Q1 2021 Globant SA Earnings Call
Oh no no.
[music].
Good day and welcome to <unk> first quarter 2021 earnings Conference call I'm, Amit Singh head of Finance and Investor Relations 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.
This event is being recorded and stream 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 globin dot com.
Our speakers today are Mark Mcgwire co founder and Chief Executive Officer, Guano, Thiago <unk>, Chief Financial Officer, Patrice Yeah, Plumbing is chief operating officer, and Diego thorough Chief Technology Officer.
Before we begin I would like to remind you that some of the comments on our call today may be deemed forward looking statements. This includes our business and financial outlook and the answers to some of your questions.
Such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC.
Please note that we follow Ifr as accounting rules in our financial statements. During our call today, We will report non ifr ice or adjusted measures, which is how we track performance internally and the easiest way to compare globin to our peers in the industry.
You will find a reconciliation of ifr S and non <unk> measures at the end of the press release, we published on our Investor Relations website announcing this quarter's results are now.
I'd now like to turn the call over to Martin <unk>, our CEO thinks.
Thanks, Amit and Hello, everyone I'm excited to speak to you today in this new format, 2%, our first quarter earnings for 2021.
This quarter, we brought in $272 million in revenue, representing a 41% growth over the previous year.
It is the highest year over year growth since the launch our IPO into south from 14. It reflects the opportunities we are taking advantage of as the market keeps evolving.
A few updates on our leadership team as we focus ourselves on keep growing sustainably.
Them, we want to boost our offerings regional coverage talent and senior she's between delivery performance and operations.
Co founder Gilbert and Libyan will become president of global Knicks and global ventures.
He will lead our startup accelerator and will work to develop new business and revenue models through initiatives like augmented coding Onstar me up which are all part of our global next division.
Finally, he will also assume the company's precedent for Latin America co founder Martino Mountain takes a new role of President of Europe, and Asia, and Chief Corporate Development Officer. He will oversee the successful integration of companies into the family as part of our global expansion strategy.
But that is simple mis has it come our new Chief operating officer her task will be to turn our executive a threat there she into measurable goals for growth delivery and execution. She.
She will consolidate our comprehensive vision between delivery people performance and operations day.
Teradata will take on the new role as global Chief Technology Officer.
Overseeing our studios of expertise and how they deliver technologies that transform companies every day.
Each global business regions will be led by a respected chief business officer with Fernando masking, a stiff insists officer for North America, Nikola GAAP Bloom as Defeasance Officer from Latin America, and Federico piano E as Chief business Officer for Europe and Asia.
And finally I'd like to welcome Maria Pinelli as the newest member of our board of Directors Maria brings 34 years of experience in helping companies develop their technology products and to reach their customers I'm happy to have her strategic advice as we keep growing our business and to serve.
Our clients better all over the world.
I'd like to congratulate all of these executives for their new appointments, we have an amazing leadership team that will enable us to achieve our goals and go beyond.
We also the inflection point of the digital transformation space in 2020.
The increase adoption of digital technologies in all processes of our professional and personal lives is opening up exciting opportunities for our sectors in parallel with increasing optimistic microeconomic predictions industry analysts like IDC have increased their forecast for the worldwide services market do.
Two a soft landing in 2020, and a strong return to growth in 2021, and this is an opportunity to position itself as a leader and preferred partner in this space, which we aim to invent and disrupt.
That's why we continue to seek out the best talent and bring them onboard as our teams continue to expand this quarter. So yet another acquisition as we welcome cloud shift to the family.
I'm excited to bring in their deep sales force multi cloud expertise to globally.
So that we can take a larger role in the cloud space.
At the same time, we announced the acquisition of <unk>, a leading Spanish digital marketing agency.
Kansas experience is fusing digital marketing digital sales technology design innovation and data. It is a complementing element. So that we can continue development unique products and solutions for lasting transformations looking for they will surely be additional exciting.
Decisions that reinforce and expand our many capabilities as well as our organic growth now.
Now a few notes on our geographic expansion as we grow we continue to scale in our business throughout the globe. This quarter, we announced new operations in Malaga, Spain, where we will be opening a new artificial intelligence innovation Center in Latin America, I am pleased to announce new operations in Monterrey, Mexico Cali.
In Colombia, being able mud in Chile, and <unk> in Argentina. This is in line with our strategy of being the employer of choice for the ambitious talent of the region. We have also announced a greater expansion of our operations in Miami, which will be the hub of our brand new Smart been Institute.
So a new concept to transform how patrons connect with brands leveraging our experience working with the entertainment and many other sectors. We're launching this studio focused on creating the best fish it'll experience through digital irritation will revolutionize how companies interact with their consumers.
<unk> and fans across their physical and digital spaces, allowing them to create a new user experience that is far more engaging creating these new ways of interactions serves as an exceptional tool to better understand customers and allows organizations to identify new and <unk>.
Conventional ways to generate new revenue.
Now knows about the collaboration with Apple We began working on a project with Apple through our life Science studio a year ago that seeks to improve the health and wellness of communities through a highly configurable wide level of recognition and reward platform using Apple watch.
The aim is to help clients improve the health of their customers members or employees. The app encourages a more healthy lifestyle for its users and provide companies and ability to create deeper more meaningful engagements.
And today I'm pleased to announce that loan non drugs, a large drugstore chain in Western Canada is our first client to rollout. This program. They have already launched a pilot rewards program in a number of stores in Vancouver that incentivize customers to complete activity goals.
Try buy Apple watch.
