Q4 2020 Globant SA Earnings Call
<unk> for the U S. All participants on this call will be on listen only mode. After today's presentation there'll be an opportunity to ask questions.
Please note. This event is being recorded and streamed live on Youtube.
By now you should have received a copy of the earnings release, if you have not a copy is available on our website investors that global Dot com.
Our speakers today are Martin Mcglynn, our co founder and Chief Executive Officer, why on Earth, Thiago, Chief Financial Officer, and Patricio <unk>, Chief delivery and people officer before.
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.
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 Debbie follow Ifr as accounting rules in our financial statements. During our call today, We will report non ifr S or adjusted measures, which is how we track performance internally and the easiest way to compare globin to our peers in the industry you.
You will find a reconciliation of I F. R S and non <unk> measures at the end of the press release, we published on our Investor Relations website announcing this quarter's results I would now like to turn the call over to Martin <unk> our CEO.
Thanks, Amit and Hello, everyone.
I'd say John you today, we'll look back on quarter, four but I'd like also to reflect on the full year of 'twenty 'twenty.
We will face unprecedented change from the major event of the year and so on accelerating digitalization, both on leases and our own personal lives.
Global responded by helping organizations adapt to this change.
In Q4, we made $232.6 million in revenue coming to a 26.2% year over year growth for the full year 2020, we made 814.1 million.
Up 23, 5% from the previous year.
Looking forward, we will keep on going Theres, a great opportunity for <unk> to maintain strong revenue growth over the long term.
We are here to invent the professional services industry it.
It is not just about technology or software products when in fact, the human capabilities creativity and innovative mindset of the organization are key to a successful transformation global true value comes from over future centric vision.
We created a way forward for our clients to become what we call augmented organizations, we work alongside them to bring together strategy sustainable business models digital trends.
And inclusive culture to unleash their potential to do this we're focusing on six pillars debt impact every dimension of the organization.
One sustainable business strategy to culture and agility.
By engaging experiences for adaptive organizations, five technology and data and six augmented capabilities. Our studios continue to bring together deep understanding of the latest technologies on trends the studios combined with our accelerators allow us to deliver.
These transformations across all of these pillars.
Let me double click on some of these pillars.
Like I say to deliver true digital transformation, we pay special focus on rethinking business model with our customers.
On this line we took a step further on December 18th we welcomed the newest member of our family Blue Cup. This Barcelona based company excels in the value added consulting, particularly in financial services.
They are a team of 160 consultant has a high end expertise with some of the largest players such as Santander Guy Charabanc on Sabadell I'm very enthusiastic to have Mitre Barreda Blue Cups, founder and CEO already working with global senior executive team to craft our way.
Forward together Blue Cups team will be key to continue strengthening our consulting portfolio in this vibrant sector and beyond.
Our future centric approach also means putting sustainability at the forefront.
In these new green economy, leaving sustainability on the side is no longer an option.
And then our six pillar approach, we provide organizations with a long term roadmap to create new inclusive business legitimacy.
Finally, augmented capabilities means bringing AI to enhance every area process or service of the organization and.
An example of this is augmented coding with it we are already reinventing the concept of software creation in many of our clients as we boost coding with artificial intelligence.
As there was a major social change and a global focus on equal opportunity at globe. On this has always been a focus diversity is in our DNA. It is something that we celebrate both within our company with our stakeholder community.
At last quarters earnings call Baidu on I share with you our excitement about women that Bill Awards.
We wanted to recognize the overlook accomplishments of women in technology, and we want to inspire more of them to innovate lead and embrace intrapreneur ship, the turn out surpassed all expectations. It was inspirational to hear the stories of how many of these women blew away obstacles.
In a positive and uplifting way for their communities I look forward to more events like this one diversity and technology isn't just an initiative for our sector. It is good for our company too.
Our teams benefit from having a more rounded perspective to solve the world's problems diversity is what makes the glow on concept work to go deeper in this concept, but retail format.
He's with US again, our chief delivery and people officer Battle. Please thanks.
Thanks to maintain and hi, everyone. It's a pleasure to be here again with you to discuss these areas.
Within our <unk> concept the women that Delta Award has been the biggest thing we have done so far.
The response was turned on manner, we received over 10000 nomination from 15 countries.
Within each region nominees will presented to a panel of touches of dessert sales.
In all we had 60 leaders participate in on our tenting panels throughout the world.
The best part about winning the build is that allow us not only to recognize these fantastic women that to bring attention to their efforts and the issue of gender equality in our technology sector.
We share their stories in our podcast and Unsocial media and engaged with the many stakeholders from academia Civil Society government and the private sector all over the world.
You all to take out day resulted in the US on the stories of these women at women our debt club on debt Com.
We have already grown is stronger and benefited from this better average with our community and we will continue promoting diversity as one of our key values.
This month I am pleased to announce that club and will join the board of the National Action Council for minorities in engineering.
<unk> is the largest provider of oncologists scholarships for under represented minorities pursuing degrees at the school of engineering, we look forward to these collaborations and also to hire more minorities to join our team at <unk>.
In December we also launched a new education initiative.
Evan has teamed up with tech powerhouse Mcmullen EBITDA on our giant program known as certified Tech developer. This is a training program designed to achieve their rapid job placement of thousands of young people from Latin America in the technology industry to.
Cash are diverse and inclusive net of participants global end and Mercado Libre are providing 7500 scholarships.
We aim to train more than 15000 young people throughout the region. The program will be carried out together with digital house.
It is committed to creating a new academic concept based on a gen methodologies with the strong practical orientation. So students can gain experience.
