Q1 2020 Earnings Call
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Earnings Conference call.
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Thank you operator, and thanks, everyone for joining us today on our go to review our first quarter 2020 financial results.
Now you shouldn't have received a copy of the earnings release, if you have not a copy somebody never know website <unk> dot com.
Our speakers today I'd like Amelia co founder and Chief Executive Officer, when would be I had two financial officer, and but the Sip on to Delever and people off before we begin I'd like to remind you that someone for comments on our call today may be deemed forward looking statements.
This concludes our business all financial outlook on the answers to some of your questions.
Mens are subject to risk and uncertainties, describing the companys earnings release, another filings with the FCC. Please note that we thought <unk> first the covering both in our financial statements.
During our call today, we're reporting <unk> first quarter adjusted measures, which is how we try to perform with internally and he says wait to compare adelanto appears in the industry.
You will find a reconciliation apply forever and I first measures at the end of the press release, we published in our Investor Relations website and they'll come this quarter's results.
Now to turn the call over to Mark Let me go Yeah, our seal.
Thanks, Bola Hello, and good afternoon, everyone.
Yes, we are IDN no discernible season I'm sure that you have heard from many Ceos across many different industries a about the difficulties our world is facing.
But it is never enough to underscore this unprecedented situation on how this is impacting our daily routines.
Reaching our concerns about our health and the health of those we love.
And how this is impacting the world economy.
We stand.
With all those were suffering today.
Over the next two minutes I would also like to layout, how globant is resolved to face this situation some accelerator for our business in the middle to long term.
Over the past few months.
I have been amazed by the kindness creativity innovation and resilience that I have seen across the world.
Today I would like to show we view some stories from Globant about how we're positioning our transformational skills to help our communities and our clients Rice studio occasion.
We have had a great first quarter with solid revenue growth and profitability.
But before I get into the details.
I'd like to introduce you to Betsy Gotbaum, yes.
She will discuss how we're facing Cobiz 19 in the global way.
But these young you saw what longtime operations will either on our chief delivery people officer as the head of Global Gabi 19 Committee. She has been instrumental is fueling our company through these by 12 months.
Oh please.
Thanks, Mussina hi, everyone. It's an honor to join it does have turned on the babies need situation over the last month, we have recently come fall did with national government independent experts more the other organizations and fellow deal by company, we have centralized how called we've maintained decision making to quickly.
Thank God, they will be enough I'd love us in our business. This is why we block maybe more of our company to work from home more on March 14, even before some of our host countries. The down knock down we completely different seasonally jumped 48 hours, all while providing uninterrupted delivery to our plans we have remained 40.
Operational since our top priorities our power safety, we will remain a war from home status for the time between <unk>.
Well when we do indeed return to the office. Our Cobiz 19 Committee has prepare a detailed plan to do so safely and rapidly.
Did you don't know this company has enabled us not only to quickly adapt to the global got down but to promote our billable professional development as well even when working remotely.
Recently announced glowing university, our own learning platform that will enable our blubber still upscale or risk killed in the most topped off their competency in the industry.
It all sorts of 14, there, but hoping to forks kills family technology ideally be language a leadership. Our aim is for our teams to become more creative problem solvers for our clients in these alferon certainty.
We're innovating our way through this is farm income a stronger on data side.
Let me share with you some of the waste love when you seem to waiting to find probably 90.
There was sourced dashboard, we knew that for public health officials information is key therefore, we team I would say forced to that but nobody interactive dashboard to enable real time garnishment up get resources.
This includes available I see you bad threats to eight doors and oxygen starch, we're working with different governments to than they did tool. So that they can mobilize their public health system more efficiently.
We didn't patient now being conducted exclusively online we knew that many schools, particularly those in the level of anymore, we're going to have trouble suddenly go in digital.
Oh, no births have therefore donated their time and conservations with Ses and drain in okay. There are some how to use only to pour more effective teaching.
As a company. We also had all the gains Cobiz campaign convenient our glover on our clients in a common effort with the support from our clients and extra effort by our global it's on our own Corebody. The nation, we were able to buy medical supplies for hospitals in each country, where we work I invite you all to learn more.
Evolved our efforts to make a difference taking care of the globin Dot com. This is a tough time for all of us, but I can not expressed to you how proud I have been to see our blocker scoping their communities in the best way because.
Third technology creativity and commitment.
Thank you, but this yeah I also have never been more proud of this team.
Indeed, I have been sharing the sentiment with globers across the world in there so town halls over the past month.
Now.
Let's look at the numbers.
I'm pleased to say that we had a very strong growth in quarter, one with 191.6 million, though not seen revenue.
This represents an outstanding 31% year over year growth.
We also had a very healthy profitability this quarter with an adjusted net income margin of 12.7%.
But dimension in mid March we have decided to move almost 100% afford blowers toward from home even before the global locked down.
We did dodd with the understanding that's a company we were ready for that.
We most of the technology and the methodologies for being able to walk in a geographically distributed manner.
However, I Miss being at the office with my team and I'm sure. Many of you do as well.
Usually come up with new ideas, when we are charging over coffee or before meetings.