With an ambition to expand in the coming months. It should be noted that this program adheres to the most stringent privacy guidelines said, but all three companies.
Let me share more updates in some of our most recent projects.
We're working closely with Nissan customer experience team this year to develop a seamless customer journey across physical and digital channels.
We're helping to revamp their online vehicle ordering process enables and their customers with greater choice and intuitive and engaging ways to choose and buy their cars. We have expanded our involvement into market operations with data systems integrations and the development of customer.
In business applications growth.
<unk> continues to expand its footprint in the digital health Arena.
For example, during Q1, we began our partnership with Boston scientific to provide implementation consulting services for CRM as strategic rollout. We also started working with the diagnostic division of Russia to develop an automated multi cloud solution for this global pharmaceutical and <unk>.
Oh technology giant.
In the retail and consumer goods space, we won a very strategic engagement with Buck country Dot Com. This is an online specialty retailer.
That sales closing and outdoor recreation gear.
<unk> has been engaged to partner on their digital transformation journey aimed at delivering impactful customer experiences by leveraging our digital and cognitive capabilities and technologies to.
To go into finer detail about our studios and our technology offering I like to welcome <unk>, our new CTO Diego please.
Thanks, <unk> and Hello, everyone. It's an honor for me to be with you. This afternoon.
I had the great experience of leading global diverse and expensive Studios force earlier in.
In my new role as global CTO, our aim will be to leverage our global talent and expertise to build a portfolio of solutions that enable our clients to fully embrace a future.
To get started I have a few more new studios to announce in addition to the smartphone use concept.
First the culture attacking studio, we know that a successful unless initiative transformation in bulks not only a technological adoption, but interest in the organization with a culture of flexibility and resilience. We therefore consolidated this new studio to help businesses achieve their goals through faster unhealthy.
Our cultures.
Our teams work with the client to create cultural strategies reshape the organization and formed new habits and behaviors that are conducive to alignment between business goes from the organization's purpose.
These two day awards to unleash the talent and potential of the employees to reskill them realigned understand cognitive capabilities and position them in the optimum place for embracing change and provide value to the organizations development. There is no way to scale up if you don't have a sustainable culture.
We are also improving our value proposition through our new digital sales studio.
For digital marketing strategies to be successful they require more than managing media.
It's a great opportunity to be more business oriented and increase performance of digital channels by using data AI and the right technology stack.
Digital sales studio comes to address this challenge by orchestrating digital capabilities, increasing digital sales with data and technology.
Digital sales acceleration means having business marketing and technology working together our mix to be driven by data under 360 degrees consumer view.
Now many of you may remember the women that build edition of the loans awards in 2020.
The term note im feeling after sharing dosing inspiring stories was so positive that we are launching a new addition for 2021 digital disruptors.
Organizations of the future will be led by individuals who embrace reinvention take risks and push the limits on what thought possible we call them digital Disruptors, we want to recognize those leaders who are going the extra mile to guarantee that their companies.
Cutting edge of every tech Revolution will.
We are inviting fascinating list of objectives.
We include <unk> President of the Walt Disney Company, Latin America Mission Bay, Soma President of the national election, coming simple for minorities in engineering Nordea.
Julia CMO CIO of the Inter-american development Bank Donald Hicks Airbnb is VP of Trust policy.
<unk> CEO <unk> <unk> and many more.
But you all to check out the initiative for yourselves digital Disruptors Dot <unk> Dot com.
Let me now welcome Patricio <unk>, our new Chief operating Officer, who will go into details on our activities.
Thanks, Diego Hi, everyone and welcome back it's been another great quarter as we continue to differentiate ourselves through the quality of our delivery in this direction. We have received important international certification based on our innovation, our inclusion of augmented coding asset.
To that elevates, our delivery and the continuous improvement of our parts.
This is a recognition to the effort that our glover snake daily to ensure that we meet and surpass client expectations, even under challenging circumstances.
In the outlook for 2021, we will remain on a remote first policy for our operations. However, we have decided to open our offices to all those who voluntarily want to work from them.
We will continue working from home, but at the same time, our Glover will have the flexibility to return when necessary for collaborative aviation or other relevant to mid teens.
We remain vigilant to the COVID-19 situation in Latin America, and India, both very important location for US we are a company in our lovers in different ways to help them through this crisis.
And we will continue to support them by offering supplies experts guidance and counsel and made donations to local institutions and hospitals. We finished the quarter with 17267, Clubbers 16, South and 284 of which were technology design.
And innovation professionals, we continue our strong hiring in Q1 with a robust addition of 994 professionals up to 39% year over ear in order to meet the strong market demand over the last few years <unk> has invested heavily in <unk>.
Publishing a robust training and hiring infrastructure across the globe.
Combined with our ongoing expansions this gave us a strong ability to seamlessly increased hiring and training that's required at this moment, we do not foresee any challenges in finding the right talent to meet the demand.
For the past 12 months continued low at 14.2 per cent compared to 15% in Q1 2020.
Going forward, we continue to estimate a normalized attrition rate of 14% to 16%.
Some news on our benefits for our Clubbers core the center of everything we do we allowance and employees' stock per case plan through the second half of this year.
We are keeping our glove has the opportunity to per case shares of the company at a discounted price. So that they can have a greater stake in our performance and growth is tori.
We continue to expand our behind concept.
This initiative has guided us to take bold steps at our company from.
From committing to having half of our managerial positions held by women by 2025, so having transition to renewable energy in 2020 and going carbon neutral a commitment that we will achieve this year. We are doing this because we want to continue making an impact in the wall.