And just as we focus on giving opportunities to those outside the club and we keep investing in our own people as well we are crafting our mandate careers for our Glover.
Some of you May remember my introduction of globe on to University in 2020 aimed to Upskill and Reskill arc lovers to face digital acceleration.
On this same platform. We have now developed my growth specifically designed to help lovers boost their career path and in haste their learning experience at the company.
I'm, particularly proud of this initiative and it is a clear example of how we constantly reinvent our employee experience.
On another note I'm glad to see every day more diversity in everything we do we have recently put together our first esports team the glove and emera team competes in the league of Legends League. We are very proud that our team has become one of the first in Latin America too.
Include women as part of the starting lineup.
It is a major milestone for esports and we are really proud to be impacting gender diversity on so many levels go gamers.
Thanks, again, everyone nice to be with you Martin.
Thanks Battle now some news about our expansion and new opportunities.
We are passionate about bringing opportunities to where the talent is we will keep expanding to offer more careers to professionals around the world, bringing more diversity into our company culture in.
In Spain, we will be opening a new office in Malaga, where we plan to hire 200 professionals to join our team.
Now I would like to introduce our new tool fluent love. This is one of our accelerators to help our clients create better customer interactive experiences back.
Backed by patented technology. This framework makes it easy to create AI powered conversational interfaces that remain humanlike clients kind of overcome the typical hustles in building an interface. So that they can communicate with their customers resolve issues on sell in a more into.
It is efficient and fluid way.
As a result of the digital acceleration brought about by the pandemic. We are optimistic about the growth of this addressable market to learn more about it visit through and lab Dot AI.
Two below weighted organizations, we will keep investing in technology expertise on our management team. Therefore, I'm happy to share that we have broad Michael fathers, two global <unk> as chief architect Michael is one of the most renowned software designers and he has the ultimate authority in working with and modern.
Nice in legacy code, he will focus on helping global clients transform how they create and deliver digital products.
Now some stories about our accelerated relationships with our clients. For example, we won a strategic data analytics projects and now T lose at home fitness company that will help drive data driven insights as an enabler in the company's digital transformation strategy. We're also began partnering.
With Mcafee to build a new infrastructure for data driven improvement in its channel management initiatives.
That feeling <unk> continued to expand its service on transformation initiatives, including digitizing his dealership offering our partnership with Viacom CBS continues to grow as we execute multiple projects on programs that support the development of its over the top product portfolio in the gaming.
Space globally continues to work in the highly anticipated higher reported title for Warner Brothers Games, we are working with spectrum hub as startup dedicated to provide employment opportunities for individuals without some via a digital tool and education.
We are designing and developing the web platform and providing business and broke strategy consulting.
The purpose is to enable their business to expand and scale as the program evolves.
Our first release of the web platform will be a corporate education initiatives on how to start a successful artisan in the workplace program.
In the beverage sector, we're working with AB inbev, the wall largest consumer beverage company. They face a continuous challenge of achieving the highest standard of operational excellence. They understand that digital capabilities are the way forward for efficiency and growth we have been working on.
On their digital transformation in Southern Latin America, applying AI to help with revenue management sales and operations throughout the business will also work with their team and senior leaders to develop their digital capabilities.
We're not only expanding with our reach with new customers, we're deepening our relationships with our core on clients as well.
Over recent months, we have been working with great minds to take them to the next level in the AD Tech industry. This sector is going through exponential growth brought on by the pandemic. The 2021 plan in both building. The next generation of the digital learning platform targeted through the United.
<unk>.
No matter how much this company growth, we still focus on the same thing disruptive innovation from the ground up that's why I'm excited about our latest venture Elsa Elsa is on App that uses artificial intelligence to help English language learners with air Berlin and <unk> on <unk>.
Option in a fun on intuitive way through our start up accelerator Global ventures, we invested in these English speaking AI up together with Google Monk and there were catalyst. Another BC players. We're really excited about this operation as we see the value.
<unk> in AI for education.
We will continue looking for more ways to further improve humankind with AI to Cal the app on Google play or the App store.
Finally, I want to close out by reaffirming our conviction that technology can be a force for good companies all over the world woke up to the need to go digital in 2020, we continued to see strong demand and a healthy pipeline ahead for 2021 and <unk>.
<unk> will keep applying our talent to help them make it happen with that I'll hand, it over to quantity theory, our CFO to go into the financials.
<unk>, please and thank you very much.
Thanks, Martin and good afternoon, everyone I hope, you're all doing well on staying safe.
Let me start by summarizing the results of our fourth quarter on full year 2020.
I will then discuss our guidance for the first quarter on the full year 2021.
We are very pleased to announce another quarter of record revenues and strong financial performance our revenues for Q4 amounted to $232 6 million.
Sending a solid 26, 2% year over year growth on.
On a sequential basis, our revenues for Q4 increased 12, 3% showing a healthy trend Q4 revenue growth was 26, 6% year over year in constant currency.
In line with our expectations the overall demand environment largely stabilized in the second half of the second quarter on.
And with sharp witness on improvement Indian markets. Since then which is reflected in our strong sequential revenue growth both in Q3 on Q4.
While the COVID-19 pandemic is still ongoing.
Not have any incremental impact on our Q4 results that said, we do still remain cautious about any impact per hour.
Market due to the potentially new waves of Lockdowns like the ones. We are currently witnessing in some parts of Europe Latam under U S.
However, we remain very bullish about the demand environment post the COVID-19 crisis and are encouraged by the ongoing positive trend in our bookings as discussed in our previous earnings call. We always prioritize the health and safety of our employees and almost all of.
