Q4 2021 Grid Dynamics Holdings Inc Earnings Call
[music].
Ladies and gentlemen, thank you for your patience.
Welcome to grid dynamics fourth quarter, and full year 2021 earnings call.
At this time all participants are in a listen only mode.
A question and answer session will follow the presentation.
Please note that this is being recorded.
I will now turn it over to our host.
Binge Yang head of Investor Relations. Thank you you may begin.
Good afternoon, welcome to greet dynamics fourth quarter 2021 earnings conference call.
Before we begin let me remind everyone that today's discussion will contain forward looking statements.
So our car and Doug gumption expectations and beliefs.
Our first quarter of 2022 financial guidance the growth of a great dynamic business objectives.
Objectives and business strategy as well as other forward looking statements.
You can refer to the disclosure at the end of the company's earnings press release, and the form 8-K filed with the security and Exchange Commission today.
For information about forward looking statements that will be made on this call.
All statements made today reflect our current expectations only and we undertake no obligation to update any of them to reflect the events that will occur after this call.
You can learn more about the specific risk factors that could cause our actual results could differ materially from today's discussion in the risk factors section of the company's Form 10-Q filed on November 4th 2021 .
Andy in subsequent periodic reports that the company filed with the FCC.
During this call, we'll discuss certain non-GAAP measures of our performance.
GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the earnings press release, and 8-K filed a waste the S E C.
This call is also available via webcast.
You can find all the information I have just described in the Investor Relations section of Great dynamics website.
Joining us today on the call our CEO lanner delicious and Seattle are near their rattler.
Following their prepared remarks, we will open the call to your questions.
With that let me turn the call over to Leonard.
Thank you Ben.
Good afternoon, everyone and thank you for joining today.
And under any other circumstances.
This would be a phenomenal discussion.
Hey, Bob how we perform.
In Q4.
And how successful <unk> 2020 one year.
Well we're agreed on it.
But it's not that important there's more.
We are.
And ward.
And what I'm Gonna do like no I'm going to tell you how green dynamics.
Operator.
In this condition.
Great.
How do we deal with all the people and how we can provide uninterrupted work broadcom.
Before I do that.
Oh, you'll walk you through all of this result, while yard and give you. An example of how we perform.
And then I come back.
Really big questions.
Great to hear when you're dealing in a situation, where we are right now.
And then.
I will take questions together with them.
On that note.
I want to provide you with business and financial performance for the fourth quarter.
Full year, 'twenty, 'twenty, one and provide outlook for the coming Q1 quarter of 2022.
As you have seen from our solid fourth quarter results published this afternoon.
I'm very pleased to report another record quarter revenue in our history.
And this marks the fourth consecutive quarter of reporting record revenue.
Before I get into the highlights of Q1.
I wanted to make some comments on our 2021 accomplishment.
It's been an important and transformational year for the company.
And over $200 million.
Annual revenue will almost double the revenue of last year.
Organic business, which grew more than 50% over the previous year.
It's now a quarterly run rate over two times.
Comparison to June 'twenty one.
Which was your independent.
We added 22, new logos in the ear explorer Oh quite New addition over the previous year instead of a positive backdrop.
Oh partnership announcements well providers, such as Google and Amazon have elevated our status.
Our two acquisitions made in December 'twenty, 'twenty and May 'twenty, 'twenty, one haven't jumped out capability and offering.
Great Guy at all words, most public and private.
Resulting in a clean capital structure and successfully executed an equity offering but not only to raise cash for the company, but also enhance liquidity to our shareholders.
Yeah.
She didn't everyones expectation.
And such a high level of execution.
Which is a testament to our strong fundamentals.
As well as differentiation and more importantly, the hard work and dedication.
People.
Very small.
Jim.
Crosses the globe.
Their hard work and we'd like to thank every one of them with the efforts and making 2021 that's remarkable.
A remarkable year.
Now I always come back because of the war.
Yeah.
How it relates to our business.
As you all know on February 24th Russia.
Launched the invasion.
Against Ukraine.
The situation is on board.
And there will be demand, we have been monitoring very closely but not just monitoring.
Participating in.
In the lives of our people to take out the hard way.
We have activated our business continuity plan or BCP.