Our the office discussion dynamics fuels innovation and productivity, what fostering an enabling the company culture for most corporations working remotely means loosing discussion moments, creating essentially decreasing in productivity and nobody thinking.
We don't do you see interactions how kind of organizations replicate group synergies and collaborations through distance working.
Well, we endured the employees feel motivated we know the traditional collaboration tools like video conference East or document sharing cannot replace these interactions. The idea is to achieve not just successful communication.
But real collaboration.
We need to apply technology to drink remote walk to the next level.
No. One has always had teams working remotely throughout the world.
Oh, we helped device ways to use artificial intelligence to empower our teams working remotely.
We're focusing our talent in our new proposal to the business world in a concept we called out mounted collaboration.
This will help organizations replicate this informally interactions to scale up culture, promoting novation and increased productivity.
We started three steps to remove the friction the distance creates.
The first is to become an enabler instead of a controller.
We tend to feel that people are less productive when they are not physically in an environment that we can control.
But this fear you some founded.
The traditional command and control the structure does not increase productivity.
Given solution is to try to things upside down.
Trust, the teams and empower them to self regulate and own their results.
Our actual bought framework I lost teams to learn continuously think systematically and adapt quickly to change the align closely with their clients, while delivering value added services.
The second step is to apply artificial intelligence to foster culture I'm personal connections uninsured that they are not lost when working from home. We know that culture can make or break a company on social connections promotes employee engagement.
No one where you say hi through our Star me up a west platform to help us understand the human fiber within an organization and also to provide a platform that will probably be promotes I'm proposed sees those the spontaneous interactions between employees. These benefits go beyond the current situation and effective.
Really enhance the workplace dynamic even when bucket the office.
Employees feel connected supported onempower by one another rather than from the top down.
The first step is to you see I told my team capabilities. When you no longer have a colleague sitting next to you to asphalt suggestions AI can be the solution to augment your teams skills and collaboration.
We have you see I to create a system that enhance the developers coding experience and capacities oriented golden shortens the learning curve when learning new coating languages or improving their skills. They receive suggestions to improve their work and examples of different solutions is like having a personal expert.
To help you understand how every single line of quotas works.
Thanks, I invite you to discover more about these babysitting augmented the globin dotcom.
Covidien has hit many companies heart. It has exposed the overdue change is that many of them need to make in how they work.
Companies must adopt immediately to ensure business continuing to however, they must also be prepare for what's beyond the crises. So they can grow.
The dishes our world is no longer an option, but they're required transformation is not just digital it is one that affects everything from business models operations infrastructure to even the core of customer relationships.
As I mentioned before I say pure play in the sheet, though uncalled if he transformations, we how the unique opportunity to help these organizations with these new reality.
Latam Airlines is a great example, although they had to come so most of their flight. They have decided to continue the deep digital transformation. We have been working together building every bump consumer experience. That's the she told at its core.
Where compiling our expertise in the content. We produce you know where Sentinel report we share for strategies that can help create new customer by you strengthening organizational agility Irene bent industries for the future.
Decided ideas.
Number one you much in exponential business.
Today more than ever companies need to challenge the our core business to seek opportunities that were previously available.
Cut the company.
Turing Ben any industry leaders will need to look at the inside to cialis current state and reshape organizations for a new reality they need to Austin cells are you looking at the boss instead of the signing for the future.
Oh mentored collaboration as I mentioned earlier, we are offering this concept us an answer to the new normal for our global economy, we need to operate the way we collaborate through technology I'm for create a mutant culture. The DNA of the corporation is a culture it must be ready to adopt to serve.
In a changing environment to read more about this is try to choose please visit sentinelle that closed on the comp.
Overall this difficult moment, we have stayed strong as a company because we're working side by side with our clients, helping them through these challenging times, our topline DC.
Has there are parts close and he said adopt interfaces crisis.
The same time. However, they are DTC division is experiencing huge growth as these the blast reach the mark of 54 million subscribers. Since the beginning we have offer our support I have been in constant sink to adopt to their needs. Despite the fact, we expect some impact in the very short term.
Coming mainly from the parts submission. This current challenge will not affect our long term partnership that is stronger than ever.
While there has been volatility in the global economy. We continued to have a strong pipeline and we continue closing deals with current a new clients. Let me give you a few examples.
We're already working on a profound digital transformation for pre PSMA additional payment company.
She said Cobiz 19 crisis broke out free PSMA needed to respond to the southern increasing demand for digital payment methods, particularly in developing countries. We created a payment button product to simplify transactions they simply push the button.
Follow the prompt and provide basic information that's it we went from design to leave element to deployment in just two weeks.
Also the health care provided clarity coal for help in managing their patient information and allocating resources. We were already building a sale force based solution. This will allow clarity to centralize the patient information and allow tracing as a result suspicious cases of copied 19 identify.
Unmanaged more efficiently these speeds up response time and decision making process.
Last quarter I show, we view the great news of Smile direct club, a digital dentistry company with more than 5000 employees and operations in seven countries. We have begun developing their solutions to improve their systems as they scale up.
