Q3 2021 Globant SA Earnings Call
It's what we do best.
[music], we are globally to.
The company you probably don't get behind many of the digital transformation.
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Reinvention.
Good day and welcome to global third quarter 2021 earnings Conference call I'm, Amit Singh head of finance for the U S and global head of Investor Relations.
All participants on this call will be unless it only mode.
After today's presentation there'll be an opportunity to ask questions. Please.
Please note. This event is being recorded and <unk> 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 slogan Dot com.
Because today, our Martin Me go App co founder and Chief Executive Officer, Juan <unk>, Chief Financial Officer, Patricio pull me as Chief operating Officer, and Diego thorough Global 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.
The 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 Paulo, Ifr as accounting rules in our financial statements during our call today, We will report non IRS or adjusted measures, which is how we track performance internally and the easiest way to compare <unk> to our peers in the industry you will find a reconciliation of Biochar <expletive> and non app part of measures at the end of the press release people.
They show in 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. It is a pleasure to be here with you again after another exciting quarter at Logan.
In Q3, 2021 plus revenue totaled $342 million.
These represent 65% year over year growth we.
We aim to close this year with an annual revenue more than 56% of all last year.
This will be our highest year over year growth ever as a publicly traded company.
We also remain very positive about future growth prospects.
The pandemic was an inflection point in demand for digital transformation.
In this new phase, we believe that organizations will increase their demand for partners.
That can help them remain relevant agile and resilient.
IDC estimates that by 2024 digital transformation spending will make up 55% of all technology investment world wide, reaching six three trillion dollars between 2022 and 2024.
For the first time ever over 50% of global companies, we have an enterprise wide digital transformation strategy.
This is a huge opportunity for us.
We will continue to move up the value chain and provide more complete a ride of end to end transformations.
We're growing capabilities and boosting our offering.
Now I'd like to Shine a spotlight on three mega trends that are reshaping, our world and how global Easter dressing them.
First artificial intelligence as we have been sharing over the past quarters. This is swaption is affecting nearly every process that organizations hub.
It is slow and as you may know, we apply AI to almost everything we do from coding to mitigating by us in recruitment to sharing knowledge.
Most recently, we have launched augmented testing.
I went to testing is a tool that improves the quality assurance process with AI.
As an example, imagine testing of video game that is almost ready to go to market millions of lines of code.
Thousands of visual elements that need to be rendered perfectly.
[noise] errors can ruin the experience for loyal gamers for everyone.
Our manual testing is very time consuming.
Through computer vision and neural networks, we enabled visual validation in a more efficient way previously this had to be done manually by QC teams.
From games to ops to web based solutions augmented testing applies AI to test smarter not harder.
We're already implementing this product with our long term client Rockwell automation, among others to benefit their time to market efficiency.
The second Mega trend is blockchain. According to IDC organizations are forecast to spend nearly $6 $6 billion on block chain solutions. This year, 50% more than in 2020.
While many have long associated blockchain crypto currencies.
The technology offers the possibility to make radical changes across multiple industries.
First it can provide decentralized financial transactions of course, but it can also offer secure and decentralized ways to store and share information such as health property and indication records.
It have even taken the world by surprise with the rise of Nfc's.
And right now there are discussions about how blockchain can impact AI by having shared decentralized data models.
These are the reasons why our global we're placing such an important emphasis on it.
To continue expanding our blockchain studio this quarter, we announced the integration of Arctic slots.
Our first blockchain specific acquisition founded in 2013, IDEXX Labs has operations in the United States, Argentina and Uruguay at.
It also has a solid project pipeline with Fortune 500 client top global players in the crypto space and organizations such as the IDB.
By bringing them on board, we're empowering our blockchain and crypto related solutions.
And finally the metaverse.
We can now create virtual a more realistic representations of ourselves as ours ours much more precisely and efficiently as you are seeing on screen.
And many spaces like fortnite and roblox already exists that enabled the creation of new worlds and experiences.
Some brands are slowly tapping into this technology.
Technology continues to evolve it is exciting to machine where organizations will be able to do to address this growing trend. We recently launched the met all of our studio.
This studio is anchored on our expertise in gaming blockchain and customer experiences.
The goal is to work with organizations to extend their presence offering and creativity through new digital spaces.
These maximize customer and employee engagement.
We want to help brands to reinvent how they connect with our consumers as well as enable the search of new breed of fully digital players.
With these trends I believe that there has never been a more exciting time to work with technology.
Hologic has the power to produce great and positive impact in the world. However.
We still need to be vigilant and mindful of how technology can affect our communities.
On that note blow on was proud to participate in the Cop 26 U N climate change conference in Glasgow.
Through leading the conversation on technologist role in fighting climate change, we're presenting our disruptive work in sustainable technology.
Additionally, following our be kind to the planet commitment, we're happy to say that we recently achieved our objective to become completely carbon neutral.
This effort goes hand in hand, with our commitment to science based targets where.
While we are setting the trajectories for reducing emissions through 2030.
In Q3, we also joined the steering committee of the Green Software Foundation.
Members are committed to work together to build sustainable software that helps reduce carbon emissions. We're proud to be part of this relevant project as it brings together major players of our industry. All these initiatives are a great source of pride within global.
Now, let me share with you an important project that we got just announced aligned to our big kind vision.
As I said earlier, we believe that tech is inherently good and improves lives.
At connect Us sports innovation for the greater good and enables a reinvention.
However, when misapplied misuse or you successively its impact come in negative.