Our employees continue to work from home, while maintaining seamless delivery of services toward customers.
Our delivery and people teams continue to develop and execute strong and innovative initiatives to keep employees' productivity and morale is very high.
Disney was our largest customer for the quarter growing strongly at 14, 8% year over year on 10, 4% quarter over quarter.
We continue to be very well diversified within Disney serving the majority of its business units.
Other than Disney rest of our accounts collectively grew at a solid 27, 7% year over year with revenues from top five on top 10 accounts, increasing at a robust rate of 42% on 48% respectively over the fourth quarter of 2019.
Outside of Disney rest of accounts collectively also grew strongly at 12, 5% quarter over quarter as we experienced improvements in most industry verticals. Moreover.
Moreover, during the quarter, we continued to successfully cross sell services with the companies we acquired during the year.
Or our customer concentration numbers for Q4, 2020 displayed improvement compared to the last quarter with our top one top five on top 10 accounts, representing 10, 7%, 30% on 42, 9% of revenues.
Looking at diversification of our revenues by industry verticals. It is clear that global value proposition on service offerings are attractive to enterprises across all industries and we remain violence in terms of vertical exposure.
Our top three industry verticals for the quarter, where banks financial services on insurance with 23, 7% of revenues.
And entertainment with 21, eight percentage of revenues and consumer retail and manufacturing with 13, 8% of revenues.
Regarding the progress of our 100 square strategy. During the last 12 months ended December 31, 2020, we had 13 accounts above $10 million in annual revenues compared to 14 accounts for the same period last year. This reflects the impact from some of our travel customers.
Hurt by the COVID-19 pandemic that said, we have 129 accounts with more than $1 million of funding on revenues compared to 107, one year ago.
Overall, we continue to expand our relationships with our key accounts the waste per hour continuous growth.
In terms of geographic regions during the fourth quarter of 2000 2065, 9% of our revenues were in North America 24, 3% in Latin America and others on nine 8% were in Europe in Europe, we witnessed a strong acceleration in revenues growing at 142, 9% year over.
The year on 43, 6% on a sequential basis also Latin America on others showed continued strength growing at 54% year over year on 22, 4% sequentially to note in 2020, the majority of the impact from COVID-19 was neutral on hospitality vertical primarily.
In North America.
During the fourth quarter of 2020 $85 eight per cent of our revenues were denominated in U S dollars, providing good protection to our top line against currency fluctuations.
Turning now to profitability, our adjusted gross profit for the period increased to $92 million, representing 39, 6% adjusted gross margin compared to $73 $5 million, representing 39, 9% adjusted gross margin in the fourth quarter of 2019 year over year adjusted.
Gross margin decline is mainly explained by a slightly lower utilization. However on a sequential basis. Our adjusted gross margin improved 60 basis points helped by relatively stable utilization on a strong pickup in demand, partially offset by salary increases on FX fluctuations with finished there.
<unk> with 16251 blowers.
<unk> thousand 290 of which where technology design and innovation professionals. We continued our strong hiring in Q4 with a robust addition of 1854 professionals sequentially.
Professionals were up around 39% year over year as we prepare to fulfill the strong demand in front of us over.
Over the last few years global has invested heavily in establishing a robust training on hiring infrastructure across the globe, which gives us a strong ability to seamlessly ramp up hiring and training as require at this moment, we don't foresee any challenges and finding the right talent to meet the demand.
<unk>.
In fact during Q4, we achieved the largest organic increase in 80 professionals in our history attrition for the past 12 months continued low of 13% compared to 14, 6% in Q4 2019 with a significant improvement in Moscow and development centers.
As discussed in the previous earnings calls moving forward, we view, 14% to 16% attrition rate as the normalized level for <unk>.
Jackie This G&A came at 19, 9% of our quarterly revenues on a decrease of 10 basis points compared to Q3, 2020, and a decrease of 30 basis points year over year, we continued investing for the future primarily to expand our sales coverage in our target markets mainly in Europe. We believe this.
This focus will help us efficiently capture the vast global demand for our services, especially post the COVID-19 crisis on also helps us maintain our strong long term revenue growth profile.
Result, our adjusted operating income for the quarter amounted to $37 9 million or 16, 3% of revenues compared to $34 million or 16, 5% of revenues for the fourth quarter of 2019 on a sequential basis adjusted operating margin improved 100.
Basis points.
Our revenue growth profile on Utilizations continues to improve it will have a positive impact on our adjusted operating margin at the same time, we will continue to strongly invest in the company taking advantage of the huge opportunity in front of us.
Together this leads us to relieve debt adjusted operating margin will trend in the 15% to 17% range in the near and midterm share.
Share based compensation for the fourth quarter of 2020 was $5 $2 million representing.
Representing two 2% of total revenues for the period as compared to three 2% for the same period last year. This expense is mainly related to the plan of restricted stock units granted to certain key executive and directors of the company as part of our long term retention plan.
Finance expenses were $3 million in the fourth quarter of 2020 compared to $2 $5 million for the same period last year. This loss is mainly composed of interest expenses on lease liabilities and interest expenses on our borrowings.
Other financial results net amounted to a gain of $1 $4 million for the quarter compared to a loss of half a million dollars. During the fourth quarter of 2019. This item is primarily composed of FX result from monetary assets and liabilities in local currencies result from our research.
<unk> strategies on gains from transactions with bonds.
In the fourth quarter, we recorded a gain of $1 $7 million.
