at some point. I'm not working with with those companies and longer. However, that does not have, you know, a an impact in terms of gross. Margin. It does have a prestige.

Martin Migoya: While, for example, you know, having a, a, a banking application where you can connect through WhatsApp, and then the bank can answer which is the, the, the balance that you have, that you can make a transfer, you can make, you know, be charged with a QR or pay with a QR code, things like that. All of those things without downloading any application, hence reducing the friction we have with the consumer and being able to expand that into many other places. If you ask me, the next three, five years, I see Globant as, you know, a disruptor on the game. I see the industry is going to a place where not much innovation is being done on how professional services are being rendered during the last 25 years.

and you can see that in terms of the operating income and

What happens with this year, right because focusing on these large companies and foreign companies is always more cost-effective than hunting you companies. Once you are dead. Company, you have the relationships in place the sales guys that you need are a lot more focused and and they have all the contacts in place to bring new business into the company off the same goes for all the support areas. Right. Once you get used to working with these companies you have you know, what what sort of talent you need to provide for those projects, you know how to collect anymore, you know how to negotiate the contract that creates energy in every support team So eventually that have helped in the last three years to reduce the weight of our DNA as a percentage of revenues right now. What we are using is a more stable margin, you know, we want to have we believe Thursday.

Martin Migoya: At Globant, we are innovating every single aspect of that industry, from how we are organized, to how we use technology to decrease our attrition, to how we use technology and in artificial intelligence now, to how we code, to how we use technology to how we design, how we retain, how we recruit. I think that there's a huge space, like, you know, other companies did on how to redefine the taxi industry or how to redefine the hotel industry or how to redefine the car industry.

Martin Migoya: There's a huge space to create that next generation player, to reinvent the industry, to reinvent the space, and I, I think that Globant, given the scale, our vision, how we use technology and how we think about that, it's in the best position to execute that vision. That, that, that's what you're gonna see us doing. Are we gonna be successful on that? We don't know. We hope, yes, and we are doing everything we can to make it happen. I feel that that's the huge space that we have in front of us in a market which is really massive. Sorry for the long answer. It was a long question.

11:00 and we have achieved, you know, we close at 17% 2019. You think that keeping that level?

Investing more in in in in in in sales coverage investing more in training our our employees investing more in getting the company ready for the next stage in terms of scale is the right approach when we continue growing the company. So we expect now more stable margins for the near future when we continue expanding our revenues.

Diego Aragao: Yes, no, thank you for that. It was a very detailed answer. Thank you. Look, my second question is also related to margins. My understanding on the 50 Squared strategy is because you can keep focusing on, let's say, large accounts, enhance the relationship with them, and eventually grab a large share of quality within these clients. By doing that, you can, you know, also reduce the number of clients by closing smaller contracts and concentrating your efforts within those large accounts. My question is, can you help us to quantify how efficient this could be to your margins as well? Thank you.

Okay, that's super helpful. Thank you.

Can I give you a call? Thank you. The next question today comes from of wedbush Securities, please go ahead. Thanks strong quarter guys back porch relations a couple of things first what's embedded in your guidance for growth or lack of growth in some of the clients that we had some issues with last year Southwest something their Bank, what are the assumptions and that in the in the guidance for calendar? 2018 is one. I mean, we have a mention, uh the company so I know it's an airline interlock, but we never mentioned you don't give you specific names. Uh, how is it that you know, uh, typically for for next year what we have seen is a slight recovery in this Bank. However, if you still look at Financial we have been able to grow up,

Juan Urthiague: Look, Diego, thanks for the question. You know, yes, we continue to believe that focusing on high potential large corporations that are investing hundreds of millions or sometimes a few billions in technology every year, is the right path to keep growing our company. We have grown the company primarily by farming those accounts. But of course, we always add some new logos here and there, you know, companies of course, with high potential that we believe can become multi-million dollar accounts. When we are doing that over time, what happens is that the smaller accounts, you know, with no potential, you know, typically, we end up at some point not working with those companies any longer.

More than 25%

The last year so we kind of very strong performance even despite one one of the banks not performing as as you know, we initially expected and and for the girls in the street for the for the airline that we you know, we start placing some headings in the past. We have seen a stable here as of today. But at the same time we are seen some good momentum in the travel agency with other airlines growing significantly faster and and helping us to keep up with the growth in in in the travel industry, you know, travel do last quarter 14% sequentially, so that that was a good number even though for the month ended up at only 4%

Juan Urthiague: However, that does not have, you know, an impact in terms of gross margin. It does have a positive tailwind, and you can see that in terms of the operating income and what happens with SG&A, right? Because focusing on these large companies and farming companies is always more cost effective than hunting new companies. Once you are inside a company, you have the relationships in place, the sales guys that you need are a lot more focused, and they have all the contacts in place to bring new business into the company. The same goes for all the support areas, right?

Great helpful, and then Canary - what was the head count? That's Argentina based for the quarter. Yes. So, you know, we have 30% of the month. I said count on the total headcount for the quarter. Give me 1 second was $11,855 employees wage for the year came down four percentage points. We started the year with 34% We ended the year with 30% of total headcount. There was an increase of more than two hundred people in absolute numbers. But again, we continue with our diversification strategy growing across the globe and becoming a uh, a more global company South and then once embedded for pricing and guidance. Is it still a couple of hundred basis points per year?