And in the tech sector, helping make it more inclusive diverse and vibrant.
Related to this I am glad to share that we have created a new initiative and space called B one of their kind, where we are sharing to promote the concept of country inclusion and diversity.
We want to make sure that everyone, especially people who are often overlook feel welcomed scene and supported.
I invited to this day to day, one of a kind that com to learn from the stories, there and maybe even share your own.
Now a few points on our revenue performance Disney was our largest customer for the quarter growing strongly at 27, 4% ear of ear and 14, 7% quarter over quarter, we continue to be very well diversified within Disney serving the majority.
Of its business units.
Other than Disney breath of our account collectively grew at a solid 42.8% year over year with revenues from top five and top 10 accounts, increasing at a robust rate of 37.5, and 41, 2% respectively over the first.
Quarter of 2020.
Outside of Disney rest of day accounts collectively also grew strongly at 16, 3% quarter over quarter as we experienced improvements in most industry by articles.
Moreover, during the quarter, we continued to successfully cross sell services with the companies we acquire in the recent past.
Regarding the progress of our one hand, it is clear our strategy. During the last 12 months ended March 31st 2021, we had 15 accounts above $10 million in annual revenue.
<unk> to 12 customers for the same period last year.
We had 139 customers with more than $1 million of annual revenue compared to 112, one year ago. Overall, we continued to expand our relationships with our key accounts the base for our continuous growth.
In terms of geographic regions Europe witnessed a strong acceleration in revenues growing at 183, 7% year over ear and at 43, 3% on a sequential basis.
In America and others show continued this trend growing at 82% year over year, and 17, 9% sequentially North America Whatsapp is strongly at 19, 3% year over ear and 11, 2% sequentially.
Asia also witnessed robust growth at 78, 7% year over ear and 31, 3% sequentially. We aim to see uptick about the demand we see in a growing market and foresee a healthy pipeline of head for 2021 and beyond will keep applying our talent to her.
They make it happen and ensure that they have the latest training to be great with that I'll pass it over to Juan to go over the financials.
Good afternoon, everyone I hope, you're all doing well on strength safe, let me start by summarizing the results of our first quarter 2021, I will then discuss our guidance from the second quarter and for the full year 2021.
Our business from 'twenty to 'twenty, one started on a very strong note and we are very pleased to announce another quarter of record revenues and strong financial performance.
Our revenues for Q1 were $272 million, representing a solid 41% year over year growth on a sequential basis. Our revenues for Q1 increased 16, 1% showing a very healthy trend. This was <unk> strongest year over year and sequential growth sales were up.
Company Q1 revenue growth was 43% year over year in constant currency.
While the COVID-19 pandemic is still ongoing it did not have any incremental impact on our Q1 results. We remain bullish about the demand environment post COVID-19.
Maintain crisis and are encouraged by the ongoing positive trend in our bookings and revenues.
Turning now to profitability, our adjusted gross profit for the period increased to $107 million, representing 39, 6% adjusted gross margin compared to $75 $6 million, representing 39, 5% adjusted gross margin in the first quarter of 2020.
Adjusted operating income for the quarter amounted to $45 million or 16, 6% of revenues compared to $29 $9 million or $15. Two two percentage of revenues for the first quarter of 2020, adjusted operating margin improved 100 basis points per year, and 30 basis points sequentially.
As our revenue growth profile.
<unk> continues to improve it will have a positive impact whereas cash.
The operating margin at the same time salary increases starting Q2, and we plan to continue investing in the company taking advantage of the huge opportunity in front of US we're ready for it.
The tax rate for this quarter was 34, 9% largely in line with our guidance.
Adjusted net income from the first quarter of the year totaled $34 $2 million, representing 12, 7% adjusted net income margin compared to $22 $4 million.
Representing 11, 7% adjusted net income margin for the first quarter of 2020, whereas it was a very <unk> adjusted net income margin increased by 80 basis points.
Starting in the first quarter of 2021, we're including tax impact of non or your first adjustments in the calculation of adjusted net income. Excluding this tax impact adjusted net income for the first quarter of 2021 is $37 million, representing adjusted net income margin of 13, 7%.
Sent compared to as reported $24 4 million, representing an adjusted net income margin of 12, 7% in the first quarter of 2020 adjusted diluted EPS for this quarter was 83.
Based on $41 2 million average diluted shares for the quarter compared to 59.
For the first quarter of 2020 based on $38 1 million average diluted shares for the quarter, excluding the tax impact to non or as far as adjustments discussed earlier adjusted diluted EPS for the first quarter of 2021 is 90.
Strongly above our guidance of <unk> 79.
And compared to as reported 64 cents in the first quarter of 2020 moving onto the balance sheet, our cash and cash equivalents and short term investments as of March 31, 2021 amounted to $195 $6 million.
During the first quarter.
For a $2 $2 million for acquisitions, and repay $25 million of our credit facility. Currently our credit facility is fully Undrawn. We also continued to successfully execute on capital allocation strategy with integrations of recently acquired companies going as planned. So we're about I would like to.
Share with you our outlook for Q2 and for the full year 2021, we note that given the ongoing COVID-19 pandemic. There are a number of factors that we may not be able to accurately predict.
Just on current visibility, we expect Q2 2021 revenues to be at least $283 million, implying 54, 9% year over year growth.
At this point, we will not expect any FX impact our second quarter revenues.
Q2, adjusted operating margin is expected to be in the 15.5% to 17% range and adjusted diluted EPS is expected to be at least 84.