In other income and expenses net approximately one $1 million were related to the fair value of contingent consideration associated with one of our acquisitions and were removed from the adjusted figures. Our ifr is effective tax rate for the quarter was 32, 7% coming in above our guidance.
Impacted by the retroactive effect of a new regulation with higher than expected taxes in one of our main talent development centers.
Adjusted net income for the fourth quarter of the year totaled $28 $5 million.
Representing 12, 3% adjusted net income margin compared to $24 2 million representing.
Representing 13, 1% adjusted net income margin for the fourth quarter of 2019 on a sequential basis adjusted net income margin increased by 50 basis points.
Adjusted diluted EPS for the quarter was 70 cents based on $40 9 million average diluted shares for the quarter compared to 64 cents for the fourth quarter of 2019 based on 38 million average diluted shares for that quarter.
Moving on to the balance sheet, our cash and investments as of December 31, 2020 amounted to $298 $2 million, while borrowings amounted to $26 million during the fourth quarter, we generated healthy free cash flow of $27 million paid 59.
For acquisitions, and repaid $50 million of our credit facility.
Full year 2020 was a solid year for free cash flow generation. Despite the ongoing COVID-19 environment on our free cash flow to adjusted net income was around 50% in line with the last two years.
We also continue to successfully execute on capital allocation strategy with integrations of recently acquired companies go in as planned.
Now, let's talk about the full year 2020 performance.
Revenues for 2020 were $814 $1 million, implying a solid 23, 5% year over year growth globally deliver robust, 20% plus year over year revenue growth in a year in which we witnessed one of the highest levels of macro uncertainty and risk.
Times, we started 2020 on a very strong footing, but face pressure on our revenues during Q2 due to the COVID-19 pandemic. However, since then the revenue on bookings profile has been trending up. This year has proved that the digital services provided by global <unk> are extremely.
Critical for the growth of corporations across industry verticals. Our 2020 M&A deals also performed strongly and we are successfully cross selling services with our recently acquired companies.
Adjusted gross profit for 2020 was $319 2 million or 39, 1% adjusted gross margin compared to $266 5 million or 44% adjusted gross margin for the full year 2019, a decrease of 130 basis.
Since year over year. This margin compression was due to the impact of COVID-19 in the form of lower utilization some impact to our revenues on some selective temporary client price concessions in the early part of this year.
Adjusted SG&A for 2020 accounted for 22% of revenues, increasing 30 basis points compared to last year, primarily due to the impact of COVID-19 on our revenues. During 2020, we continued to invest to capture the significant opportunities in front of us.
Adjusted profit from operations for 2020 or $124 million or 15, 2% adjusted profit from operations margin compared to $112 million or 17% adjusted profit from operations margin for last year, representing a decrease of 180 basis points.
Driven primarily by the impact of COVID-19, as you'll remember Robin decided to not lay off its employees in response to the top line pressure from COVID-19 on kept a higher than normal talent pool. During the early part of this year, which in turn allowed the company to accelerate its growth as the demand environment.
Started to normalize.
Share based compensation expense for 2020 amounted to $24 $6 million.
Representing 3% of revenues compared to $19 $9 million.
Representing 3% of revenues for 2019 as explained before this expense is mainly driven by our long term incentive program and was in line with our target.
Finance expenses were $10 $4 million for the full year 2020, compared to $6 $7 million for the last year. This loss is mainly composed of interest expense is on lease liabilities on.
And interest expenses on borrowings on our financial results net amounted to a gain of $3 $6 million for the year compared to a loss of $5 $9 million. During 2019. This item is primarily composed of FX results from monetary assets on liabilities in local currencies results from our hedging strategy.
His on gain from transaction with bonds. During 2020, we recorded a loss of $1 $9 million in other income on expenses. Net this was mainly related to the remeasurement of the fair value of contingent consideration associated with our acquisitions given that this impact comes from M&A.
Actions as mentioned above the majority of this line item is adjusted from our non <unk> measures.
Our effective tax rate for the year was 29, 2% come in above our guidance primarily impacted by the retroactive effect of a new regulation with higher than expected taxes in one of our main talent development centers.
Adjusted net income for 2020 was $97 $3 million or 12% adjusted net income margin compared to $86 1 million or 15, 1% adjusted net income margin for the last year.
Diluted EPS for 2020 was $2 45.
Based on 39 7 million average diluted shares for the year compared to $2 29 for the last year based on 37 7 million average diluted shares.
To wrap up I would like to share with you our outlook for Q1 on for the full year 2021, we have decided to reinstate our full year guidance. Although we note that given the ongoing COVID-19 pandemic. There are a number of factors, which we may not be able to accurately predict including the demand on.
Environment trend throughout 2021.
Based on current visibility, we expect Q1 2021 revenues to be at least $258 million.
Or 34, 7% year over year growth at this point, we do not expect any effects impacts our first quarter revenues Q1, adjusted operating margin is expected to be in the 15% to 17% range and adjusted diluted EPS is expected to be at least 70.
Nine.
Assuming for a $1 2 million average diluted shares outstanding for the quarter regarding the full year 2021, we expect revenues to be at least $1 billion on $47 million or.
Or 28, 6% year over year growth, we currently assume no FX impact or full year 2021 revenues.
For 2021, we expect our adjusted operating margins largely stable in the 15% to 17% range. While we continue to invest in training programs and cutting edge technologies on expand our sales coverage.
<unk> effective tax rate is expected to be in the 25% to 27% range for both Q1 2021 on.