This needs to be addressed to ensure tech is good for humanity. So that's why we recently launched a $10 million venture fund called Big kind Tech fund.
The goal is to provide funding opportunities to start ups that developed technology and applications to tackle the misuse and abuse of technology in society.
The fund will focus on providing investments ranging from seed to series a so we consider and selected we will evaluate the purpose and ability of each project to make effective changes in user behavior and multiply good practices.
The scope of this debate and the focus of the fund is broad it can range from preventing texting and driving to solutions that can mitigate screentime abuse you.
Can find more about this initiative and requirements for startups B kind Tech fund Dot com.
Last week whoever had the owner of bringing together some of the most thought provoking innovators in the world today at our annual converge event.
And that the theme of the power of prevention. The Forum. Notable speakers included Yuval Harari will I am.
Kathy Huckle among many others. The event was hosted by James Corden, with whom I had a great time discussing the latest transformational tech trends.
More than 50000 people register to learn more about the future of technology and how it will impact our world.
I invite you to relive it by besetting converge that global Dot com.
Finally, a recent development that will be a great asset for our future expansion a few days ago, we announced the acquisition of Navient.
They have deep knowhow in improving business processes, the strategy and technologies across every stage of the company lifecycle sales service finance and delivery now has more than 130 employees in the U S and in the U K and a profound sale force.
Expertise.
They will lead to revenue capabilities will help us reinforce our focus on reinventing companies internal strategies to enable a complete transformation.
<unk> express since in the U S will allow us to continue growing in our largest market. We're very happy to have them on board welcomed.
Now as we look forward I'd like to share the pillars of <unk> strategy in the next stage of our growth story.
First reinforcing our studio offering.
We'll continue to focus on compounding the knowledge and capabilities of our studios of expertise.
To complement our digital studios, we're launching a new platform our reinvention studios.
They will work with our clients to disrupt their entire industries. Our CTO. Dr. Thorough will later go into final details on this endeavor.
Second a greater offering of products and platforms through global next.
We will continue expanding our portfolio to complement our service offerings.
Our perks, such a stormy app and augmented coding will be given greater autonomy.
We want their teams to iterate directly and rapidly with the end users that way they will be able to grow and improve faster.
To foster these new expansion phase, we recently created global next first innovation hub in Maldonado Uruguay.
We opened a new global office, there and are expecting over 150 professionals to work there in 2022.
And finally, our geographic expansion. This will be later explained by Patricia promise, our Chief operating officer.
Now I'd like to turn it over two gigawatts per hour lower CTO to go over the focus of our new and exciting technology offering.
Oh, please and thank you very much.
Thanks, Martine hi, everyone great to be here again.
As Marty mentioned I Hope you were able to enjoy Congress last week. It was a fantastic event, where we discuss many of the latest trends.
These friends are reshaping experiences and opening new doors for industries to radically change how things are done.
As organizations in the industry get ready to face more challenges to reinvent themselves to adapt we have decided that this is the right time to expand our studio model excuse.
As you May know our digital studios have been the trademark of how we deliver quality services over the years.
They are deep pockets of expertise with diverse multi industry teams our studios cross pollinate in order to provide with robust award rounded solutions for our clients as.
As we have continued to grow and the nature of our services has become more sophisticated we see the opportunity to a play or require learning to reinvent entire industries.
That's why a one 2% our newer ambitious studios.
This new type of studios will lean on the technology expertise of the digital studios to build practices will enable profound industry transformation.
Today I'm happy to announce that we are launching three new reinvention studios' focus on financial trouble, the hospitality and airline sector. These studios complement our existing portfolio. It includes gaming media and entertainment and life Sciences.
We will continue evolving our offering in the next months.
Now let me soon in the new re measure studios first the blucher future funding of the studio.
The financial services industry is going through unprecedented transformation.
Players in this space mice, either disrupt or be disrupted let's.
That's quite globally is fusing its digital expertise in the industry with Blue Cups financial services portfolio.
The studio will boost new business model and strategies, while enhancing the experience of customers.
Now, let's go into the travel and hospitality studio the new guest expectation for personalized digital interaction are here to stay.
We focus on reinventing how brands engage with their guests and designed memorable and fulfilling experiences.
We leverage the latest trends and technologies to help companies create a frictionless customer first approach that deliver relevant and context of appropriate experience to their guests.
The airline studio address the specific challenges brought in this sector.
We have an exceptionally complex business landscape will leverage our expertise to help a highly competitive a regulated industry reinvent.
We drive digital transformation by putting the passenger experience front and center or mall strategies in both business, we empower passengers to manage the complete lifecycle of their journey and a highly personalized manner maximizing conversion and ancillary revenue.
The combination of our expertise brought by the digital Umbrae mentioned studios enabled us to deliver a comprehensive digital and cognitive transformation two organizations throughout the world.
Let me share some examples of work that we are executing well.
We're working on the modernization of lending clubs technology stuck lending club is emerging from a peer to peer lenders to a full digital bank and global is providing the needed digital horsepower in financial sector Knowhow to help support their evolution to new products and services growth.
We work with people to take their fitness platform to the next level, we help them to deliver a unique value to their members globally, making a complete shift to digital.
In Q3, 2021, we released a brand new experiences and workout designed to help women keep training with their personalized routines in the U K, we have begun a new project with one of the largest housing associations in the country the hydro <unk> the.
The group also over 50000 properties and provides homes through 100000 people.
The only scoping high group in their digital transformation journey.