Human $41 4 million average diluted shares outstanding for the quarter regarding the full year 2021, given the robust demand environment. We are witnessing we arent significantly increasing our revenue guidance and we now expect revenues to be at least $1 billion $135 million.
Representing 39, 4% year over year growth. We currently assume no FX impact our full year 2021 revenues from turning 21, we now expect our adjusted operating margin to be in the 15.5% to 17% range versus the 15% to 17% range guided before.
Our global and we continue to strongly investing in globalizing, our operations training programs from cutting edge technologies and expanding our sales coverage.
Effective income tax rate is now expected to be net on a 3% to 25% range for both Q2 2021 and the full year 2021. Finally, we expect adjusted EPS to be at least $3.37 for the full year 2021.
Assuming 41 6 million average diluted shares outstanding for the full year to note. Our adjusted diluted EPS calculation. Now also includes tax impact of not only as far as adjustments. Thanks, everyone for participating and Nicole from your coverage and support.
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Exelon so as regard to your question and answer section of this call I'll announce your name and that point. Please on mute your line and asking questions and please mute your line up to your question is done you also ask you to please limit your time to one question and one follow up thank you.
The first question today comes from the lineups engine Huang from Jpmorgan. Please go ahead.
Hey, Great Hope you can hear me.
I'll begin.
Hey, Martin you guys all look great great presentation, obviously, great results as well.
And I appreciate the update on the people side with some of the changes so I wanted to ask maybe start with the people.
Question of <unk>.
Coming out of this earnings season, everyone. We've heard a lot about.
Wage inflation and fight for talent I would imagine your utilization is probably running pretty high as well it sounds like no real COVID-19 impact. So can you just maybe give us an update on how you feel about.
The people side of the equation in terms of cost utilization.
It sounds like attrition is under control, but I am curious how you feel about your ability to meet some of the demand that you're expressing here with the with the raised guidance.
Sure.
Let me, let me let me summarize.
First.
The recruiting power remains higher than ever.
It is higher than ever.
And we're extremely happy with the amount of people, where COVID-19 right now.
It's really amazing to see the amount of net income that we are gaining every day every quarter as you may see here.
This nation, it's higher or force higher than before.
On the environment of.
Demand for the people also is harder.
<unk>.
We believe that.
Using all our things towards value proposition uniqueness in terms of.
How we position our.
Offer and our valuable position us employers.
We'll still have no.
Vantage.
Compared to our competitors in terms of hours per truck.
We maintain.
<unk> proposed two hour.
So lower is better.
A better value every day as you have fared on some other things.
That we explained during the day presentation.
And.
I believe that you know.
Attrition remains steady.
Stable.
Of course is not a slow as it was in the middle of the pandemic.
But that's also connect.
How how the market is.
Behaving in terms of demand.
We're seeing a pretty large demand we're seeing.
No that is a pressure on bread on price at which is interesting.
So that's the full picture not really concerned about that of course, we're doing everything we do.
And we will keep on improving which is the most important part keep on improving value proposition for our current lowers our future growth.
Okay. Great then maybe it's my quick follow up then on just on the gross margin side staying with that theme.
Thing to call out for the second quarter for the balance of the year. Thank you.
Thank you.
So you reported a second quarter.
Rest of the year.
Can you two things for you.
Percentage range.
Turning to the regional.
We have set up.
<unk> remained solid.
If you look at Q1.
$39 six person slowly.
You too.
Q4 last year.
During Q2, and Q3 to income salary increases, but also from a business that is very strong.
With utilization, we should be able to offset some of their income.
So I would share of ACD that we will continue to be in the range.
3rd% to 40% and we will continue to comp.
Very efficient organization in terms of the agenda. If you look at the operating income guidance that we provided a boost.
<unk> slightly up from 16 to 17.
Got it.
Quarter. So overall, we think that the only give the company.
Soon.
Thank you Steve.
Thank you.
Next question comes from the line of Bryan Bergin from time, Brian. Please go ahead.
Alright, thanks, good afternoon.
So based on the growth performance of it would appear the majority of their client basis is back to pre COVID-19 spending pace, but I'm curious if there are still parts of the portfolio that are not yet back to a normalized rate. If there are what where are those and are you building recovery in those as well.
The rest of the balance of the year and the guide.
Hi, how are you.
<unk> per your question.
Hello.
The two sectors that are non steel coming back our gross lines.
No.
We hope it will come back very soon.
<unk>.
Risk makes sense will lift up very soon in the U S. They feel.
And.
The second the second thing it.
This completes our airlines.
Some of them are picking up and growing back again some of them were maintained that may explain another calls.
And some others.
Our adjusted <unk>.
Travelling to survive so I believe that.
Those are the same all the rest of the segments are growing and.
On an IPO net.
Those will come back very soon including media and entertainment of course, all the streaming part is very clear.
We saw it as always.
In Britain.
Entertainment.
Apart from the sorts of and so forth.
Our picking up very fast so this is the.
My view right now, maybe im missing something but.
The most important part.
Okay.
Brian if you're moving.
Interest.
Youre seeing very very through route and we are seeing very strong demand.
Strong level of bookings, so we don't need relative to the market convention.
The rest of the businesses.
Yes.
Not everyone is leading umbrella anyone.
That actually dovetails into a follow up I wanted to ask about just just pace of bookings that did it.
<unk> in the quarter from what you were seeing before and it does it maintain good basic and any qualitative commentary you can give there.
Yes.
The big Rush of acceleration in Europe, and Latin America, and also in the U S.
And we see that acceleration will convene transforming revenue.
You've seen you know.
The growth is.