On the full year 2021 at this point, we expect the tax rate to be towards the lower end of this range. Finally, we expect our adjusted diluted EPS to be at least $3.20 for the full year of 2021, assuming $41 5 million average diluted shares outstanding.
For the full year, thanks, everyone for participating in the call for your coverage on support.
Thank you on thank you Martin and thank you better.
As we go through the question and answer section of this call I will announce your name at that point, you'll be asked to our mutual line and turn on your camera and you'll be able to ask a question. Please.
Please mute your line on trade question is done we also ask you to please limit your time to one question and one follow up.
Q.
So the first question today comes from the line of Tien Tsin Huang from Jpmorgan. Please go ahead.
Hey, guys good to see all virtually.
Can you hear me okay.
Terrific.
Obviously impressive double digit growth sequentially and it looks like youre expecting that again.
In the first quarter it was double digit as well on the fourth quarter. So my question for you you Martina and on.
Understood.
Thinking about your outlook and how you put it together this year versus last year, what would be different in your mind I am very curious.
Obviously, I always ask about visibility, but I'm curious is it more broad based is it a lot more focus on some key accounts in terms of the potential to drive some of this continuation of growth growth I'm. Just curious how you are.
You view this outlooks differently from what you did a year ago.
Sure.
How are you.
Really it <unk> really a nice to have you in this new format.
[laughter].
Look we see.
Demand coming from pretty much every industry.
In every sector and every company and it's not that we're seeing I mean Disney growing in others.
Not growing or.
As I said.
This new reality like trigger on.
Turn on the demand and turn on the desire of the companies of every company to go digital.
And that's kind of pushing in helping us too.
We do have that thing across the board to have that demand across the board. So.
It's not a specific sector I could not mentioned one because when you see when you see them all separated you see demand.
On the automation sector on the finance sector on the ethics sector on the even in the entertainment sector.
We we need to see a steel still need to see the recovery from the airline sector and the.
I would say hospitality sector in general.
But I will I would say that all the other sectors are still very very fast and as I said before.
On the bus earning call.
Companies like Latam are doubling down saying, okay. This is our moment to remain the way we operate and we're helping them with those kind of things. So even in those centers that are not blooming or not growing now.
We see investments happening on them.
Taking advantage of this moment too to make the digital transformation.
So thinking about the moment as my follow up then same similar question around acquisitions.
Do you see the potential to do more in the way of acquisitions to sort of satisfy some of this this growth youre seeing from the from the client base or is this potentially more of a year for you to focus on trying to weigh and focus organically et cetera.
Organic organic growth has been like.
The main thing this year.
We did a couple of very interesting acquisitions.
Like the one we did with.
With Blue Cup in Barcelona.
They have an amazing team managed pushing they're pushing us into new into new into new landscape that we never saw before.
Which is pretty interesting. So we will continue doing things that make sense for us.
That generates like a new tool for our business development guys to have them in front of their customers and I'm obsession with that and the fact that every day and we're competing against all our.
Really great competitors, we have out there and.
And we need to have the tools to win the game.
Thing that keeps me up at night and this is you know if you need to see how we will keep on growing through the inorganic space you need to see how long we will keep on adding tools into into that portfolio to become more effective each time, we are in front of per customer.
But organic growth has been great is being great.
On the outlook for this year as I said, it's really really pretty good pretty good pretty unheard.
And Jim just filed on book value.
The organic growth that we continue to see that recovery. After Q2 information on on the expectations were for next year I know the embedded organic growth in that number in our ratio is already approximately 20% organic.
And we're just starting the year right.
Of course, we're going on.
Taking a prudent approach because the COVID-19 still around.
But.
We're still seeing that organic growth is going on is going to keep on improving asset transfer indicators throughout the ERC as the pandemic, yes, no. It's impressive guys well done thank you alright.
Alright, Thank you very much Tien tsin.
The next question is going to come on the line of Bryan Bergin from Cowen Brian. Please go ahead.
Hey, guys.
Good evening and afternoon.
Wanted to ask on the work force here. So even if we take outflow pebbles like you are still up 12 or 13% sequentially on the billable base can you comment on the key regions, where you're adding that head count and also how are you thinking about how the kind of the evolution of how work gets delivered value, adding head count on in regions under the assumption there going on in centers.
Or more on virtual model.
Maybe working on I can take the first part one on the lease rollover to comment on that so thank you for the question Brian.
Yes.
One of the key decisions back in Q2 was to keep.
Our people.
And the company to keep the brands that we have been building in the in the in the short market very strong on.
On to be ready once the demand.
It would recover.
Ramp up our revenues on on of course to ramp up on more engineers and designers on.
And what we have seen us as we've discussed over the last few calls is a continuous improvement in terms of demand.
And we ended we ended the year very very strong which.
Trevor on record December.
Our history sales of hirings.
We're hiring.
We're growing quite a lot in India.
We are seeing very very good traction there.
On the operation in Brazil, and Mexico keeps also.
Improving Brazil.
Also on a challenge for for a while on and we were able to to make shopping and we keep on growing there on Mexico as well right.
And then on the other countries more or less stay the same and.
All of them grew in absolute numbers Argentina.
Decreased a little bit as a percentage of the total share count, but also grew in an absolute number on.
We're a global company, we are becoming more global as we speak when you look at our revenue breakdown for this year Youll see a much more balanced portfolio with a U S still living but also with very good traction in Latin America very good traction in EMEA.
And of course.
Our customers. It appears that we are going after are more global right on when.
You have low on customers and global list you started getting requests for operations in other regions.
On a larger scale. So you should expect more growth coming from India more growth.