Our improving their customer self service capabilities in Asia experience using salesforce multi cloud products in Brazil, lower loss chosen as a strategic partner for insofar most digital transformation process, we're creating a data lake they will take the company to a new level.
This project brought our journey into the world of data involving about 40 remains in area, such as legal HR sales marketing intelligence and more.
The goal is to democratize data axis started the AI journey and improve their operations.
We believe that several technologies will continue to disrupt the future as Monty mentioned AI blockchain under murderers and some of the trends that will be key drivers for evolution.
And when some of the issues for this our ear seem to making companies have to build their foundations now.
They have to prepare their infrastructure and data as well as work on virtual and physical experiences before I hand, it over to Patricia I'd like to invite you to read the latest Sentinel report the colors opportunities that smart venues present.
Can access all the information in Sentinel, Doug LOE and dotcom.
I would like to now hand, it over to Patricia Pommies or CLO. Thank.
Thank you Diego, it's a pleasure for me to be with all of you today.
I'd like to begin they share our vision of our Glover girls.
<unk> in our talent and our client markets.
Since <unk> was founded our team has been to grow where the talent is.
So instead of pushing professional to move to the bigger cities to access global careers, we have open delivery centers in smaller closer cities and broad opportunities to them.
Nowadays we have continued this strategy.
In the recent months, we have announced new offices in Cali, Colombia vignette mud in Chile at a key pain, Purdue Maldonado knew why Monterrey, Mexico, and Barilla Chaz, Indiana.
In addition, we will further consolidate our leadership in Latin America by entering new markets in the region most.
Most recently, we announced our new operations in Costa Rica.
In Asia, we continued to grow as well.
I'm glad to share that we have passed the milestone of over 3000 kilometers in India.
This is more than double than last year and up to 26% since last quarter.
This make India the fastest growing talent center in global and I am also happy to see our growth in Europe.
Have recently announced great expansion plans for the United Kingdom.
Over the next three years, we are going to invest 55 millions British pound and higher 600 Nuc lovers.
Our London offices will become the global knowledge hub of our sustainable business is to do.
This is investment I key to support our growth in the region for the App economy years.
Overall for Q3, our hiring remain robust and we finished the quarter with 21849 globe wears.
Of this figure 20573, our technology design and innovation professionals.
2223 of the new hires in the quarter were I T professionals.
Up 53 point wind person year over year attrition for the past 12 months was at 18.4% slightly higher than our target range of 15.5 to 17 play pie.
This increase is largely attributed to the very strong demand for talent as we move into the post pandemic phase.
That said, we have now seen a stabilization in the in our attrition rates.
Our value proposition to our employees continues to be very very appealing.
As a reflection of this we have received several hours in the past months.
In Colombia, the organization great place to work awarded as the best workplace of 2021.
This is a great recognition, especially with Colombia being one of our largest talent markets with nearly 5000 clobbered.
In Peru, Colombia, and Chile, the organization employees for years, just norland a month 700 companies as the number one company to work for.
In Chile, the S E businesses call named US the most innovative company for 'twenty or 'twenty one.
No a snapshot of the makeup of our clients' revenues the Walt Disney Company continues to be our largest client growing this quarter at 74% year over year and 24% quarter over quarter.
We have a very well diversified within Disney who serve the majority of its business units and we continue to expand in new areas.
The rest of our accounts collectively grew 53.8% year over year and 10.6 quarter over quarter.
We continued to experience momentum in most industry vertical.
Moreover, we have taken advantage of the networks of the company. We have recently acquire to cross sell our services regarding the progress of our 100 has crashed chatterji. During the last 12 months, we have 11 accounts that brought in more than $20 million of.
Annual revenue compared to five from last year.
We also had 162 customers with more than $1 million of annual revenue compared to 118, one year ago. When we look at our regions in Q3 65, 2% of our revenues were from North America.
92% in Latin America, and others, 11.1% in Europe, and 1.7 in Asia coming.
Coming up on December 10th the women that Bill Awards Gala event will take place where the winners will be announced.
We went to support recognize and give visibility to the women who are challenging the status quo.
This second edition was held in light of the success from last year, and we are really happy with the participation so far.
We received more than 1600 nominations from women leaders from all over the world and over 70000 boats.
I invite you all to join US on the town you can learn more about this in woman award that the globe and that's com.
With that I hand, it over to Juan to discuss the financials.
One please.
Thank you and with afternoon, everyone I hope, you're all doing well.
Let me start by summarizing the results of our third quarter 2021, I will then discuss our guidance for the fourth quarter we.
We are very pleased with our overall results for the third quarter of this year as our business continued to show robust momentum revenues for Q3 were $341.8 million, representing 65% year over year growth and 12% sequential growth.
We are delighted that glow and continues to deliver industry, leading growth and we expect this trend to continue.
We estimate organic revenue growth for the quarter, two we are above 52%.
As discussed in our last earnings call. The business environment is largely back to pre COVID-19 levels on our Q3 results and a robust pipeline make us believe that the demand for our services unplugged firms is stronger now than before the pandemic, we feel confident in delivering robust.
And elevated levels of growth in the upcoming years.
Turning now to profitability our app.
Gross profit for the period increased to $136 $1 million, representing 39, 8% adjusted gross margin 80 basis points improvement compared to the third quarter of 2020.
<unk> operating income for the quarter.
Amounted to $56 $3 million or 16, 5% of revenues compared to 41 $6 million or 15, 3% of revenues for the third quarter of 2020.
Demand and pricing environment continues to be strong, allowing us to offset inflation in the labor market.
We were also able to drive SG&A efficiencies with our increasing scale.