We have taken this opportunity to boost our gaming studio as we have seen increased demand in time of global quarantined blow any development AAA games for Sony and Microsoft next generation consoles. We're also expanding our relationship with EA games, we began working for their North America subsidiaries are now.
We support electronic Arts in Europe, and India.
In Bunking, we're partnering with Texas Capitals Bank their machine with independent Bank group to become one of the largest banks in Texas Glom will help drive the cloud migration uncommon data stores for the entire bank.
Also this quarter I'm pleased to announce the brand new life Science studio.
Globant already has deep expertise in both health care and by Informatics.
These the studio brings these areas together to form a new agile team. They have the know how to assist the healthcare agricultural and pharmaceutical sector to become fully digitally enabled the studio will focus on smart farming image diagnoses health care ecosystems Tele medicine.
I'm precision medicine, among other areas. The studios first brush it will be the integrated breeding platform. This is a nonprofit the wants to fight global hunger by de Dicing plant breeding, we're creating a new module for plan breeders, so that they come breed more productive inefficient.
Clubs, we hope to make a difference, particularly in developing countries, where food management is crucial.
In closing out let me say that Globant is no stranger to adversity.
My three partners and I founded this company in the Middle office severe economic crises.
Through constant determination adaptation and innovation, we bid the arts at every corner I have delivered consistent growth our unique technological solutions for the worlds top brands.
With this new era of global uncertainty and bonus this top brands have an exponential greater need from dynamic relationships with end users an issuer a suburb user experience deceased globant moment.
Please take much care and stay safe.
With that I'll turn the call over 200, <unk>, our CFO for detailed financial review on Q1 twentytwenty onto provide guidance for quarter two.
Thank you very much plus one.
Thank you Martin and thank you all for joining us today.
Surely hope you your families colleagues are all well unsafe, let me start by summarizing for first quarter 2020 results I will then discuss our guidance for the second quarter. We're very pleased with our overall response for the first quarter of the or as we showed very strong prefer.
Our revenues for Q1 amounted to $191.6 million, beating our guidance, representing a solid 31.1% yearoveryear growth.
Wondering your growth were 32.2% year over year in constant currency covino had minimal impact on our Q1 revenues, primarily because of our swift actions related to transition almost 100% of or employees working from home mundane seamless delivery of service.
Historic customers did he was once again, our largest customer for the quarter growing more than 45% or nearly basis revenues from booked five to 10 accounts increased 31.9 person for the one with 5% respectively over the first quarter of 2019.
Customers, leaving them beyond increased 30.8% during the same quarter showing solid growth all across the board on a sequential very fish revenues increased 3.9% during Q1 2020 over the last quarter of tuning team.
The result of or the diversification of gracious into multiple regions, we have been able to grow new reviews able to provision analogy in terms of revenues our customer concentration numbers for Q1 2020 remain largely stable. We know were born from five top 10 accounts representing 11.7%.
And to 9.1 person, 41% the revenues compared to 10.5% to nearly 9% I'm, 40.8% of revenues respectively for the first quarter of 29 team nuclear diversification learning is very industry vertical will remain balanced across the different means.
With me Entertainment and financial services, leading the POC accounting for 24.2 person and 23.7% of revenues, respectively professional services and consumer we didn't one factory, where the fastest growing industry, where degree you one growing at 52.1% I'm 44.9.
Percent yearoveryear, respectively.
Regarding the progress of our 50 square strategy. During the last 12 months ended March 31st 2020, we shot towards customers about $10 million, even your revenues compared to 10 customers for the same period last year.
Scott 100, and poor customers with more than 1 million dollar revenues compared to 91, one year ago.
We continue to expand their relationships with all key accounts the grade for our continuous growth.
So geographic regions during the first quarter of 2020, 74.5% of our revenues were in North America.
1.5% in Latin America, and 6% wearing Europe.
Once again, we continue to see strong growth investments in digital transformation, particularly in the U.S from Latin America.
During the first quarter of 2020, 86.8% AFFO revenues were denominated in us dollar providing an approach toward topline against currency fluctuations in Q1, well the impact from Covidien Pinto revenues was minimal we did start wincing toward the end of the corner.
Some possibilities an elongated playing decision making cycles, primarily in determining hospitality sector.
During the beginning of Q2 trend continue mainly in the children hospitality vertical along with media entertainment retail vertical.
Well the Korean panoramic is creating some near term pressure toll revenues, you disposal, creating opportunities to deepen our relationship with our customers. Moreover, we really that the criteria will create material near and mid term will be these opportunities to accelerate or initiate.
This is a transformation journeys enterprises across the globe.
No one as previously discussed my Martine, we stand ready and prepared to captured those opportunities.
During these pandemic. We're also witnessing consolidation of vendors at similar four times with us gaining greater share of the guiding toward.
Turning down to profitability or adjusted gross profit for the period increased to $75.6 million, representing 39.5% adjusted gross margin compared to $60.1 million, representing 41.1% adjusted gross margin the first quarter of Tony 90.
Over a year adjusted gross margin decline is explained by higher cost emerging time probable and FX movements.
The management of or business to mundane or adjusted gross margin in the 3% to 4% range, which gave us sufficient room to misnomer business.