Europe.
Also continental Europe on the U S on pretty much everywhere.
Not much difference there.
Two on <unk> or partners.
After after listening to your question I forgot the second question.
Now, let me put on the answer sorry, yeah as far as the World workers go.
New hiring on the assumption that kind of go back to Hillary centers are you doing this more of a hybrid on remote model on a few treasury as youre, adding head count global.
They want to take it but I think on David I mean, while SG&A today, we are still on working from home I mean.
And of course that they are prepared to.
Whenever we need on April eight and a client that has on a specific need there but of course, we are putting on our global first and we're taking care of that.
<unk> are working from home on framework is working great and then we have probably net net the productivity is in sales and in higher than ever and we are still growing there.
Also I mean, the quality of the delivery.
It's on top of our line these days and many of our clients, we have been able to partner with our clients in the add on.
And then.
It is a really fun yet as demonstrated in the past.
It will keep on working from home of course, if there is an assertion.
Any clients that we continue on the assets.
We have net.
Yes.
And coffee at the end.
On the calls at the gate to take care of all of them.
Okay.
Just a quick follow up here.
Head count and you notice.
There's a lot in the last two years and as we look at the numbers per capita revenue that has come down. So I'm just trying to think about as you're adding so much how are you considering worker productivity and how should.
<unk> per employee metrics trend as you kind of walk through 'twenty, one and into 'twenty two.
Thank you, Brian I think on one so there's a combination of factors impacting the revenue per head number on it.
On one side, if you look at global on back in 2017 compared to now.
On site teams were allow about 11% of the time now.
Turning on 6% that was pretty much driven a low by our customers basically were getting very good value and then we're getting very good projects deliver from nearshore locations keep in mind on we are very close to we have the same times on debt, but our customers.
And in most cases right. So in a way where we're getting on that type of demand that typically comes on.
Net lower range second thing is that we are investing heavily as Martin discussed before on.
On some internal projects, you know that momentum coating on and that takes people that could be built but we believe it is a game changer. So we definitely prefer.
Theres some of that money on on that front on finally, you know again as we keep on seeing this huge or this large demand.
And that also strengthened after Covid rights.
We don't we don't want to stop bringing people training people on and having them ready.
Keep in mind that we.
We manage our gross margin in the 39%.
More or less 38% to 40% range was 39, 1%.
Quarter from sign on for six storage this quarter, so even with that with a slightly lower revenue per share we were able to keep our margins in the gross margin.
Number and we do see now on going forward is on improving we are now when we look at the predictions for Q1.
And for the rest of the year.
Are there going to be starting to see.
Some of that revenue income embarks on a horse investments starting to pay off.
On inventory that will lead into a higher revenue per ship, but again.
We will take care of on March levels, as you know <unk> seen us over the last several years.
But we also need to invest in the future and these investments will deliver on our game changers in the industry.
That's why that number has come down on Ono Martina if you want to share anything that's pretty much how we see yes, basically michigan to say that the revenue per hip knee share is coming down mainly.
Total photos as Juan said that mainly because.
The combination of onshore on site, sorry on onshore offshore chain.
<unk>.
As the pandemic evolved we showed the model was working perfectly without as much coverage on site and that change will be the revenue per head. There was the largest component and then we are investing in some other tools.
For the future like augmented coding and things like that.
He has also taken some effort on some capital to to make it happen. So that's why that number gets a little bit.
Distort, but the important thing here is to focus on debt on the margin.
On the on the gross margin and that has been maintained so so the quality of our business is pretty much the same.
Okay. Thank you very much Brian.
Next question. Thank you Brian.
Next question Maggie Nolan from William Blair Maggie. Please go ahead.
Okay.
Hi, Thank you.
Ron you mentioned positive trends in bookings a couple of different times is there any additional detail you can share on that.
Yeah sure so.
This is something that we've been.
Mentioning over the last three calls with this firm.
The year basically share.
We have a very strong Q1 or end of 2019.
We saw the impact of COVID-19 pandemic during Q2 than we saw stabilization towards the end of Q2 and then since Q3 on onwards, we continue to see an increasing level of bookings increase in demand customers that maybe at some point.
We're hesitant about restarting investments now that they see some light on end of the channel in terms of the pandemic on and they can measure a wreck on our sites.
The impact of the pandemic they realize that they can.
<unk> leasing business on that they actually need to do them sooner rather than later, so so what you're seeing is a situation where you know the travel sector still has.
Some has been impacted on has been impacted but all the other industries keep on showing strong momentum strong bookings and they want to they want to make sure that they already once a day.
We get out of this low and that creates a large opportunity to source Martin discussed at the beginning.
Coming from a multiple industries very good momentum insurance care very good momentum with financials.
<unk> payment companies and very good momentum with anything related to E commerce kind of share.
Brookdale is complex with are getting ready to be able to engage a 100% digitally with consumers. So we are seeing kind of a situation where a lot of demand is coming we still need to see that recover in Charlotte and keep in mind that travel was a big sector for US right. So hopefully at some point that will be.
A tailwind for us.
That's basically it Maggie HR HR, a strong momentum of course, even though we are very optimistic we also need to put some to be a little bit prudent us us against some countries are more complicated on others. We don't know how fast the vaccine is going to be distributed on small cells.
Okay.
Our sales to us, they're 90, probably I mean, and when I mean I want to mention that also I mean on the gaming industry. I mean, we have been having a strong pipeline there and strong relationship with our partner on the game sector also with media and.
And in Mena.
Windows.
Industry, we're ready to start playing any little already also because net.