That defines that shouldn't be taken by the company on a different level of risk of the business.
Yeah.
Sadly, we have kicked off our plan.
Going back to 2014.
And because of our experience.
Can you update it.
The main focus is on the safety of our employees.
And continued at a world class business.
As war.
<unk>.
Our top priority has been to ensure the safety of all our employees.
And that as well.
I'm very happy to say.
The majority of our employees and Ukraine are safe and accounted for.
Well, the new Queen wherever else with 1400 employees.
Across the country.
And we were addressing the needs and the multiple ways.
To begin.
We have offered to all employees the choice to work out from their location.
And we are helping in any variety of the ways that includes transportation.
Shelter food.
Medical.
Some of them once they have chosen to stay in their locations.
And they've been shelter in place with their families.
Oh, they have chosen to move toward the western part of Ukraine.
Well go on others.
As of today.
Me George Yellow employees have really kicked in.
Into the western part of Ukraine and their families.
On the way.
Safety all neighboring countries.
Additionally, we continue.
Accelerate too.
Bringing the remaining of four employees and their families to safety at the situations permit.
We also added delivery capacity to minimize disruption to our client budge.
On this we have been working on multiple fronts.
Sure.
We're stepping up our hiring process across all of the geographic locations.
<unk> Mexico.
Poland mogul, Serbia and Armenia.
Secondly, we.
She brings significant milestone with our substantial lever operations in India.
And now the Green show read the name is India, why a strategic partnership with Sigma Infotech.
We're excited by this opportunity will present jaws, the best path for the entry and growth in India.
We anticipate to have more partnerships going forward.
Oh first set of billable employees in India.
Very short period of time.
Org chart.
To grow our presence in India.
At least 500 or more people cut back.
And I stress.
Focus on the high talent.
And the goodwill in partnership with our Great people, who currently work in India.
And the third one I wanted to highlight how our employees have done well beyond the hold up.
Across all geographies.
All employees have shown tremendous team spirit.
And have stepped up by taking additional responsibility with one brush.
They work day and night.
They step up to me.
Make sure that clients are satisfied with the basketball capability and the percentage.
Oh Oh.
Business rollout is growing daily.
And it is playing an important role.
And it's a testament to our culture and highlights how resilient.
And how come Roderick.
Juniors are and how they care about each other.
I also believe.
Oh, sorry them to lever and DNA positions us well.
Well.
And the difficult navigation.
What are the crane.
Situation.
It was founded the company will ensure client project in the mainstream.
To be not concentrated in any geographic location.
Or a smaller company and disruptions and client work due to concentration of resources would have had a major impact on their business.
So very dynamic work with Steuben.
And we are set to provide the best possible support to their clients.
Not worth it.
The impact is hundreds of people not thousands not pencil.
Given that we are or 12 countries.
And 15 time zones.
Access to tap into large labor pools.
And bottom line.
We're a more nimble and can address the capacity issues as quickly as possible.
It is a very difficult time.
I just agree dynamics, but it's the tail.
Could the entire humanity in the world.
And to my delight.
Our customers have proven to be outstanding partners.
They have shown tremendous support to the company and our employees.
We're engaged with all our customers on a daily basis and have not seen any loss of customers. So far.
On the opposite way.
Our customers are stepping up.
And there are helping us with logistics.
Those patients they're committed.
And then in addition to our business relationship they are happy to participate and contribute.
The Cherokee Cherokee is established by grid than it is.
Again.
It's a testament of years of relationships and our track record of being a reliable.
Intelligence and committed.
Now come into the fourth quarter.
They finished the year strongly with revenue of $66 million, representing 120% year over year growth.
Musically exceeding our expectation when we shared with you last.
Sure.
What was the end of the fourth quarter with adjusted EBITDA was $11 $6 million representing growth of one three acts on the same period in the play.
On a sequential basis, our revenue grew 15%.
Mark It is one of the strongest fourth quarter and drove a sequential growth rate.
As you know from our previous commentary around seasonality.
Fourth quarter grows a bit more modest than over third nevertheless.
The quarter has performed better than expected.
We witnessed strong demand across all industries.
All our verticals and.
And we've seen the go through our organic business.
As well.
As with acquisitions.
The efforts, we made on the supply chain during 2021 .