This together with our growing exposure to services products and platforms that will help us break revenue and employee growth linearity will continue to help us deliver shows the adjusted operating margins, while maintaining strong investment in the company to capitalize on the massive opportunity in front of us.
Our effective tax rate for the quarter was 21, 6% below our guidance as inflation adjustments drove taxes lower than our initial expectations in certain geographies adjusted net income for the third quarter of the year totaled $41 $9 million.
Representing 12, 3% adjusted net income margin compared to $23 million, representing 11, 1% adjusted net income margin for the third quarter of 'twenty to them.
Adjusted diluted EPS for the quarter was 98 cents based on $42 8 million average diluted shares for the quarter compared to 56 cents for the third quarter of 2020 based on $40 8 million average diluted shares for the quarter.
Adjusted EPS for Q3 implies a solid 73, 5% year over year growth and 850 basis points above our robust year over year revenue growth in the quarter moving onto the balance sheet, our cash and cash equivalents and short term investments as of Sept.
Timber various 2021 amounted to $482 6 million lawyers during the third quarter, we generated strong free cash flow of $71 $2 million versus 21 $6 million in the third quarter of last year and our free cash flow.
Adjusted net income was around 170% during this quarter, we paid $44 $1 million for acquisitions currently our encouraged facility is fully undrawn.
We continue to successfully execute on capital allocation strategy with integrations of recently acquired companies go in as planned now I would like to talk about our guidance for Q4 2021.
Discussed the demand environment remains robust.
Based on current visibility, we expect Q4, 2021 revenues to be at least $359 million or 54, 3% year over year growth at this point, we do not expect any FX impact for fourth quarter revenues, our fourth quarter revenue.
Guidance implies full year revenue guidance of at least $1.276 billion or 56, 7% year over year growth versus prior guidance of at least $1.236 billion or 51 eight.
<unk> percent year over year growth.
Q4, adjusted operating margin is expected to be in the 16% to 17% range, implying full year 2021 adjusted operating margin guidance range of 16% to 17% as well versus prior guidance range of 15.5% to 17%.
Are you Faris effective income tax rate is expected to read near 22% to 24% range for Q4, 2020 one.
Diluted EPS is expected to be at least one dollar in one sense, assuming for a $2 9 million average diluted shares outstanding for the quarter.
This implies full year 2021, adjusted diluted EPS guidance of at least $3.70 versus our prior guidance of at least $3.58.
Thanks, everyone for participating in the call for your coverage and support.
Okay.
Yeah.
In Q1.
<unk> done in the past and you go to the question and answer section of this call I'll announce your name and that point. Please on mute your line and ask your questions. Please.
Please remember to mute your line. After your question has done we also ask you to please limit your time to one question and one follow up thank you very much.
So the first question today comes from the line of Tien Tsin Huang from Jpmorgan engine, Steve go ahead.
Yeah.
Thank you Amit.
Good again.
I wanted to ask just on the.
The demand side things are great. It sounds like pricing is in a good place as well your gross margin came in quite strong, but youre rolling out the new studios.
So hiring very very aggressively integrating acquisitions as youre thinking around margin changed sort of in the midterm and a 16 or 17, you land nicely in that zone.
Suggests but are you thinking that there's more need to invest at this stage or to sustain this kind of growth just curious what the thinking was there.
Thank you had been doing how are you.
Look I think that the.
Length of the business at this point.
Allows us to keep on expanding and investing while maintaining the level of operating margin.
That you are seeing right now, we're continuing to see a 16% to 17%.
As I would number for the near future and it allows us to keep on investing aggressively on the business expanding into new studios new geographies. So so basically we do believe that that's a number that we can sustain in the near term.
Okay, Great and then my follow up just with some of the New studios.
Last couple of acquisitions.
A little bit different so I'm wondering if the revenue per employee.
Bottle here.
And I would imagine it's going to be higher, but just curious how that cycles tend to be.
Okay.
I mean, the last two deals that we did.
The ones that were just announced ethics.
Blurton company, allowing a little revenue company. The second one is more U S based on UK base. So the revenue per head is higher still it's a very small acquisition right at about 130 people so that that doesn't necessarily impact the revenue per head, but we'll see.
Revenue per head moving up.
New deals that we're signing and ongoing discussions in terms of pricing kicking and eventually that will drive revenue per head up in the near future.
And then.
Yeah, that's pretty much the answer in terms of how that's gone on in park revenue per head at this point.
Great Great results guys. Thank you.
Yeah.
Thank you gene and thank you very much Tien tsin.
The next question comes from the line of Ashwin Shoemaker from Citi.
Please go ahead.
Yeah.
Hello folks.
Congratulations on the.
Solid quarter.
You guys did mention obviously that the level of Avi.
Demand trends continue to be to be strong and should be.
Heightened range for some time to come.
You know not really looking obviously for 'twenty two.
Guidance, but in the past you have indicated.
They're made.
Mid Twenty's type of type of level less possible are you are you now thinking potentially higher.
And that and certainly the head count increases, which suggests that you can actually support much higher.
Growth rate, so can you kind of.
Hmm.
All that together for us and talk about.
What's achievable.
Yeah.
I think you asked me for the question I mean, yeah business continues to be very very strong.
Even though it's still early to discuss in detail 2020 through what we can say at this point.
Is that you know last quarter, we did mention 23, 24% organic plus one coming from from acquisitions.
We have done up to that point now.