<unk> mentioned before we have been training, our glover with different kinds of initiatives like <unk> University as I mentioned on last quarter I mean.
That is that both of the cans that are really treat their talent and whatever day.
On the client need that we are ready to book.
Good day demand.
Okay.
Right.
Maggie on unit sorry.
Okay.
Thank you very much. The next question comes from the line of surrendered theme from Jefferies.
I'll be glad.
Okay.
Thanks, guys.
So two part question one.
Just following up on the idea on just kind of global expansion and new locations per delivery centers and the idea of balancing that model delivery centers vs.
Can you talk a little bit about the decision to maybe set up office in certain countries certain location and is there a minimum level of scale that you are trying to anticipate there or is there a potential.
Truly change the.
Delivery model in the sense that you can have a much much more distributed workforce or do you still need.
For every location.
Pick a number 200 <unk>.
<unk>.
And in an office or something or some sort of accounts.
Location.
I can take that one and then bartow can complement maybe thank you sorry for the question and.
The this new reality means that we are also rethinking the office space.
That means also that we won't have any more one one seat per each of our.
Clover swell, if they won't yes, but in general who work much more balance between work from home and won't grow the office.
So that means that gives us a lot of more flexibility I need.
The new offices, we're putting together our total EBITDA from from the back office as we are putting together they have much more space, where meetings have much more space for having lunch or dinner or meetings and be like like a huge place too.
Two to get together with people.
<unk>.
This is this is like the new reality. This is what's happening so the message behind it is that is allowing us to.
To start a much more global recruiting which we're already doing.
<unk> global recruiting now.
It is necessary that even if we are going global to recruit too. Many more places those guys will be connected to some countries are to some.
Some Cds on specific fee and we will need to have some specific presence in those places. So we can gather with them and we can get.
Get them together.
So although.
This will happen, we will keep on having the need of having a specific presence, but now with the totally different.
Totally different dynamic some metrics in terms of how much office space, we need to open up a new CD now we can open up a new city with a very small effort that before was still the total different game.
So I think that answers your question regarding how you will scale up okay now the scale up looks much different than before.
I'm truly excited about this new reality, because we were dreaming about this for many many years and now looks like it's happening.
Okay.
It's helpful and then.
Just a question about the guidance here.
When I look patent assets the past couple of quarters, obviously things have come in above expectations just based on.
Arguably what's been a faster than expected improvement in the economy and stuff.
But when I kind of look forward and I think about the guidance that you've provided it.
It also sounded from some of the day commentary.
But theres still some conservatism in the guidance because you guys talked about lockdowns of Covid and stuff.
Is there can you quantify the conservatism in this guide versus how it may be you've guided in the past.
We werent in this environment.
I'll take that one or future ones.
Sure.
We always historically have been guiding.
Based on what we when we feel very comfortable about meeting the numbers.
As we enter Q4, the last CCR iconic company right since 2014.
We are very comfortable with the guidance Q1, very high confidence level on the words, but when we need to look into the into the rest of the year I think that there is still macro uncertainty there is still some countries where.
We are delivering services, where we are selling services.
They still have some issues some of the industry cycle shop grown a lot with low ones like travel issue still impacted on it's not exactly clear when it's when they come back. So we've tried to do as you know.
Range day, the full year, let's be programmed and then as per our clear progress is on and we'll see you know.
More lives at the end of day time, which clearly seems to be the case right. We are optimistic about what's happening.
We'll update the guidance but.
There is no point in taking unnecessary risks when when when the Covid is still around growth, 100% all of US are now doing this call from home.
And you're on some countries.
The numbers are still very very box. So we feel that taking a prudent approach.
We're going step by step on great safety Green strength in our full year guidance is the right approach at this point on we will update on the year progresses.
Thank you that's very helpful.
Thank you very much strength, there and then it also one of the newest analysts covering our names and welcome to the family.
Yes.
Next question comes on the line of Diego Arago from Goldman Sachs Diego. Please go ahead.
Yes.
It's very good to see you all thank you for taking my question flow.
First on maybe just a follow up question regarding.
The revenue outlook I, just want to make sure that I would otherwise messaging here what was the revenue contribution by region that you are taking to consideration for your full year guidance for 'twenty, 'twenty, one, especially because I wanted to understand whether or not we should be considering FX had on our growth.
Thank you Luke.
First thing is that we are seeing.
Latin America on.
On Europe.
Growing.
You saw the last quarter right growing a little faster than on the U S. Because the U S has a bigger share of the travel and hospitality sector.
So depending on the recovery of turning assets be parity. We may start on all the all the OLED on the regions growing at similar pace.
Is that on vacation you would probably see more EMEA.
On Latin America growing faster now when you talk about FX for next year right.
Actually.
Most of our revenue of 86% of the revenue.
Is denominated in U S dollars. So there is only a smaller share of debt in currencies other than the donor on.
<unk>.
What we are seeing from macro from a macro reported on the left is that.
There might be a little bit weaker so.
If anything it by it might be positive for the revenue.
The impact on the revenue side, but again at this point, we prefer and we said all the targets for our teams in dollars. So we just focus on the dollar number we don't play the fixed game, we need to deliver to the owners that we will not break.
You are muted.
I have a follow up.
Thank you very much.
Our strategy here, so sorry for that.
It's just a second question if I may which is related to the number of clients. I mean, we can see that cash number the number of clients coming down.
On a year on year, which makes sense, we will take into consideration and all your strategy to increase the scope of projects within your existing clients.
Growing significantly with the new clients.
100 <unk> what.