It's all going to be significantly higher billable headcount.
Depending the trends was the strong customer interest in engaging our services around digital engineering.
As these programs take center stage priority across the enterprise work.
In the fourth quarter.
Several positive trends and I want to assure yoga.
Please understand that under current circumstances.
Some of the comments, maybe not as important.
As they have seen just a few weeks ago.
But nevertheless, I want to point out.
What.
The main trend across all the segments continue to grow and there's a healthy demand all over.
During the fourth quarter, all large technology customer continued to aggressively dedicate their work.
It would read their names.
Retail has another strong sequential quarter. It was the largest vertical in Q.
We saw the strength or all former Goldman class along with e-commerce friendly.
Apparel retailers.
On these she'd be G and manufacturing with the GM to lever jokes produced in digital commerce.
Oh, that's moving into adjacent areas of order fulfillment and supply chain list, but you can choose from she'd be Jim administration clients, including some of the top players for sure.
And with that within other verticals the demand was largely driven within healthcare and pharmaceutical clients.
We've seen a huge demand for challenge.
The man for skill sets that you need to give a bust.
That said on the supply side or some scale and talent acquisitions as the big you know 2021 has significantly paid off.
Luxury reflected by our ability to convert a number of engineers to billable position and resolve the 15% sequential growth in revenues.
I mean tortured path.
Made a solid progress as we partner with the top universe.
From 'twenty to 'twenty, one with double number of internships.
Our 2020.
Expect to continue to grow.
Okay.
Well the moment.
Our new logo addition.
The organic business continued to be robust.
And this quarter, we added five new logos, bringing our total to 22 additions for the full year as I mentioned to you before.
And that's just on the organic side compared with 16 2020.
Of these five new logos to where in that each of your retail one was in health care, one media and wanted at Bell wound care.
All products are young kids illegal or pod model.
Has been increasingly accepted.
Bottled larger clients.
These strengths.
Carefully drove all building capabilities of larger teams and the multiple offshore of the message.
I'm happy to import the June Q4.
Fortune 500 pharma company, we're able to pick up a dedicated offshore location and the central Bachelors and there you have a data science and artificial intelligence.
We expect this trend in favor of hub to continuous clients across industry verticals increasingly see the benefit.
It was about the action des.
Acquisition revenue in the quarter was higher than expected.
That's both vaccine tested weakness elevated demand across the board.
I'm happy to report an integration with both companies are playing out as expected.
And at this point I can report that we have fully completed acquisition and integration of bags and bags is completely.
A green dynamics in every facet of the business.
We will do so with passage.
A few quarters.
John as far as expense.
As you May recall, we're all rolled out our strategy around expanding our sales force in early 2021 and in Q4, we made several strategic sales hires across the United States.
Before central around hiring a senior sales people, who can leverage their experience and expertise with their industry connections in.
In addition to strengthening our geographic coverage, we have invested in bringing the people with the domain knowledge insights broadly called in.
Insurance Fintech and pharma.
I'm excited to see these senior people on board.
Forward to continue growing our business in 2022.
R&D expense.
During the Q4.
Same show growth and then a number of major initiatives. Some big area of focus include ramping up our accelerating their offering.
They are pre salespeople ordering capabilities and scaling our consulting practices.
To make sure we meet all of that growing demand.
All right.
As we look into 2022 N b M. When housing all capability is really more platform solutions, which will result in winning larger deals for the company.
During the quarter with name has delivered some notable budgets.
Number one.
A global Technology company would build a complex system to predict device for all you directly on the company's mission critical production lines.
This system into I E G data with the use of streaming technology and.
Analyze the data with machine learning modeling and.
Hawaii decisions in real time.
This leads to a further reduction of production maintenance cost for this last month.
Craig the assistant Japan Junior go overtime and being rolled out on most of their product line.
Number two.
And the global CPG brand, we help to integrate their systems with a third party distribution center provider.
Thereby significantly increasing their retail supply chain capacity in North America.
Oh, one will lead to several benefits that includes include the increase in revenues and grow customer satisfaction and prevention of stockpiled, especially during peak demand of the house.
Number three.
And the large U S luxury retailer green dynamics develop and deliver the new Coty age.
Mobile application.
That customer segment.