In turn helping US one thing a robust top line growth trend on a sequential basis. This slide degrees is mainly related to a slightly lower utilization due to the holiday season. We finished the quarter with 12538, Globers 11755 of which warranty professions.
Attrition for the past 12 month continue to stay low and 15% compared to 16% one year ago, showing a significant improvement morstan development centers, particularly in Argentina.
Given the current economic impact from Covidien team, we expect attrition rate to go further down to below 15%. The following quarter's covidien team has impacted demand for talent and some people are less prone to changing jobs, a global and we managed the company for the long term the current crises we likely.
To be short term manger.
We don't want to once you adjust our strategy regarding talent, especially as it relates to retention. Moreover, I discussed before we expect any money coming out of the crisis to be stronger than going into the crises, we want to be prepared to capture that demand.
In addition, our universe, our key acids, and we have invested heavily in hiring the right Palin and training them to be industry leaders. This however will lead to depreciate easy decision on some margin compression over the next few quarters, we've done to counter some of this impact through briefing GMI hiring.
And keeping the from legal expenses during Q2 and when the Caribbean team crisis persists, we will do selective hiring a fight the professional focusing on technologies that will not having excess or that will be in high demand post crises.
Got it gives you an eight came at 20.4% before quarterly revenue showing an increase of 30 basis points compared to Q1 219, we continue investing for the future primarily to expand their sales coverage in our target markets. This focus will only increase as we plan to capture increasing demand.
Covenant in crisis. Her result, our adjusted operating income for the quarter amounted to $29 million to $9 million or 15.6% of revenues compared to $24.7 million or 16.9% of revenues for the first quarter of 29 team Sharebased compensation expense.
The first quarter of 2020 amounted to $6.3 million, representing 3.3% total revenues for the period. This expense is mainly related to the plan Overstreet, We've talked unit granted to certain key employees in the directors of the company as part of the for long term retention plan finance expenses amounted.
Two $2.5 million in the first quarter of 2020 compared to $1.1 million for the same period last year. This loss is mainly composed of interest expenses from borrowings and interest expenses on these liabilities I.
Our financial results net amounted to a gain of $2.7 million for the first quarter compared to a loss of $1.9 million. During the first quarter 290 decide Tim is primarily composed of FX was sorry for monetary assets I really this in local currencies response from our hedging strategies and gained from.
Section with bonds or I FRS effective tax rate for the quarter was 31.6% coming in materially higher than our previous expectation of 22% to 4%. This increase was mainly driven by the large depreciation of Latin American currencies, primarily Colombia, Mexico, which grew.
Is the taxable base for the period, resulting in higher income tax expense.
We now expect were second quarter effective tax rate to be between 24, 26%.
Full year, Tony Tony effective tax rate to be between 25% to 27%.
Adjusted net income for the first quarter of the year totaled $24.4 million, representing 12.7% adjusted net income margin compared to $18.5 million, representing 12.7% adjusted net income machine for the first quarter.
Adjusted diluted DBS for this quarter was solid at 54 cents based on Thursday April 1 million average diluted shares for the quarter compared to 50 cents for the first quarter of Tony 19, based on 37.3 million average diluted shares for the quarter.
Moving on to balance sheet workers and investments as of March 31st 2020 amounted to 134.2 billion daughters, well borrowings amounted to 125 $7 million. The first quarter 220, we drew an additional 75 million from our credit facility, one or cash flows and ray.
Asian profile satisfies our needs for investments in our business. Our current credit facility of $350 million provides us the flexibility related internal developments, while also generating sufficient firepower for us to pursue any potentially money as mentioned in past calls.
Typically the first half of the or negative free cash flow as we pay bonuses and the second half of the year is when we generate the majority of the free cash flow. The second quarter of this year, we expect some impact in terms of collections as Cobiz 19 has impacted some of the customers and Charlie Entertainment.
Industries, which have approach are requesting temporary extensions in payment terms.
To wrap up I would like to share with you or outlook for Q2.
Based on current visibility, we expect Q2 2020 revenues to be at least $179 million or 13.6% Yearoveryear growth at this point would not expect any fixed impacts to our second quarter revenues.
Q2, adjusted operating margin. She is expected to be in that talks about a half percent to 14 and a half percentrange largely impacted by lower utilization on adjusted the GDP is expected to be at least 47 cents, assuming 38.2 million average beauty cheers.
It's done for the quarter.
We remain confident of our strong position in the digital income do space the uncertainty related to the current economic conditions, resulting from the community in outbreak makes it difficult to predict full year 2020 result, with high levels of accuracy. Therefore, we will not be guiding for the full year 22.
For the time be thanks, everyone for participating in the quote for your coverage and support operator can you. Please ask your questions. Thank you.
Yes. Thank you well now begin the question and answer session.
To ask a question you May have press Star then one on your Touchtone phone.
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And the first question constant Tencent, along with JP Morgan.
Thank you Greg.
Rich connect it looks like a break order on the second quarter it looks like.
The.
Got it implied deceleration or little bit better than what we had expected. So I'm curious on the second quarter here.
Broad base, where some of the delays that youre, describing it sounds like it's mostly travel and.