What should we be.
A ceiling going forward, especially on electronics, and whether or not there reflects the right balance between client them on in.
In Mexico City blocks, Thanks, Jeff I think goes on.
I'll take that question. So it's much more important for you to focus on the number of accounts over 1 million over 5 million over $5 million.
As opposed to focusing on the on the total number of customers. Now every time, we do a deal sometimes they come with.
Some very very small customer set over a.
Maybe somewhat smaller potential on eventually.
They don't grow that Martin.
Basically.
And GAAP focusing on selling more to the to the high potential logos right. We have the Hunter square strategy in place, which is the evolution of the 50 square. So we want to focus on these very large global companies that are going to make blow on significantly.
Significantly nursery in the future.
So I think that as opposed to looking at the total number which is fine if it goes down and we will refine its still a very high rate 800 customers, but I would put a lot more emphasis on the above 1 million about $5 million on how we're performing in those sectors.
Thank you.
Thank you very much Diego.
Leo.
Our next question comes from the line of Cesar Medina from Morgan Stanley.
Yes.
Yeah.
Yeah.
So sorry for the debt.
I was wondering.
If you can give us a comment regarding your your debt.
That you have on broke up on what type of claim.
Client engagement could that bring to Europe.
Sure. Thank you assessed for joining and thank you for the question.
The know how the blue curve is bringing to the table is like a very deep knowledge of analytics.
On data data analytics on the risk side.
So basically these guys are able to this team is able to provide no predictions about the performance of the different types of.
Assets that the banks have the different types of clients on group of clients on cohorts of clients that the bank sub and.
On predictions on different diets, though.
Total TVT or.
The amount of money that they will lose with each of those profiles of customers.
So that capability.
Of course, we will keep on using for new project and of course, those predictions on that data analytic needs to then connect with technology and with products that can.
Putting putting it is what these guys are able to predict.
So.
The idea of getting together when we were total we'd like day on the whole team where.
The idea was okay, let led to the analysis led to the debt are predicting with artificial intelligence to understand what's going on inside those portfolios and then let's develop the technology that will have low the banks and the financial services company to be more efficient now this is the initial.
Yeah, I would say number one step.
Of doing things together number two step is to bring that same knowledge through many other sectors. The same thing happened.
No.
On <unk> on cash happens on when you are selling a car or you'd cabin, so youre selling flights or tickets or when you are selling any kind of.
On online.
Asset so so we plan to be.
First in.
In the first moment to keep on developing things together for the financial sector, and then go to expand to other sectors to be able to develop this that same knowledge that same ability to predict to other industries, which excites me a lot. So this is pretty much the rationale behind it.
Got it. Thank you so much on congratulations on the great quarter.
Thank you sure. Thank you.
Thank you very much denser.
Final question for today comes from the line of Steven Enders Keybanc. Please go ahead.
Okay, great. Thanks for thanks for taking the question.
I guess, that's what I touched a little bit on how youre thinking about.
On the expectations.
Around your software investments and what Youre doing with yardbird activity as well as with any cancellation I guess, what I was kind of the go to market look like with that.
And how you're thinking about monetizing that down the line.
Sure.
On the reimbursement process is critical.
We are being able to differentiate our offering when we are in front of the customers and that's the first way to monetize debt when we sit down on the table and we can we say, okay. Instead of doing the things the old way, we're doing their thing and annoyed.
This reinvention for me is extremely extremely important when competing as I said every day in front of our customers and competing with our.
Amazing competition, we have so.
That's one thing that's one way to monetize it that we're already doing it now.
What happened.
If these guys want to use it for them or want to use it for.
For other engineers that they have in the same project or other projects, who will be very happy to use it and expand it and we'll be charging some money for that independently on our surety is done it will be a fee that will be connected with D. A.
On a certain amount of money per month.
Per user that is Houston described will start trying that model.
During 2021, as our product evolves as the product and book.
And.
Those are the two main ideas. We found we could have many more ideas and many more things that we are thinking but I think those two are very clear based on to understand.
And really doable now, let's see how it works you never know.
At the very beginning of the Battle is being one because we are in both customer and being able to show something that nobody else.
Right.
Thank you Steve actually we have a request for one final question for sure.
Go ahead.
And then our clear aligner from E town actuarial. Please go ahead.
Thank you for taking my question, just a really quick one but in the past you stated that you have interesting payments on <unk>.
Playing that area I was just wondering where that stands on that there has been any news on that on.
On those initiatives.
Well they are progressing well.
We have.
We have we have some good progress in terms of implementing some of those payments essentially some with some together with 10 months and.
We have no no news yet no no no new developments on the on the yes. The program is progressing day, it's better.
But we have nothing new to be released right now.
But I'm quite bullish on the on.
On the future of that book that specific segment.
And that's on the book we are developing.
And we are trying to push then we're developing a lot of things force for many of our customers and that is really exciting and it's growing very very fast as you may matching the.
Those payments are going everywhere, so we're not outside that.
That growth loop.
So this is the update I can give you now.
Thank you Martin.
Yeah. Thank you so much.
Thank you very much so that'll be off on the Q&A section today. Thank you all for joining thank you all to the analysts are asking more questions on.
I'll now ask marching to peace provide the closing comments on please go ahead.
Thank you very much Amit well. Thank you very much everyone for joining number one number two I hope this new format.
Something that you like book to try to keep on improving it and make it better each time.
Thank you very much and again, thank you very much for your coverage and support looking forward to see you on the next quarter Goodbye.
Thank you very much.
Yeah.
Okay.