Now we are able to you know to increase slightly the number even though as I say it is still very early and we will provide detailed guidelines in February we will see you know 24 to 25 organic lost around two and a half a percent coming from the recent deals that were just announced.
As possible.
Number four our pro next year on I mean on the on the on the labor market.
As you said you know we have been hiring very very strongly during this year and I mean since I would say since Q2 last year, which was the quarter of the pandemic.
Every quarter. Since then we have had very strong hirings.
And again you know the market of course, there is a lot of competition, but we do see we do.
We believe that we have a very attractive value proposition for employees.
We continue to do to attract talent and anniversary boy.
Before might be a little lower in terms of the net additions because we found in the new year and the typical seasonality that happens and people will go on holiday they suddenly because of how the last year.
<unk> was basically Bob again, we continue to see good traction in the market will continue to see our name and our brand.
As the preferred option in many of the countries, where we're operating and again there is competition, yes, but we do believe that we have the right. The right recruitment recruiting power on the right brand and the right projects and the right technologies to continue attracting talent.
Great.
And as a follow up.
When you look at the.
Top clients that you have named Disney obviously, leading the pack but.
But as you look at them and back that you had.
In terms of let's call it wallet share gain at those clients.
Is that maybe indicate you of is the repeat plan you can follow.
You know maybe accelerates your hundreds of airplanes.
Okay.
Hi, Tien tsin.
And how are you sorry.
Sorry.
Ashwin.
In and out of the best normally normally I and Dodge.
Dodge one.
We enter into that's one way there with pension, but okay sorry.
No I think the demand is still very solid.
In all our key accounts, where you have seen the numbers of D C, which are pretty impressive and.
They are really.
Mind blowing.
I would say that it is not of course possible to keep have impressive performance moving forward, but yet.
We feel that pretty much all our largest customers are in the mode of changing and improving and spending more money on their digital transformation.
I don't see that trend changing right now.
Because you know.
They are not ready yet and they need to keep on doing things.
And then if not just a domain of the large brands, but also the main I would say of our smaller customers smaller customers smaller brands too.
I mean the per.
Pretty.
Good consensus around that the demand is still there is bare.
Very strong and it will keep on being strong during next year now you can never predict anything here.
Here.
But.
As of now the.
The consensus within global is that that demand will keep on being very strong.
During this last quarter and at least you know the first portion of next year and then we'll know but they were in my opinion it will keep on being very strong year in 2022.
Yeah.
Perfect. Thank you very much eschmann.
Next we'll go to Bryan Bergin from Con Bryan go ahead.
Alright, guys. Thank you.
I wanted to dig in a little bit around the India based so heard you mentioned 3000 globe ours up to ask your fastest growing talent center can you talk about the financial implications of that as you grow in that country as it may relate to consolidated per capita revenue and margins and is that exposure a bigger factor in the uptick of attrition recently.
The short term here.
Look.
The first part of the question you know India has continued to show very very good momentum for us.
Yeah.
As you know we started our operation in earlier, so I'll go through an acquisition.
As of now you know the Italian relevant center from India.
It's 100% fully integrated in our Italy operation.
And as we become more and more global many of our customers ask us for a global process projects and sometimes you know we decided to stop them, although our India TTC.
In terms of.
You know revenue per head.
India might be lightly we know.
Some of the Latin American countries, but it's not really a big difference. So we don't really see.
On impact on their own you per head count coming from there.
In terms of margins.
It is.
More profitable than other locations at the same time.
No.
Our senior people we hire.
Louise.
Overtime.
The cost of that people becomes more a more globalized in a way. So I don't think that looking at you know calendar.
Talent development Center by talent Development Center is going to really help I think we need to think about the company on a consolidated level and eventually as we move forward one of the things that we learned from Korea.
People can be anywhere.
Matters are the skills and and we will see over time I think the cost of people from all over the world.
You know go into to a certain mean.
So we don't we don't really see.
Revenue per head being significantly impacted where we also don't see it.
Margins significantly benefited from that.
And long term short term you may hover around thereabout, but that's basically the answer for attrition.
You know there are three sung is driven by by Argentina, where you know the macroeconomic than two two booths people too to get.
Sometimes you know other opportunities in smaller companies with.
Sometimes of our being able to.
To attract them, but.
But I don't think it's not India that has driven up the there were the consolidated attrition as a whole I mean, the market is hot everywhere, but at the same time that you know attrition came up a little bit above our expectations, we do believe that.
It has been stabilizing more recently and we do think that over time, we will take it more to the target range that we always provided.
And the attrition attrition situation as I say is not driven by one specific country, but when we look at beyond the one country, where you werent listen there's nothing it's not in India.
Okay. Okay. Thanks for that one and then recent deals like while American and then Avenue and I guess I've answered in the past.
Seem to be somewhat more closely related to some packaged SaaS work versus complete custom development and curious if that is something we should continue to expect from you.
And aside from Salesforce or are there other SaaS ecosystem do you think are very attractive right now where you have penetrated.
Yeah sure.
Thanks for the question.
I think that there's a there's some momentum happening on the surface space.
In particular, because you know the.
The demand is very high and it is a platform that is really broadly adopted by many people that doesn't mean that we don't develop custom solutions in that case because in every implementation. There's a lot of custom implementation custom development gasoline connection with it.
Internal systems of the company and this is where we're doing our magic there.
I think this is a very special part of the digital transformation I will keep on investing on that specific front I think in the case of where America is slightly different I mean, they're we enter into more the cycle of conversion.
Of leap into real sales.
That's something that is not.
The same the same thing.
Our M life, how you how you monetize the leads that youre producing through you know.