Entertainment and now that we're about halfway through the order are you starting to see some of the the delays get back started again with projects getting getting underway again, just curious what you're seeing right now real time. Thank you yeah, Hello Indian on how are you doing.
My question.
No no has really done so far I'm also paper, we're seeing is concentrated on travel entertainment.
Oh somewhat both projects are coming back.
Some of them. So far are still unquote. So it's a mix integration that industry other industry are holding up well.
But as you know you know Charlotte ARX <unk> customers, who those industries. That's why we have two or our forecast for the second quarter is a little below where it on an hour number for Q1, but you know given what we're seeing the market.
Really what we feel that are the $179 million Fourq you too.
Sorry, sorry, Scott.
Number for Q2.
I was saying you know Moscow Dart is coming from.
Some projects getting led to some some small counseling Johnson.
R&D in Florida Hospital.
All the other industries look.
Our recent already called enough so far.
Okay. No. That's good that's encouraging actually just as my follow up that just thinking about.
Longer term margins I know you gave the second quarter that's helpful.
You know what the success of work from home and you're talking about augmented.
And everything else do you see potential for higher productivity to drive.
Margins longer term than than before.
In a post comfortable.
Oh, no I think it's still too early to say clearly there's going to be changing the way working your way people go to offices in many of the number of people that number of offices that we will need in the future, but I think it's too early to say no. We are in the process of learning how you're working from home.
Working you know in the near environment is gonna be like so I think at this point Oh of course, we do believe that the decision is going to come up again as soon as we start to say.
More demand coming back and that will improve the margins relative cuts you true, but I think it's too early to say what when I read the longer can impact of the new reality or Oh, we're working from home, we're working promote which is no different way.
I don't know Martin is one area he will not.
Well I.
I think it's right on.
Right on spot.
Very good thanks, Jeff Thank you.
Thank you can do you think you figured the good thing.
Thank you and the nice crush cause much on Chicago with Citi.
Okay. Thank you.
Hi, Marty in high one.
I hope you too are doing that.
Likewise.
For for the second quarter, the outlook looks a little better than what we talk type.
Askew Lake.
Yes.
To quite a little bit more color with regards to.
Specific visibility of what you're hearing from.
Other work because in terms of.
Is that a secondary impact how are you managing things such as hiring pace utilization you hitting any comments with regard to pricing conversations.
Some qualitative desert.
This would be great. Thank you.
Sure. Thanks to the question Ashwin.
It's Marty.
No.
Like you know overall it seemed like it so that's unique.
And.
I don't think it's improving.
I don't think it is going wars.
So.
My feeling is that God. It's also followed by.
Not sure.
So Mike.
Okay, alright pressure on.
[music].
Not such a high pressure on pricing.
So that that's on one side.
So.
Not a lot of you know at this moment another little renegotiation of terms.
So on that on that I think it looks like the situation.
That's all.
Now going into utilization, which I think what's your second question. Please let me know.
One can help you with that one.
Yes, so I think classroom.
Sure absolutely.
Good.
Huh.
So look a little essentially on interest when it comes down a little bit or will be picked up.
These crises or this equation.
You know if it's going to reach our crop.
Chris you know things that are the economy will start recording.
In the near future and because of that.
We are trying to keep all the knowledge and experience can we talk built over the last few years.
In our company.
And that's why he now utilization is going to come down a little bit, especially during Q2.
So that's the way we're managing.
He did somebody knows they study where all the hiring.
Those.
Skills that but we know that are very very hot on the one really really and we are working a lot on training people go to make sure that no. We are ready to cope with the demand that is coming so you will see a lower number of meda insurance during Q2.
But that's because we would prefer to mining a utilization that way, but keeping all the knowledge or most of the knowledge that we had one of your company.
Good training our people.
Even if that has a small impact on margins when utilizations in the short term we.
We are building a business for the long term, we really that we will be in a very good position. Once all these situation improves because the need for digital transformation and it's what we should solicitation.
Going to he's going to increase and Globant is we believe it's the right partner for those companies that will need that type of talent and that type of.
Services in the future.
There is it fair points and good to hear so they get the second question is when you provided a lot of good detail there on the.
On the on the balance sheet side of things the clarification I wanted to ask you about was.
The drawdown of the credit facility, and 25 million, which make makes up the vast majority of the art and 34 million in cash that you have.
That's is that they basically you're trying to manage timing of bonuses worsen.
Her collection.
The collections comment was that more of a very sector, especially comment or or or or was it a little bit broader.
So the boy the going on to say well in January so they are actually in Q1 actually in March So that's already impacted in the in the in the in the gosh the balance sheet of the end of March.
You want deciding to draw the money.
Just to make sure that.
So the at the very beginning of the.
The quarter sorry, when all these started so just wanted to to be under safe side and.
Our money in the balance sheet in case the situation deteriorated further.
At this point we are not.
We don't see actually we're not using that money, we haven't seen the bank they are ready and waiting waiting to be used case, it's necessary collections. A you know I should mention how could it come on the travel and hospitality sector. Some selective.
Discussions with some customers work.