Historically had not adopted digital shop.
And why only application experience recommendation and personalization focus which increases digital engagement and revenue on their journey to become a more sleep problem right.
With luxury care.
Continues to make investments in this strategic initiative is just foundational in the company's small don't stretch.
And last but not least example.
Well one of the tragic solution minutes at true we apply data analytics technology.
Has the data management game, but you'll see them air traffic control systems.
By their clients.
This system to collect information.
The wide range of Iot sensors deployed around cities and on vehicle.
We then implement several business cases, whether it's a building descriptive analytics and hence you are well.
Features enabled by our solution.
Because one of their competitive advantages.
And allowed this customer clear track from Oklahoma.
Before John John Neale.
I want to remind you again that you are.
Indicating our Q&A session.
Well no I would be happy to give you as much color as we can provide.
To demonstrate how incredibly resilient.
Green dynamics remains to be in the industry and.
And how incredibly proud I am.
Well my employees, who work day and night.
Under very difficult circumstances.
Oh my.
Clients or the most understand nimble and a more generous partners.
Yeah, I would like to hear more from our investors as their contribution to six O reason atmos.
Ukraine as well.
Thank you and now I will turn the call to our new who will discuss Q4 results in more detail.
Yeah.
Thanks, Linda and good afternoon, everyone.
Our fourth quarter revenue of $66 5 million exceeded our guidance range of 58 to 59 million and was up 14, 9% on a sequential basis.
Here in 'twenty.
One 9% on a year over year basis.
Excluding revenues from our expectations of docs and taxes.
Which contributed $15 2 million in the quarter.
And was higher than our guidance.
$12 5 million our.
Our organic revenue of $51 3 million was up 16, 4% sequentially and 76% on a year over year basis, and exceeded our guidance of $45 5 million to $46 $5 million.
The better than expected revenue in the quarter was driven by strong demand.
For our services across industry verticals.
During the fourth quarter retail.
Our largest vertical representing 32, 9% number revenues grew 19, 7% on a sequential basis.
<unk> hundred 82% on a year over year basis the.
The strong sequential and year over year growth was driven by strength across our customer base with e-commerce friendly brick and motor and home improvement retailers continue focusing on digital transformation initiative.
Our TMT vertical was our second largest vertical and represented 29, 4% of our fourth quarter extras and grew 11, 2% on a sequential basis and 83, 3% on a year over year basis.
Growth in the quarter largely came from some of our large TMT customers will continue to ramp their offshore operations with us.
Here are the details of the revenue mix some other verticals.
Our CPG and manufacturing represented 25 person number of revenue in the fourth quarter and grew 21, 6% on a sequential basis and 120% on a year over year basis.
The growth during the quarter, primarily came from large global brands, along with new customers.
Finance represented seven 2% of revenue and declined eight 5% on a sequential basis.
But was up 62, 5% on a year over year basis.
The decline in the financial vertical was actually driven.
By the declines at some of our insurance and banking clients.
And finally, the other segment represented 10% of our fourth quarter revenue and was up 18, 8% on a sequential basis.
Within this vertical.
We witnessed continued ramp.
And some of our recent client wins in the healthcare space.
We exited the fourth quarter with a total head count at 3274 up from 2884 employees in the third quarter of 2021 and up from 1894 in the fourth quarter of 2020.
The sequential increase of 390 employees or 13, 5% was largely due to increase in engineering headcount from improving demand.
The increase from 2020 was largely due to a combination of improving demand, resulting in head count increase combined with our acquisitions of tacit knowledge.
At the end of the fourth quarter of 2021, our total U S headcount was 324 or 10% of our company's total head count. This was similar to the 10 person in the third quarter and down from 14% in a year over quarter.
The year over year decline as a percentage of the total head count was largely driven by greater off shoring by our clients.
Our non U S head count, which we sometimes refer to as offshore located in central and Eastern Europe , UK, Netherlands, and Mexico locations was 2950 or 90%.
In the fourth quarter revenues from our top five and top 10 customers were 42% and 57, 7% respectively.
During the same period, a year ago, our top five and top 10 customer concentration was $53 nine and 73, 7% respectively. The.
The diversification across our top five and top 10 were driven by a combination of factors that included new logo ramp industry diversification and our acquisitions.