The traditional internet Internet marketing stuff, we that we have a specific solution for them. We have a specific solution that can work for our customers that can accelerate that conversion.
And it's a specific play that we have not seen in many many different platforms on how to you know.
Make more efficient that conversion from.
Digital marketing into real sales.
So the short answer it yet we will keep on investing in more software as a service platforms, but always with a mine.
With that concept in mind that in each of them, we need to develop many.
Many new things to be able to connect those platforms to the current.
To the corrib.
Stack of technology that they have.
Thank you very much Brian. The next question comes from Maggie Nolan from William Blair. Maggie. Please go ahead.
Thank you great to see you guys.
Hi, Michael.
So youre expecting several years of elevated growth is this consistent across your different geographic exposures or is there a particular geography that you think can be an incremental growth driver.
I don't know if you want to take it.
First hey, Maggie how are you.
So I think that app.
It's a very interesting question I mean, we are exploring all the ways New places to go App.
I mentioned in the earnings call. We have opened many emphasis in Latin America that we are also making a huge expansion in U K, we are exploring other.
Other places in in in Europe in Spain, and in Asia, I think that that is something that is going to keep go in and in terms of the hiring I mean, we have app in 2200, new hires and this quarter. There are 19 that that means a lot for us so I think that opening year.
Status is around the globe of course, we love our Latin American based talent, but we are expanding in every places that we think that is the correct talent. We are below it is everywhere these days anything.
And part of that.
Arthur.
And May I.
E.
The growth of the cabin has been pretty much across.
Every region.
And.
When you see for example, Latin America like no.
Or a growing organically in a pretty solid manner. While also euro also.
United States. So it's all over the place it's across pretty much all geographies.
Together with what Bob was saying with it keep on exploring other destination.
To grow our talent.
I would say that this is like a pretty.
Like a pretty good picture of how we are thinking is.
<unk> come in growth coming or what we're living growth coming from pretty much everywhere and reacting and growing our talent base pretty much everywhere and expanding.
Everywhere, we can yeah.
When you look at the numbers.
You know the size of our business.
In Europe, it's still very small.
Sides of our business in Latin America.
No. It's been growing it is still small right. So the opportunity is massive for both regions. The U S of course as you know it's pretty much limitless, so huge opportunity there and finally Asia you know, we are losing about $5 $6 million.
Right now per quarter in Asia, and again, that's another opportunity right I mean, we don't need to forget I mean, we're still not specifically.
Specifically pursuing dark, but you know all of us and we already have them in front of me that $20 million to $25 million per year run rate.
And as we become more global we were for global companies.
And we have global talent development centers that needs to opportunities in other regions than the typical regions that we have been targeting so again massive overall in global market opportunity and we do see growth coming from all regions.
Thank you and then.
Have there been any changes to your promotion our compensation cycles or are those additional levers that you would have to control attrition and what gives you confidence that attrition has stabilized.
Okay.
Okay.
Sorry, Ann Martinez told me again, I think that yes, we haven't been doing different approach in terms of benefits and compensation. I mean, we are calling the total compensation line and below then we're talking about bathroom. These days that has to do not only with with al.
Long term incentive of course with with a compensation package within your benefit things that our employees are eager to to understand and to and asking for some different things. These days as you know.
After this pandemic and then we had been at.
With it with some stress and some burn out in some cases and in specific countries. So we hadn't been able to to make partnerships with different platforms with different candidates.
And especially <unk> and we have put in place a program with psychologists and magic.
And they said can and everything that has to do with the keep our mental and physical health for our goal of ours and trial. So I think all these things have to do that a glove and it's not only taking care of the people that is work in Anglo Venice bloggers also and we're taking care of their family and we.
Looking at that and we are looking after that so I think it is it is interesting that is our employee brand dry that is completely and I think way beyond up others competitors in terms of what we can achieve and what we can offer as a culture and that means at th differentiation between other companies.
I think in probably only attacking this with with a compensation. We are attacking this with the different candidates at 360 plan for us.
Thank you.
Okay. Thank you very much Maggie next let's go to Arturo Langa from Eatontown Arturo.
Good evening, Thank you for the presentation congrats.
Congratulations they're very useful but I understand your story.
I just wanted to.
I understand.
More on this attrition point.
I mean, it's coming a lot from Argentina, and maybe that has to do with the fact that some developers have access to a freelance market and therefore are more attractive.
Sort of exchange rate and.
The regulator one in Argentina, how much of that factor would you say is contributing to a higher attrition in Argentina, and maybe if you can remind us what percentage of total head count is currently.
Or Argentina currently represent.
If you can increase.
Increase or Mike or Google.
That's gonna be great. If I got your question right.
Clearly in Argentina by.
Okay.
Yes.
Okay.
That's okay.
Good.
That type of competition are you know people are getting you know money abroad or people getting paid increased though I mean, we have to live with that.
We have many other things that we can do Asa Asa as a company to fight back or to our tool to help.
And you know what happens is that at the end of the day. When you look at who we're losing people to we lose people typically two startups typically do some small product companies and those are the ones that are using.
In that market.
More recently.
We've seen.
A lot of that happening eventually.
I cannot last forever.
It's in a way from generic competition.
And eventually to fix but that's that's where you know where where people where we're losing people through and because of that type of market. Argentina. I mean again, we are about 25% of our employees down in Argentina on attrition is you know, it's driven by Argentina, It's the highest number.
<unk> in the industry.
As you pointed out it is related to the way some companies are compensating people and that's something that you know we cannot do basically.