Well, we agreed with them for a for a temporary extension payment terms, but those were just very very few Casey.
We still decided to take a money to go that money and keep in the wrong just to be honest if side, but so far.
I have not yet we did a neutral to use any of that mark.
Got it understood. Thank you.
Thank you thanks, Josh when there was much more.
Thank you.
Thank you and the next question comes from my you know on with William Blair.
Hi, Thank you.
Within that Twoq guidance that you gave one what is the expectation or performance.
Your top account buckets.
But in terms of the revenue and margin figures.
Hello, Mike how are you thinking for the question. So you don't really know Workover top accounts.
There are only two accounts.
The problem.
So one and entertainment sector.
We will see something on one of the of the travel companies. The other one I certainly hope not very well because they want to a vendor consolidation and we came out as the preferred vendor and we're actually growing that account.
The other account in the trial itself. So it's going to be impacted on we will see a decrease in that account.
And then in there in the one tenant sector.
No.
Well of course.
We did have some impact because also it's actually it's actually this means our number one account us know well we did have some impact on the on the parts TV shows because the parks are close customer sets you guys know, but you know what vision in the last.
Six seven years without being able to expand into multiple areas look at these words on.
All the other regions of the Rins are holding up well and growing so that is offsetting part of the impact that we caught on the part then Kelly you know the relationship that account continues to be very very strong.
We will be can we expect to come back once the situational recovers from them.
Then in terms of margins you know.
Again no.
We don't we don't think that margin in the Pacific accounts are going to come down I mean, we're not having.
Any meaningful discussion in terms of pricing or anything like that I mean, it's just very selective.
The impact beyond overall margins and that's why we because of the slightly lower utilization overall, but we're going to hop.
Because again, you know I thought it was discussed before.
We believe that he is going to be an opportunity for globant. The future. This is going to generate demand for launch in the future.
Because of all the trends that you're asking consultant utilization.
Because of that you know we are we decided to keep Oh this gives us.
Company or the people that we have been training over the last few years and that's why Wouldnt. We believe that you know for sure, but the company and also the shareholder.
It's a better decision to to maybe travel asphalt margins well be ready for a strong come back once they reach the situation improves.
And on the vendor consolidation quite that you brought up not script and now.
Is it something I'd be remiss, if that's what went quite prior to Carla virus or is vendor consolidation of trends that you're seeing more so that's a result.
Run a virus and Oh, what are you hearing from clients in terms of now why they're keeping globant and why club.
I could show.
Hello, My read it's hard to yes. There are several factors played here the number one factory that you know the value proposition and that kind of projects were doing is really you know people. Many of those customers so were seeing although ill.
Great great with its everywhere.
In the discourse it'd be an accelerated now now.
Why.
Because you know for the same reasons, we have been talking about many many.
Where pure play we know how to do these things better than our competition hopefully.
And that's the number one weekend the taken recently.
We have decided to approach to those customers that I really need for health.
And I think we took a very.
My decision to help those customers that we like that we trust in their business too.
To help them in ways.
Barry created a understanding their business cycle and or the saying understanding our bid cycle I think that this approach it pretty unique in the industry.
And it's something that we have been able to differentiate our approach from many of our competitors in turn so how we manage.
In terms, how we manage.
Our project and the upside that we have you guys. The perfect successful, so and so forth and that was a very creative way of understanding how to.
Help them in this situation and the third factor is that you know many of those documents that the connection becomes sort of connection between <unk> and the customer.
Hi.
So whenever they need to cat.
They will find out you know.
Where you've got for rather than getting our teams that had a big chunk of their knowledge on the on the know how Oh the project that they are executing on that and the reason why there are customers are selected.
I think there's a mix of situation Cornell viruses, it's well, it's just a question for me.
Celebrating.
For all of a global selection and that's why I said, if you mean so.
This is global moment and I think that.
We are able to show the difference.
Today in the field against our competitors.
And it's an issue and it's working out really great. So that's the that's that's the common to toward toward one dimension.
Alright, Thank you glad you're out well.
Thank you Marty.
You know you.
Thank you and once again. Please press Star then one if you would like to ask a question.
And the next question comes from Bryan Bergin with Cowen.
Hey, Thank you very much Shapiro your old on well I wanted to ask on Talen Resourcing as demand does start to pick up here. How are you thinking about recruiting and a virtual world are there any limitations or concerns for you to add people first the traditional why.
Yes, Hello, Brian.
Yes or no.
So no in the list.
Several quarters, we have been having no more than 600 equal.
Proving that we are very attractive company work for people that are actually starting to work. So no. One in what you're still we are extremely competitive environment. So we thought the level because of the type of customer starts we shot the type of those itself we felt.
Brian that we created to become not a bunch of choice for many years not only in Britain Latin America, but also now in some countries also between your Oh.
So yeah, we happening.
Hiring you know a lot of talent in the past what preparing for a very very strong here.
You know that number for Q1 actually shows up you know were were set for a follow up for a record year, but you know now we'd have to face a different environment.
No will hire you know when the baby no the hiring especially during Q2.
You should expect us to hiring very selectively coastal models is that doesnt want to expand those to notice is that how we believe are going to be in very high demand one once the situation improves.