Juan Urthiague: Once you are used to working with these companies, you have, you know, what sort, what sort of talent you need to provide for those projects, you know, how to collect an invoice, you know how to negotiate a contract. That creates synergies in every support team. Eventually, that has helped in the last three, four years to reduce the weight of our SG&A as a percentage of revenues. Right now, what we are guiding is a more stable margin. You know, we want to have, we believe that the level of operating margin that we have achieved, you know, we closed at 17% in 2019.

Juan Urthiague: We think that keeping that level and investing more in sales coverage, investing more in training our employees, investing more in getting the company ready for the next stage in terms of scale, is the right approach while we continue growing the company. We expect now more stable margins for the near future, while we continue expanding our revenues.

Look for I mean even though we having growing, uh more than 2% than average when we when we build the guidance and when we work on on on our budget, we should assume flat pricing. Uh, so that you know, we take some conservative approach on that front, even though the pricing environment looks good.

And then the final question, I believe you started moving maybe expanding your your 50 square more towards maybe a hundred fifty accounts. Is that took the the plan to try to expand into a larger set of potential key accounts down the road and where are we in that process?

Diego Aragao: Okay, that's super helpful. Thank you.

Juan Urthiague: Thank you, Diego. Thank you, Diego.

Operator: The next question today comes from Moshe Katri of Wedbush Securities. Please go ahead.

Moshe Katri: Hey, thanks. Strong quarter, guys. Congratulations. Couple of things. First, what's embedded in your guidance for growth or lack of growth in some of the clients that we had some issues with last year, Southwest, Santander Bank? What are the assumptions in that in the guidance for 2020?

Does that mean you know, there's any tension things are going to and and our former fifty Square program now has been like renaming to 100 square program. Yeah, and I think that that's that's kind of movement. We are seeing in terms of the growth of organization and uh with the guidance that we do for next year. Maybe the the exit run but we we uh, very close to two billion dollars in revenue. And uh, the the fact is that we need this I think in an organization in a totally different Manner and the reflective that is is that changed on the on the hundred square program and how we are seeing things happening. So short answer to your question. Yes. We are. We are evolving Everything download everything log on to start dealing with a much larger organization and a much-loved.

Juan Urthiague: Mochi, this is one. I mean, we never mentioned the company, so I know it's an airline and a bank, but we never mentioned. We don't give specific names. Having said that, you know, we typically, for next year, what we are seeing is a slight recovery in this bank. However, if you still look at financials, we have been able to grow more than 25% during last year, so we've had a very strong performance, even despite one of the banks not performing as, you know, we initially expected. For the travel industry, for the airline that we, you know, we had facing some headwinds in the past, we have seen a stable year as of today.

For Market opportunity that we we have in front of us while we think to reinvent the whole Space.

Thanks for that.

Welcome, the next question comes from Brian Virgin of Colin, please go ahead.

Juan Urthiague: At the same time, we are seeing some good momentum in the travel industry with other airlines growing significantly faster and helping us to keep up with the growth in the travel industry. You know, travel grew last quarter 14% sequentially, that was a good number, even though for the year we ended up at only 4%.

Hi, good afternoon. Thank you. Just I wanted to ask on Europe. Can you just talk about your efforts to scale there and regarding just for key performance was that fully due to the one large banking client and anything else to call out there?

Hello, Brian, I couldn't get the first part of the question. I'm sorry. Can you repeat?

Yeah, can you just talk about your efforts to scale in Europe? And then just on the four key performance want to confirm if it was just the one large banking client? Great. Yeah, so Europe was flashing did you much quarter-over-quarter will continue to see Europe as a big opportunity for us. We continue to see both continent and under UK Europe a big opportunity You know despite that client that didn't last year would not could not grow the opportunities that we have seen a 20 are quite quite positive, you know, not only with that customer that we are seeing a recovery, but also with other banks in Europe with with some Faith Automotive companies in Europe and with some Airlines in Europe, so we are optimistic about Europe we continue to invest in the team. We are we have a you know, we have been increasing the seniority dead.

Moshe Katri: Okay, great. Helpful. Then, can you remind us what was the headcount that's Argentina-based for the quarter?

Juan Urthiague: Yes. In Argentina, we have 30% of the total headcount, and the total headcount for the quarter, just give me one second, was 11,855 employees. Argentina, for the year, came down 4 percentage points. We started the year with 34%, we ended the year with 30% of total headcount. There was an increase of more than 200 people in absolute numbers, but again, we continue with our diversification strategy, growing across the globe and becoming a, a, a, a, a more global company.

Moshe Katri: Helpful. Then what's embedded for pricing and guidance? This is still a couple hundred basis points per year.

Juan Urthiague: I mean, even though we have been growing more than, you know, 2% on average, when we build the guidance and when we work on our budget, we always assume a flat pricing, so that, you know, we take some conservative approach on that front, even though the pricing environment looks good.