But that's pretty much gone through I'm pleased to now still keep in mind that as I mentioned before we are seen attrition stabilizing when we look at the 300 per month, we are seeing that number stabilizing or even coming slightly down.
You know keep in mind that we're coming from an extremely low number in Q2 last year, you know when pandemic started in or the very beginning there was pretty much no attrition people, we're not changing jobs than just for like a spike and then we started to see a more stable number when we look at the month the monthly number right.
That's where we've seen that attrition cross sterilized and makes us feel comfortable about our guidance.
We need to see how the market continues to evolve going forward.
I don't know if you have another question but.
Let's move on to the next analyst or entertain from Jefferies.
Please go ahead.
Okay.
Okay.
When they're smaller.
Thank you for taking my question.
I would like to start a question about the the elevated growth rate.
Can you talk about it maybe from the perspective of.
The shape of the pyramid at this point.
And how that's impacting or is there a lot more junior hires at this point and there wasn't earlier question about the promotional cycles. So when youre growing at 20% head count pre pandemic.
There may be at a two three year cycle for promotions when youre growing at 50%.
Is the promotional cycle elevated how are the teams adjusting.
All that being structured and managed.
I mean why why.
Why we are.
Growing faster the promotion the promotion cycle should change I mean, it doesn't make it a rough sense now in terms of.
Because of how fast we're growing but yet because that we need to move faster because of the market and how hard is the market promotion promotional cycles in itself has not changed and we won't change. It now we are.
Having like a more aggressive way to understand the specific cases angle more into each case faster and that's how we are trying to tackle the situation, where we're getting now.
As always being cautious about the budget, we have the amount of money, we have to be able to fix those cases.
But we're not changing because of the growth speed.
The growth speed, the the cycles and the second part of your question or the first one was Jeremy the parent and the parent is still looking very.
Pretty much the same I mean, most of the hires that we do.
It has to do with people that hard from the outside with people that have that knowledge. Both on how we are putting together a lot of younger people without that specific experience with initiatives like what we are doing with with.
With digital house.
Jointly with Mercado Libre, our program, which is the certified tech developer, while those things are bringing people into us from other places in the market to what we're doing today and to the development of the world and we are hiring them and we're training them and those those guy.
Are starting to feel our parts.
But in essence.
I'd say with this 50% growth or more than 50%, 65% growth year over year.
We are not seeing a massive shape on what we are hiring and how we are hiring.
And we didn't change the mix of young talent as opposed to more lateral hire them more already trained hiring.
So we're seeing that that mix pretty much the same.
But but but what we are doing it and we're laying down.
With our with all the airports, we are having to train women to train young people to retrain people and repurpose people from other you know.
Jobs into this new technology.
Technology area.
We are settling the foundation to be able to grow much faster in the region than before because we have all those tools to help us to overcome the shortage situation. So.
So this is something that we're very proud of them. We talk a lot about that so that's why I think it deserves a special mention on this chapter and.
And specifically to address your concern around what you just mentioned.
Can I can I add.
On top of that heightened Linda.
So in there.
Several years ago, we started changing or switching our approach in terms of how we hire talent in the company whether in the past we had like a very immediate approach given the opportunity we went after the talent.
We now switching to a more proactive.
Approach, where we actually forecast or growth are the technologies that trends and we hire talented adviser gives us the opportunity to properly train people so when they get into their pods.
Started delivering.
Quality will not suffer I think that change.
Allowed us to support the growth, we're seeing today, while maintaining quality.
And another thing you mentioned with regards to the cadence of the growth in promotions for their people.
That might have changed positively, but not because of the market conditions we started.
Several years ago with is something that we call my light growth, where we transferred we created a platforms. We on boarded what we call the work ecosystem for the area for the type of technologies.
And people can actually get a grip on their career and that's very important so we translated.
The career by we gave them our own blowers tools to accelerate their development and that has been working very very good for us.
So I think.
This slight increase we are seeing their response to that not actually the market conditions.
That's helpful and administer a related follow up this is maybe more for Patricia.
Can you maybe talk a little bit about how one of the things that loss.
As people look for years.
Our long tenured career path and opportunity, which you guys clearly provide here.
Can you also talk about the intangible part of this which is.
From a cultural perspective or the culture that go onto is known for.
You kind of build out more distributed offices as you build up more smaller offices.
And then the fact that you're again, you're hiring quite quickly.
How are you kind of view that through the organization because of.
We see people with compensation to some extent, but at the same time.
Youre also trying to make sure that the culture stays intact, which is also Germany is an important part of keeping the attrition rate.
Well. Thank you for your question I think that it is really interesting to understand that right now what what.
What was the base of global and that we're a digital native company is really and health pain in order to how we are attracting that talent when because we have had for a digital framework that we use this agile pod. So from debate that very first beginning of this I mean, we have been making diverse.
<unk> and then this has been in that we have made from different countries different places of the world and diversity is what to give our culture there that.
Sense of innovation in Japan, and ownership that is in the DNA of our culture and so I think that what is important to understand now is that that culture is in direct of course that we have we have been able to redesign their onboarding process for for many Glover last year, we have.
Higher many many new bloggers to their companies. So how are you on track of that and how you retain them or are you sustain them. So we are offering and unique path in terms of carrier. We don't work in silos in global and you can choose the carrier and you can change in the middle you can change from location I mean so.
Does that mean different kind of things that has to do with the agility of this company and where the possibilities that has being a digital native company. Okay.