On of course, we have to do that managing a world today section on our margins at the levels, what we want them to be on where we'd like them to eat.
That's what I read this tradition in terms of hirings and almost.
If you want to expand on how we seemed not hurting it's going to look like in the next.
Couple of quarters.
Yeah, I feel like there are plenty of opportunities or to attract great talent right now as you know a this situation it's driving.
It's not really driving.
Much smarter decisions everywhere I mean.
It's sometimes trigger.
Yeah, No child, God, because the say cord cutting costs. So one so forth.
And that really that are really really great talent into the market and so.
So I see if future us as you know having pretty good opportunity said trial.
Such a talent that that maybe as seen in trouble hearing this the last weeks or months. So I believe because we will have a pretty strong opportunities looking for what I saw ways.
No and I have been answering this question for many many years already as always I see the that solid market I said pretty.
Pretty good place for us, even our positioning and given what we have to offer to them.
So.
In essence, I don't see any problem and even more I see opportunities moving forward.
Okay. That's helpful.
I want to ask on revenue per employee could you just look and how that's trended over the last year or so like Matt down mid single digits on a trailing 12 basis. He just comment on some of the changes there. There's maybe the nature of somebody activities that are coming onto M&A or anything else, we should be thinking about and those matters. Yeah, yeah, I'll take that one mine so.
There is a combination of things over there.
First one or more importantly, the changing the mix.
Onsite.
Our teams were up about 5% to 6% or total employees compared to about eight or 9% years ago.
So when you look at their revenue per se that you know the rubber hit if I look our employee.
Usually two or three times the her in your funnel for employee.
So that's one factor, but if I can the number second Parker, our so called it out is the M&A one some of the companies.
We acquired I'm also the expansion that we have in foreign countries in Latin America came at a slightly lower.
Revenue per case, so you're probably a little bit of a mix there impacting the number on finally the last one.
One of the most important one is up you know the loss.
For five quarters, we want to see London demand picking up and the pipeline building getting ready to get right. So if you look at the number of people who are out in the last several quarters. Because we are very very large number the growth in terms of net retrans was higher than the revenue growth. So we were preparing the company for the quarter what.
We were seen in Q1 actually who are seen a very strong 2024. This year I would want anybody forgotten advance so I truly become your internal both talk to US is what explaining you are the slight decrease in the earlier number but I want to be I want to emphasize the coin.
No price reductions or anything like that in fact, we still see I mean, not grow out right now it is not the time to two to maybe one right. But of course are there wasn't until March not a single discussion about pricing or so it was more about the mix. It was more about now.
Number of people that we're bringing to the company to get them trained than anything else.
Okay very helpful. Thank you very much.
You're welcome.
Thank you and especially customer Moshe Katri with Wedbush Securities.
Hey, Thanks, good to hear your voice is good to hear everything is a everybody's fine just a follow up and maybe a let's start with a housekeeping item can you talk a bit about the headcount or regions, Argentina until the other regions, where we are.
Yes, sure so Argentina right now is a 29% cocoa Chicago.
Followed by Columbia at 27%.
Actually go 11%.
India, 10% and then you have some other other regions. There are so again, Argentina is again relative basis. It went up in absolute numbers, but it's down on a relative basis. So we continue to decentralize the company on Argentina.
It's now all the 29% of the total kit.
Who are just looking at the level said console developers engineers.
Colombia you.
Slightly ahead of Argentina like now.
So Colombia is it just by everybody to people.
No I said on come on Argentina, we canceled.
Yeah, well see how some of our stuff early us in Argentina. So that's why the total number it's higher for Argentina overall.
Understood and then should we assume that some of the typical traditional cost pressure out of Argentina is probably lessening given the environment.
No at this point Oh, no there would be crises from what's going on.
All over.
Or.
I think about it.
So it let's say, there's a little bit less so oh for a certain kinds of Oh in terms of costs, Oh people and companies in general.
Protecting themselves and I'm not I'm not being aggressive in markets not asked the question as it used to be in prior years. So no I don't see got level off for sure.
Got you were seeing you know up until last year, you know and that's not just the one country. That's of course, not you know people in general and company some more defensive boy.
So we don't expect to see the same level of course, it like we used to see a in the past.
Thanks, that's helpful phone then the lots of questions from 14.
Maybe you can talk a bit but some of the conversations you're having with clients or in terms of what they are planning to do down the road post scope it well, what's called it actually making them do looking at their infrastructure and looking at your portfolio. You know advanced technologies that you have on board. Thanks.
Yeah, Hi, how are you think there's so much but the question look it depends a lot on the on the industry. There's certain industries like travel for example on your particular outline.
We try to kind of lean Ben what they're doing so the dialogue now.
At this moment to kind of Green bend that whole company.
So I think in that way or it will be healthy for some of those companies. Although they are giving a huge prices right now.
When they allowed them.
On the sorry, we ceiling operation or they will be totally different shape.
The thing happened with some company from that the demand side, which brought the public statement or from their CEO, saying you know, we're looking into a totally different company after getting out and we're seeing that I'm, we're helping them in many many of these situation.