In very significant storage growth.
And the guidance for the next quarter is also pretty solid so.
That is connected to an exploration.
On the demand and the thing that we were talking in the pandemic.
Really generated like like you are pretty I would say.
Interest in place per hour sorry.
And.
Everybody is trying to get the things for tomorrow and high strength.
<unk> accelerated our crushing.
Does that mean in my opinion that it would slow down in the future with US is a trend that will never change now.
I believe that this is something that is pretty clear right now I don't know Pat if you want to add something from the demand side.
Yes of course, I think we are seen as from demand on a day, meaning the sales hub. So that we have been working with different partners in terms of how to again be the case in other industries in the in the space of the digital payments also we are seeing a strong demand are online learning of course.
Something that probably is not going to change not in the in the near future or anything that we have a strong demand. There also social networking I think there are different kind of warranty cost that flow from our being impact for this post COVID-19 situation or at least.
Some of the industry, we are seeing in very very good trends in our pipeline and on the demand.
Thank you very much.
Thank you.
The next question comes from the line of Maggie Nolan from William Blair magnitude go ahead.
Maggie.
We've ever seen.
We're not here Lee.
Yes.
Yes, Greg when you look at the Q2 guidance one.
And when you think about the quarter over quarter change in the margins and just wanted to clarify is that driven by mostly the impact to salary increases and is that a larger impacted here than you would've seen in years prior.
Until and push them through.
No.
I think that when you reported.
Or the true.
In terms of gross margin clearly you may expect.
Small impact of salaries.
Chris It's <unk>.
Even though the market is short.
We also have.
The ability to keep on increasing utilization.
I'm not sure share vessel.
Net impact.
Short term and then eventually price discussions that their company customers.
It also keen on sales.
With the margins back to where they are supposed to be so I would say.
You should expect us more impact into Q2.
Numbers from.
It's not what it had been operating.
Operating income level operating income is solely from second quarter.
And then from the rest of the year, we should be able to recover part of that.
We continue to flow through our customers.
I think that the demand side is very very strong.
So to offset some of the voluminous I don't think is going to be very different from other years and we're just I think that after two quarters Q2, and Q3 last year, where things were kind of cone. We are just coming back to reward Australia to COVID-19.
These are different.
We can see where the necessary leaders. This is a market that is strong there is a lot of demand.
There is an acceleration coming out of where rebounded.
All right price as you can.
Good day.
So we're just coming back to the normal scenario.
Please please of course and individuals.
Additional acceleration that of course has an impact from the labor market.
When you look at that.
To bring people into the company growth.
Sales and people 900, we can much of which were organic so very strong organic growth.
We continue to believe that those companies.
Tom.
Great value.
Wanted to employees, we continue to attract talent.
Very attractive boutiques through.
Sure, it's a unique organization.
<unk> seen over the last two or three years when the market was also looming.
Moving to bring a lot of.
Macey engineers from citizens where globally. So we are not even though we had noted that there is.
A tougher market. We also think that we will continue to be very good.
As we have been over the last three four years in terms of bringing people into loans.
Okay, Great and then my team in a scenario, where you partner with a company like Apple like you outlined in your remarks can you give us some insight into how your team and their teams work together and where globe interest able to kind of take the lead in sugar strength.
Yes, it was.
It's an idea that will together with the with the Apple theme and.
It took us a while like a year.
So finalized agreement with Apple and to be able to.
You got to the application and now this application can be.
Can be it can be sold to any you know any health insurance company R&D any related company.
Want to for wideband camels of incentives for people.
The heavier more healthy way.
Net.
It's an obligation that is mounted on the on the Apple Watch and then when you use that application the Apple watch measure some of your things on activity and then you get rewarded.
Discounts on many other things.
Connected to your activity.
And then how we get paid on that is pretty interesting because its not because of the development that we did but if the cost is it connected to the amount of users and if the monthly payment.
Every user that we get.
Is that clear.
Yes. Thank you.
You're welcome Mike.
Thank you very much Maggie.
The next question comes from the line of Ashwin share acre from city Ashwin. Please go ahead.
Ashwin.
Can't hear you.
Hey can you hear me now.
Cool.
Third quarter guidance.
Okay.
I Might've missed this says wondering if you could talk about organic versus inorganic growth.
In the quarter as well as the.
Increment.
In terms of.
In terms of the outlook and you made the.
An interesting acquisition.
I guess another interesting activation they simply habitat.
Okay.
So actually a net.
Good day with organic and organic question mark into growth.
The acquisition strength so.
No.
Always.
Very hard to integrate.
<unk> that we acquired from.
Having said that our estimate for cash.
You won any.
Growth was three.
3%.
For the Q2 numbers, which we guided 55%.
90% of our business to make up their lending growth.
Approximately 37%.
And then for the full year number which.
<unk>.
39, 4%.
Again, our best estimate from there so we're not.
It's around from 700 offices.
Keep in mind that it's not issue two from tanks to isolate the effects of some of the acquired company sales as we integrate very fast.
I will just frankly from our strategy of integration.
I don't know if you want a common yes.
Other comment.
We acquired.
We announced.
Are we commented on the on the presentation about certification while that is largely connected to our strategy of creating every day more value around our cloud operations and in particular standpoint, now with adding that ability in Europe, which we had it very concentrated in Latin America.
And we are shifting that into into Europe.
Very interesting to see how that is progressing now the demand is quite high and then.
On the digital marketing space.
We believe that there are some space there too.
Talk about digital sales.
There's the space in which we have been blamed for for some time, but having already done.