According to the office is what we are proposing these days is we have open offices right. So and we are encouraging people to to go to their offices for purpose. So for this serendipity sessions for and there are things that well when you want to share ideas and some places as you know.
Having a coffee sometimes it is better than probably having a soon.
But we are very they're very respectful about what each blogger in their parts.
Or are they belong want to decide to do so today.
What we are proposing is that inside the pod and the autonomy that we give to those spot decide what they want to do is they want to go to an office.
Twice a week one per week or I don't know one per month I mean, this has to do with it with the nature of the project that they are doing and of course the needs of the clients are a net promoter score has been and the highest than ever in globe. In this last quarter. So I think that that means that our clients are really happy about what we are doing.
And we are over the range of the industry that is around 30 40 years and we are far away from that were around six days. So I think that that means a lot also for our culture and I think that today, what we are a very like serious about is about taking care of their people and in turn.
As I mentioned before in this holistic way and this thing about offering career the possibility to work with the top clients of their war I mean, North America has tremendous growth this last quarter and we have incredible new clients with the new new.
Possibilities there to be creative and you can do that from any place in the world of course, we have offices and we are still building and believe that offices are places that we want to keep and we want to probably to really signed and that is what we are doing in some places.
And more of these kind of chill out or workplace, where creativity is is a place.
Where you can find them in the office more easily so I think that and I am answering your question is it has to do with keeping our culture of agility of being kind not only with without that with our peers also with yourself I mean, I think that has to do with ink that we are have been our values.
For the last 16 17 years.
Okay. Thank you very much sir in there. Thank you Pat.
The next question comes from the line of Orange Armani from Piper Sandler Please.
Please go ahead.
Hey, thanks, Thanks, Amit.
Martin I just wanted to go back to the conversation we had several years back I think versus 2014 and 15 in USA.
Kind of limiting our growth because.
Hire a bunch of people and get them trained and keep their culture was difficult, but obviously you know the company has scale you have an alcohol geolocation.
Hiring at a pace that voters.
Far greater than what it was six or seven years back.
And you know.
This would add back up how are you able to sort of maintain that.
In some sense, it's kind of.
They're hanging out of law of large numbers as you grow bigger your growth rate comes down but your growth rate is accelerating azure grown much bigger in size.
However, it was a record those books and then.
And I'll make sure.
And our organization of thing stay intact and the quantity.
Okay.
Thank you for the question I will mention two things.
The third.
The use of technology to maintain the culture.
Costar me up on all the tools that we use.
The idea of changing for example, the feedback process.
111, gigawatt, a year or two.
That can be done at any moment I requested at any moment.
The notion of that any.
<unk> or.
Or any act within the company.
That is connected to our value can be celebrated can be and.
Understood.
<unk> seen by others.
That technology that we're using is helping us and helped us a lot during the pandemic to be able to keep our teams connected.
But that connected among them.
Connected in terms of culture connected with a core of our culture.
So the use of technology.
I have been saying in many many.
My earnings calls.
I think I have already like.
Okay.
The 30th.
32.
37 years.
So about 30 earnings call.
And pretty much every call I mentioned, they are using technology to augment your culture using technology to maintain your culture is the essence of this business.
Of course, it's not that easy to understand.
But when you keep on growing and you see that that culture is being maintained.
<unk> is extremely important to understand why.
So that's one thing how we use technology to connect and maintain our culture and the second thing I would say is that concept of the boats that BARDA was explained a few minutes ago.
Having those path that it has a lot of degrees of autonomy by the way just.
I announced today.
That we will give them the autonomy to figure out which is the best of the best idea to.
Connect better with their customers and to serve better our customers and to decide from where they need to work if they can combined office.
<unk>.
And home or they can do everything from home or they can do everything from the office. They will have the power to decide where to work for them. So this is just an example of autonomy, we believe and I believe that.
If we keep on pushing the autonomy of those balls and we keep on insistent on the concept that those boats are on the top of this organization.
And that we are here all of the Red we're here to serve those parts to be successful.
Then it's much easier to maintain is much easier to expand the organization. When that's the concept when there are just a few layers.
Between you know that the top on the bottom of that.
And ill.
Our parts, which are on the top connecting with our customers.
And just.
Just a few layers and layers there is extremely important to understand that this is.
A reason why you can keep on scaling this organization beyond the traditional growth rate that we had before.
I don't know I can keep on going with this question for the next five years, but the complement to complement that on the physical side of things.
We also took care of approximately two years ago now a little bit over that we'll launch our TD six initiative the talent development centers.
These are geo locations, where one of the first things we took care of is having proper technical representation.
So approximately 40% of the head count from studios for the Studios management now has been the centralized via relocations naming and getting the right people. So we have technical and bus others that have been longtime globus, making sure.
That every office feels like global so that our components are are.
Our digital initiatives.
Perfect. Thank you very much and.
The first of the year.
Thank you. Thank you Scott.
Alright, perfect. Thank you very much everyone and unfortunately, that's all the time, we have today for the Q&A again, thanks, everyone for joining I'll now pass the mic to Martin for any closing comments Martin. Please go ahead.
Thank you very much everyone for coming here for being here today.
We're much more than what we have been in past earnings calls we have made a huge improvement from congratulations to all of us and we have been working on this huge improvements in how these earnings call look like I hope you enjoy it otherwise what wasn't going to be what I need to come back to that that's one and ourselves.
Enjoy it looking forward to see you next quarter.
Thank you as always for your support and understanding for covering App. They way we are.
Doing youre doing thank you so much bye bye. Thank you.
Okay.
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