Talking specifically about the Oh, well sorry go into other industries, where the impact it's not big or on the other him.
Improving like for example, lets say retailer or healthcare or even at finally, we're seeing also like a lot of that's is accelerating and this is worth seeing demand right now like it changing shape on demand.
Accelerating be for both to be ready beforehand and to be ready before you know the crisis and so I see.
New normal dairy company right now.
Well no obvious status will be reshape globant included in that exactly where we learn from day Tonight that we can work from home in an efficient manner.
But you know that something lost.
Well, there's a lot of things that are happening in that state in the in the I actually speak in different industry focus.
<unk>.
Culture I think that.
This is one of the most challenging thing.
So the.
As I said before you know many things had lost when you're working from home that you know.
That that encountered that.
Good happening in Iowa.
Exchanging an idea.
Over a coffee well they'll think doesn't exist anymore and touching replaced by just brought it unplanned meetings.
So I think we have the brother can we have been playing with that for years now around how to create those you know caught show or or random contact.
Among the company and we are seeing a lot of demand in that space around how to replicate the offering you know kind off serendipity.
Into something totally you know a working from home I guess, you know you know demand from company understanding that that's going to be a problem and that in some way there's a need for technology to go one level up from where we are today in terms of just interacting by soon.
Or interacting with you know it document shared we like the basic stuff woke up to 1.0 now we need to go to two point.
And 2.0 mean, how we fought sort of culture, how we use artificial intelligence to help to recreate dose contacts that didn't exist anymore when you're at home.
She is gonna be then you know the percentage, we see that the percentage of people working from home.
From now on will be much higher you won't be when we bought 100% at all but it will be much higher than before and that would have an impact on the kind of fools that companies will need to how we are ready we the tool.
We are ready how that's why the concept of mental calibration, it's extremely important Brad.
She served those need to be able to be close to those got some yourself because a confirmation code anywhere including on how to help people to work them and that's the whole idea.
That's helpful just in that context.
Lots of questions on my side, how is the whole selling process or the pitching process for new prospects.
Has been going Oh, and the era, where are you can't really travel prospects cannot does it.
Oh, it's all your facilities that I mean, what how are you kind of handling the whole situation.
And at the various my question I think I think that well all the questions as much but this one it is especially part I think that.
They hold your challenge for all our sales guys or I know about business development people around the world on how to connect cloud degrade those relationships. When you are not able to a you know be in person you're meeting in a place.
I will get you might surprise.
We have been able to accelerate and close like large large deals and large things happening you don't nobody knows this new thing, it's happening and nobody knows we try to next steps, including our itself, but we're experimenting pretty interesting stuff. Like for example, you know the big deals are being close now without any.
Do you think.
You know in person meeting and they're being goes anyway. So that really surprised me and I think that you know the future will look much more like you know a closing deals and make in a more connections through online channel rather than just in person in person was needed which is why do I didnt change.
It's critical to the plan it because the carbon footprint will be you know much smaller for closing a deal which was something that we were concerned about you know truck the amount of traveling we needed to do to be able to two two grows one deal from the slide from white box to the other call sort to fly grown Latin America.
On to Europe, Boyd from Europe into the U.S., So I see I see that that's gonna be like a new kind of dynamic where experiment the on that.
But were seeing good stuff happening already people can connect over these kind of folks.
And they are executing extremely well.
Great.
I've got tougher Washington Trust, so talking about no Oh, no we've been doing a lot in the last.
Monkeys.
Getting together with all our yield our sales teams would go down were essentially direct source discussed for the us to discuss the you know there's a lot of innovation going on I looked very creative ideas of how to engage with customers know how to win deals how to how did the situation not with the relationship will.
You should have always been on but in those meetings you know what discussions what about we do them very often on of course was sort of you know.
Our the opportunities how it performs her go and that's also for but you know who have been very very creative very very know what the in ways to engage with customers and I think yes that stuff that's going well.
Well I know just a quick comment on that I think I think that these new era.
I see engines of coverage.
That's then we'll know they all that much.
So what I'm trying to what I'm trying to say is that you know it didn't Atlanta, we will have.
Like yeah.
A more content base connection.
You know rather that Peter relationship connection.
And if it's a very important sheath that I've seen happening.
And for US is extremely well.
No we are very deep in our content. We are really nobody can what we are able to renew our got so much.
This is I would say much more important now because we have that content, we have that innovation I suppose.
To something that we don't have that much which is no excuse me ending to call, where you know 100% like operational like other companies.
So I think that.
Hi, good we especially moment for us indeed in the in these hospitals.
Perfect. Thanks, guys.
Thank you.
And as that does conclude the question and answer session I would like to we're trying to look forward on my team acquire for any closing comments.
So thank you very much for all of your join in I'm really pleased school that coverage, you're providing to us.
The time, they're spending with us.
I know he has been tiring and that's been along the lines full season, and I'm really happy to have you here and really looking for to keep talking over the next quarters I see that situation develops and hopefully about.
Hey abruptly so thank you very much and looking forward to contract in the next quarter.
Thank you see conference has now concluded thank him for attending today's presentation may now disconnect your lines.