One of the leading digital and digital sales company.
In.
In Spain, it's something that.
Deciding on a lot of value in front of our customers on a new segment.
To keep expanding the way, we talk with them and to keep expanding the wallet of consolidated portfolio of offering that we have but remember.
Organic growth is about being able to talk about new things with our customers every day.
And these two acquisitions.
100% connected to that idea.
Understood.
And then the second question.
The recent organizational changes.
Sort of backing off of the structure I thought was very interesting.
Should one think of that as a precursor to <unk>.
Yes.
A.
Is that actively addressing phase.
Global growth.
You basically preparing the structure for net.
Look we have always seen preparing for that.
I think youre asking me gasoline material preparing for growth.
Good day.
Non correctly.
The day globalization is that correct.
Yeah look.
It has to deal with the idea of being prepared.
Every day.
New blood new management into in store and so our teams.
And you know.
Most of them are coming from the inside of a company many many years ago.
In doing amazing carriers within the company of the year on Battle net.
And also.
Some.
Additions like Nikola capital.
And coming from Accenture or some other.
And people that has been working for years from the company.
Fernando masking that are leaving.
Europe and U S respectively.
So this is something that we are.
Putting a much deeper effort into making stronger our regions even.
Playing with the founders of the company connected to that Martina Mandan connected to Spain, being depressed demand, Spain, working very closely with <unk> moving into <unk> and now we are giving like a totally different spin reorganization in Europe.
And.
Give or moving a spread in Latin America I also Brett Redman equity some of the most strategic things that we're doing with England that includes augmented coding and clouds.
All the augmented low end stuff.
Including <unk> the platform.
So this is a really deep.
Step into our next phase of the company, we're already at $1 $1 billion organization, and we need something different we want to remain the industry adapt and that needs to be connected with a change or evolution on our management.
And so via a startup.
That also coming from from a company. Many many years ago. So look it's a pretty interesting thing.
The board also evolve into a more diverse board.
Now we've got <unk>, a former partner Zen young.
So one of our customers.
Xyrem is a young and LTE coming into our board of directors a lot of value added.
She will add to the organization.
So we're preparing the company for.
Big things in the future and I'm very happy with all the management changes on everything that is going on in the company of course, there are always things to improve I won't say no to that.
But.
We're preparing the company reported.
For net things.
Yes, I want to add something to that and methane from.
And I think that this reorganization has to do not only with <unk>.
Cost of preparing ourselves for growth we are growing all the time and that the last couple of years, we have green band ourselves. Many many times and all the 10 day do we have done that is because we are hearing our customers and.
Because they ask in a different kind of partnerships with us so that means that we need to be prepared to be different are all have different flavors in different areas. For example in EMEA Latam U S. I mean, we are being prepared to be closer to our clients to understand what they needed to be day with their culture.
The net and that has been our strategy for the last couple of year being closer to our clients understand what they need understand how we can be prepared and and that means also the reorganization in the case of at operations and income together with people with that with performance and with the quality.
The delivery that has to do with one vision and working together as a team understanding where are the levers are needing and when when when when they need us and be there and prepare the business also for the to attend to that so I think it's important to have that in mind, we are reinventing.
<unk> remains in the industry and we have reinventing ourselves.
Got it thank you.
Thank you Ashley.
Thank you very much ashwin.
Our next question and it comes from Surinder <unk> from Jefferies.
Please go ahead.
Thank you for taking my question.
The first question I'd like to ask about is just the visibility and this is kind of a follow on to the bookings question.
Obviously, the magnitude of the beat was pretty big last quarter. So can you comment on that a little bit and how we should actually user guide.
As it suggests there's a sequential slowdown in terms of your organic growth.
Understood.
So.
When they are started.
Huawei situation was impacted pretty.
Thank you much order, where commodity markets. The U S Europe and also Latin America.
Well, it's hard to anticipate.
<unk> extends the recovery was moving to continue or the speed of net recovery.
Clearly.
It was a little bit stronger than we anticipated and that's why.
Hi.
From two to beat the guidance.
And that's been the bigger way.
In the past.
We see hub in order to delivery centers.
A lot of impact from COVID-19.
Most of the poor people in Latin America.
In Europe.
These leaders vaccination is not growing as fast.
It's going in the U S or even in Europe.
So that creates relative.
From certainty around around that.
But.
I think that what is clear is becoming more clear is are those companies that were not impacted.
Uh huh.
Certainly impacted by COVID-19.
Accelerated reader on the projects and that's what we're seeing.
This strong level of bookings that we are.
We are seeing in the last couple of quarters.
Moving forward again.
We always guide.
So we're familiar with it forever, we like to write.
Place, where we feel.
So we're.
Hopefully exceed those numbers.
That's all great news will be of course. These are not these are still.
Certain times I'm going to take some extra.
With Russia.
We would normally take would have normally taken in the past.
But again.
The reason is as we.
We continue to see strong bookings coming in will continue to hire very aggressively in the market and we continue to prepare the company is worth tiered bundle this time too.
To become even.
<unk> <unk>, that's why you've seen some of those.
Uh huh.
It really changes or structural changes that we discuss.
That's helpful and then.
Switching topics here an ESG question did I hear you correctly that you guys are carbon neutral at this point or is that a goal that you're trying to get to and I'm. Just wondering I wanted to clarify that.
Thank you.
Yes of course, I mean, we are working this year and in terms of the covenants. We have this plan.
Graham decline that we launched a couple of months ago.
And we have been very very progressive in terms of.