On the and we have a much more experienced Management in Europe. So Europe continues to be honorable.

Maybe then we have to materialize doing next year. We are optimistic about Europe. Yeah, by the way, you know, we we have we have mentioned on the previous call that you know, that customer was recovering and this is what we are seeing now, so that's a positive thing.

Moshe Katri: The final question. I believe you started moving, maybe expanding your 50 Squared more towards maybe 100 top tier accounts. Is that still the plan, to try to expand into a larger set of potential key accounts down the road? Where are we in that process?

Okay, that's helpful. Any more teen just that augment encoding example, you detail was interesting how how prevalent are cognitive service engagements or or at least serious conversations around those are prevalent of those across your page today. And then are there any particular Industries are moving faster on those than others know. We we have been trying to the software on the product and Thursday and the artificial intelligence engines in in many different customers is really promising the what we have seen and we have been engaged in already in conversations with other for our own customers to use the same tool for their own for their own people, which is also pretty pretty pretty pretty interesting is doing amazing things also being able to go and and no document back code that is totally undocumented wage.

Martin Migoya: Look, I mean, as the organization, things are growing, too, and our former 50 Squared program now has been, like, renamed into 100 Squared program.

Moshe Katri: Yep.

Martin Migoya: I think that, that's the kind of movement we are seeing in terms of the growth of organization. With the guidance that we need for next year, maybe the exit runway will be very close to $1 billion in revenue. The fact is that we need to start thinking an organization in a totally different manner. A reflect of that is that change on the 100 Squared program and how we are seeing those things happening. Short answer to your question, yes, we are evolving everything within Globant to start dealing with a much larger organization and a much larger market opportunity that we have in front of us, while we think to reinvent the whole space.

It's really.

Really attractive from our perspective to do software accuracy and things like that. So I see a promising path of growth for that specific technology that we're launching in the fact that for me means, uh, mainly a gain in productivity for our people that will be translated into our customers and hence will be able, you know to defend better our positioning on on defending the price. So we're extremely positive about the the progress of that of that initiative.

Moshe Katri: Thanks, Martin.

Martin Migoya: Welcome.

Operator: The next question comes from Bryan Bergin of Cowen. Please go ahead.

Bryan Bergin: Hi, good afternoon. Thank you. Just I wanted to ask on Europe, can you just talk about your efforts to scale there? Regarding just Q4 performance, was that fully due to the one large banking client? Anything else to call out there?

Okay, thank you. Conclude. Our question-and-answer session. I would like to turn the conference back over to Martin for any closing remarks.

Juan Urthiague: Hello, Bryan. I, I couldn't get the first part of the question. I'm sorry. Can you repeat?

Well, thank you very much for for covering us. Thank you very much for supporting us. We have had another very good quarter wage and good outlook for 2020 and I really look forward to seeing you on the next and of course any other question we're always available. Thank you so much.

Bryan Bergin: Yeah. Can you just talk about your efforts to scale in Europe, and then just on the 4Q performance, I wanna confirm if it was just the one large banking client?

Juan Urthiague: Great, yeah. Europe was flat pretty much quarter-over-quarter. We continue to see Europe as a big opportunity for us. We continue to see both continental and the UK, Europe, as a big opportunity, you know. Despite that client that during last year would not, could not grow, the opportunities that we are seeing for 2020 are quite positive. You know, not only with that customer, that we are seeing a recovery, but also with other banks in Europe, with some automotive companies in Europe and with some airlines in Europe. We are optimistic about Europe. We continue to invest in the team. We have, you know, we have been increasing the seniority and the...

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Juan Urthiague: We have a much more experienced management team in Europe. Europe continues to be an opportunity that we have to materialize during next year. We are optimistic about Europe.

Martin Migoya: Yeah, by the way, you know, we, we have, we have mentioned on the previous call, that, you know, that customer was recovering, and this is what we are seeing now. That's a positive sign.

Bryan Bergin: Okay, that's helpful. Martin, just that Augmented Coding example you detailed was interesting. How prevalent are cognitive service engagements or at least serious conversations around those? How prevalent are those across your client base today? Are there any particular industries that are moving faster on those than others?

Martin Migoya: No, we have been trying the software and the product and the artificial intelligence engines in many different customers. It's really promising, what we are seeing, and we have been engaging already in conversations for our own customers to use the same tool for their own people, which is also pretty, pretty interesting. The product is doing amazing things. Also, it's been able to go and, you know, document back code that is totally undocumented, which is really, really attractive from our perspective, to do software archaeology and things like that. I see a promising path of growth for that specific technology that we're launching in the market.

Martin Migoya: For me, means mainly a gain in productivity for our people that will be translated into our customers, and hence, we'll be able, you know, to defend better our positioning, on, on defending the price. We're extremely positive about the progress of that, of that initiative.

Bryan Bergin: Okay, thank you.

Martin Migoya: Welcome.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Martin Migoya for any closing remarks.

Martin Migoya: Well, guys, thank you very much for covering us. Thank you very much for supporting us. We have had another very good quarter and good outlook for 2020, and I really look forward to see you on the next and, of course, any other question, we are always available. Thank you so much.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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