In Ablative program. So we have built that sustainability studio in order there not only to help our fault.
And sustainable company out there to help our clients and being closer to them to be sustainable I think that at the became free of planted that is one of the main and battery calcium became program has been progressing so yes.
It means that the 10 day, one we are going to be carbon neutral in anything that is in the maintenance into the.
Just have never April of course.
That actually sounds pretty wonderful so just to clear from my perspective is that.
Primarily like there's just it's a function of reduced travel or is there other things that we should be thinking about that you've hit the goal, where maybe others are struggling to reach that goal.
That's a combination I think it is a combination between different things I mean, there's other we're going to be reducing travel channel has been reduced.
As a.
Result of the <unk>.
<unk>.
We believe that it will come back it won't come back that fast.
But.
It's a combination between that.
<unk>.
Global compensating the current footprint that we have.
As a company and.
In essence, <unk> has a pretty low carbon footprint with the activity we do.
But in any case, we are very conscious about that and we want to be very conscious about where we are producing and moving forward is not just that we want to compensate our.
We are making numbers now and I'm trying to understand if that's possible or not.
The idea would be that if you work at <unk>.
Sure. They are receiving your monthly compensation answer Youre receiving now.
Carbon compensation that.
<unk> neutral at your activity at the human.
Yeah. So.
We are very conscious about that taking care of our blended for US is one main thing.
Otherwise, we wouldn't be totally out of day.
Out of control very soon so I think that Neil.
This this big kind of initiatives at Barclays reviews.
It's extremely important for the company because not just taking care of the planet, but taking care of our peers with more being more than <unk> more diverse more inclusive as we're trying to demonstrate every year and with very concrete commitments on training women that are trying to come into the industry.
Promoting women that are.
Inside our organization, having a very clear commitment of having 50%.
Yeah.
Competition between women and men on our mind on our management on 2025, and then of course, taking care of the humankind become with the human bed, which is the third pillar which is.
How we use technology for the best of the World instead of using technology just for.
Or.
For things that are not healthy for the employee employment creation and so on so forth.
We added a fourth pillar, which is.
It became we yourself to.
<unk> herself and.
That means that we are.
Including every day more and more.
Options for our growers.
Take care of themselves to take care of their bodies to take care of their minds and I don't know, but if you want to add something to the net of course, I mean, and you can see our focus the last initiative that we launched and it has to do with of course, the fact talking about mental health in their organization inside of any station and that means net of course.
Tony.
Of course at taking GAAP. Your body of courses is has to do with mindfulness. It has been doing how are we as an organization and I was thinking you can not only oh.
Our global because we are seeing all that time that our globex hiring net processing a family in a day or in a scenario. So.
As we see our flowers team and their families and their structure and how they are they are leaving on every day basis. So in this working from home and scenario.
We have put a lot of energy in this strategy.
Even then sold understanding what are their pain and putting some psychology in terms of having calls and trying to be closer to them. So we can have them and I think all the organization should have this kind of conversation about mental health inside their organization and that is something that we we have been doing in Alaska.
Plus years that we've put that very very strong effort in the last couple of quarters.
So I mean in order to be from those secular globally. That's also has to do with a career path that we are building for our Glover and how we add tied to take care of them and in terms of their professional career also in terms of technology University. So I think it has to do with a mix of things that make a slogan and deferred income.
And at very attractive culture.
Neogen, our agents and for the time.
Thank you Pat and thank you Sir and there.
We'll move onto our next question.
Comes from key vendors from Keybanc and just as a reminder, limit your time to one question and one follow up.
Please go ahead.
Okay, great. Thanks for thanks for taking my question.
I just wanted to get a better sense of some of the acquisitions you made in the past few quarters, and how you're saying the cross sell opportunity with us.
And yes it is.
That would be great.
How you're seeing what the synergies sorry, yeah, the synergies, you're saying with some of the acquisitions you've made in the past few quarters and the cross sell opportunity there.
Thank you for the question.
Luke.
All of them are performing right and.
I would say that.
Our strategy the strategy we're following.
The last.
Few.
A few quarters.
Concentrating on our new offering.
Our new offerings for our value proposition is really important.
<unk>.
I feel that at all.
Let's start with the case of broke up.
The Spanish company that we bought.
I think in quarter four.
That was on.
An amazing upgrade on how we relate to the financial system.
In Europe, I think that now we are expanding that.
We're expanding that into Latin America now.
We are expanding that.
Some customers in the U S and so.
That's great then.
<unk>.
When we talk about acquisitions like Sofia, all cloud sheet.
Which are as I said connected with the cloud expansion.
Sales force and everything that is happening in that space that is speaking up and pretty much every every customer we do because they like to go a long way of doing those things and I think that when we acquired those companies we pay a lot of attention on their culture, how they do things are similar.
To what do we do now.
But when we talk about <unk>.
We are increasing our portfolio with healthcare, we're increasing our portfolio.
ERP migration ERP reinvention, which is something that is happening right now migration from the cloud average.
Net Hudson, who.
With the backing of the company and also with understanding how the company it creates and analyze its own internal processes. So that is.
Performing quite well and moving into many of these customers that we already know so overall theyre performing.
The C&I she is like essential part that we see what we need when we know acquisition and how we can expand what they offer into all our 800 plus customers.
Fact number be spun correct me.
Our 800 plus customers, so I think that.
I'm very happy with the progress of each of them.
And of course, you know.
We cannot be 100% share that all of them will work perfectly in the future.
But at least right now we are very happy with them.
Okay.
Equipment.
The very strong was there any growth Q.
Q1, Q2, a quarter from here.
Were accelerated.
Combined with a new services from the <unk> coming from the decisions. The two things are performing really really strong. This year. So I think it's more.
Very clear Okay, that's great to hear and just wanted to just housekeeping question on are.
To get a better sense of the impact on the on the tax rate on the on the guide here for lab.
Non I for that.
The adjustment there.
Yes.
Political year for the full year.
Is it <unk>.
Pretty soon.
The tax impact from the adjustment so without that the way we used to call.
The adjusted EPS.
363 so.
There was a.
Our own.
Something since the impact coming from the tax, but we believe that.
It improves from where our rigs.
So that's where they studied Walker Omega threes.
Thank you very much Steve and given the time constrained I'll ask.
Let's take a few more questions, but I'll just ask everyone to limit to one question. So.
So let's move on to the next question, which comes from Arturo Langa from <unk>. Please go ahead.
Hi, good afternoon, everyone.
Well I have to but I guess I'll just ask the first one do you see any impacts.
Both from operations from maybe you go ahead Arturo.
Two of them.
Thank you.
Vertical and so it just is.
Beer, what's happening on the ground any concern maybe from an FX perspective.
From any other angle and then the second one is may be thinking in a five year horizon and how much should you.
Europe represent in terms of topline.
Those are the two questions yes.
Okay.
You can take.
In terms of geopolitical.
The geopolitical situation of Columbia, we are concerned about whats going on there.
Nothing that we think will affect our business that are working from home.
People are safe.
And we haven't had any issues with our own people.
So we hope that this will we will.
<unk>.
Literally day will be diluted.
In a normal situation would come back.
Regarding the other part of your question on one lease or battle.
Sure so.
We are investing.
Europe, it's been a real investment for us for the next three years.
See no reason why Europe from tenants.
The U S.
If you look at some of your peers they are making videos.
Sure.
So there is no limit there is no no signs.
King size.
The people, we know that we can ru significantly over the next several years in Europe.
There is no recently.
It should not happen, we just need to keep focusing keep on investing bringing the right comment buying the right companies weighted there.
Yes.
As Martin mentioned in the beginning of it.
And Ken I mean, I think we have put up a solid team in Europe.
As one of the phone. There also is there end of Indiana also working in corporate development I think that India for <unk>.
A big Big market. So we are putting all our effort.
Also there too.
To build a stronger region. There anything is that is the most important thing these days right.
Of course, it took us a little.
Mark to develop there, but we I think index doubtful.
Okay. Thank you very much and thank you Arturo.
Question comes from the line of <unk> from from Goldman Sachs. Please go ahead.
Hello, all and thanks for taking our question so if I could.
Follow up loans come off the previous question.
Our general way could you give us some more color on how you are seeing the draw.
Drivers are demand at this point of the pandemic. So mainly for example companies are being motivated more by seeking cost efficiency are by their nature marker from our facing operations our margin already.
Whether there are any specific types of projects.
The most demand thank you.
Sure. Thank you for the question.
Look in general what we're seeing as they have been re marketing some of my past quarter certain cold.
<unk>.
The first the first thing is the first trend on the most.
I'd say.
Demand in trend is the fact.
Net closer to consumers.
Is our specialty from.
The automation industry.
So the media entertainment.
To the football.
<unk> production.
The stadiums.
Going through the pharma industry I mean, all across the board, we're seeing pretty much the same trend.
Oh certainly.
Pandemic may make us think about the idea of you know.
Not needing any one in the middle between us and the underground and the consumers.
So we.
We need to change the way, we sell our products and understand better.
Our consumer that is happening also free sampling in CPG.
So everybody that before was trying to distribute their boats with Charles.
Leaving that final connection to consumers into those channel I'm trying to get back and say, okay. Now that we have the tools to covert the biology to get closer to those consumers, we need to both directly to them understand them better understand how to construct products and services for them.
Better and to connect with them, even more emotional way and that thing that we started with DC 13, 14 years ago, now with expanding into pretty much every industry like wildfire.
And I think the pandemic has been like and very important.
Important trigger for that same company now and it will keep on happening us.
So moving to that as governments moving to that as pretty much everything mortgage into that direction.
It's quite amazing you got it exactly.
One of the things that we invest in something.
We will keep on growing towards the future now how you deliver that how you reinvent the way in which you delivered that connection with consumer makes a huge difference at the time of competing for those deals and we are convinced that we have like a brand new way of approaching those.
Customers that needs to reach those consumers.
Using AI using our studio model using the autonomy of our ports all of the things that we're doing to be able to provide services in a different way. So those are the projects that I'm seeing.
More more and more often even.
If you're in a single ahead of meeting with a real estate company.
And.
Reported we're selling the project to be in.
Institutional funds now they want to get into the blockchain to be able to sell tokens connected to those real estate brushy.
Again, a new way of crowd pounding a new way of connecting the dose.
Maybe not such a high peak debt investor, but lower ticket investor and it's really amazing something that we've never seen before.
It's pretty exciting.
Okay awesome. Thank you thank.
Thank you so much acreage et cetera.
So that will be all for the Q&A session today. Thank.
Thank you all very much for joining at this point actually I'll pass it back to Martin to please provide the closing comments Martin please.
Thank you.
Well. Thank you very much for everyone participating in this new format. Thank you draw those that did not ask questions per participated in a way what.
What you would we have to say this quarter looking forward to keep connecting with you on looking forward compute scribing.
The low end to the next level. Thank you and see you next quarter.
Thank you hi, everyone.
Okay.
[music].