During the fourth quarter, we had a total of 221 customers with 58 coming from our organic business and the remaining 163 coming from our test it in depth acquisitions.
Our organic business customers counts are 58 was up from 55 in the third quarter of 2021 and up from 43 in the fourth quarter of 2020.
As a reminder, we count the revenue generating customers in the corner and do not include customers who were enacted during the quarter.
Moving to the income statement, our GAAP gross margin during the quarter was $27 3 million or 41, 1% up from $25 3 million.
Or 40 T. Six question in the third quarter of 2021, and up from $12.3 million or 47% in the year ago quarter.
On a sequential basis, the roughly 300 bps decline in the gross margin as a percentage of revenues was from a combination of factors that included fewer working days from the holiday season.
And increased hiring during the quarter.
On a non-GAAP basis, our gross margin was $27 $6 million or 41, 4% change.
Changed from $25 $4 million or $43 nine question in the third quarter of 2021, and up from $12 $4 million or 41% in a year ago quarter.
The sequential decrease in non-GAAP gross margin as a percentage was driven by the same factors highlighted earlier.
non-GAAP EBITDA during the fourth quarter that excluded stock based compensation depreciation and amortization.
Action and other related.
Cost was $11 6 million or 17, 4% down from $12 5 million or 21, 6% in the third quarter of 2021 and up from $4 $1 million or 13, 7% in the year ago quarter.
Sequential decrease in EBITDA as a percentage of revenue was largely due to a combination of a decline in gross margin percentage highlighted earlier.
Higher operating expenses initially in the year ago quarter, our business was recovering from the pandemic related headwinds.
And low levels of EBITDA, both in terms of dollars as well as a percentage.
Our GAAP net loss in the fourth quarter totaled a loss of $3 $6 million or a Lhasa license based on a share count of $65 7 million shares.
Compared to the third quarter loss of.
$5 million or a loss of one cents per share based on $62 6 million shares and a loss of $4 7 million.
Or a loss of 10 cents per share based on $49 7 million shares in the year ago quarter.
The sequential increase in GAAP net loss.
It was largely due to higher stock based compensation that included annual performance share Award on.
On a year over year basis, the decrease in GAAP net loss was a combination of higher levels of revenue offset by higher levels of stock based compensation and operating expenses.
On a non-GAAP basis in the fourth quarter. Our non-GAAP net income was $7 1 million or 10 cents per share based on 71 7 million diluted shares compared to the.
Third quarter non-GAAP net income of $7 9 million or 11 cents per diluted share based on $69 5 million diluted shares and $2 $2 million or <unk> <unk> per diluted share based on 54 9 million diluted shares in the year ago quarter.
Key reasons for the decline in the non-GAAP net income on a sequential basis was higher operating expenses.
The increase in non-GAAP net income in comparison to the year ago quarter was largely driven from higher levels of revenue Harsha.
Partially offset by higher operating expenses.
On December 31, 2021, our cash and cash equivalents totaled $144 million.
$113 million on December 31, 2020, the key reason for the increase was a combination of redemption of public and private warrants capital raise from primary offering of equity shares and higher cash generation in the business.
Now coming to the guidance.
For the first quarter of.
2022, we expect revenues to be in the range of 55 million to $60 million.
We expect our non-GAAP EBITDA in the first quarter to be in the range of 8% to 12 person or $4 4 million to $7 $2 million.
For Q1, 2022, we expect our basic share count to be in the range of $69 million to $70 million.
And our diluted share count to be in the way of just 70 273 million.
That concludes my prepared remarks, operator, we are ready to take questions.
Thank you and before we begin our question and answer session I'm going to turn the floor back over to Mr. Zhang for some additional comments. Thank you.
Thank you operator.
Before we jump to the Q&A session I would like to show you a short video clip about how.
Our employees and their families currently in Ukraine.
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Okay.
Thank you operator, we are ready for Q&A session.
Thank you Ann are a reminder to the audience to ask a question on the phone press Star One. Our first question comes from my own Tandon with Needham. Please go ahead.
Thank you good evening first and foremost our Leonard is good to hear that your employees are staying safe.
But he was a very tragic situation. So that's very comforting to here and also congrats on the quarter and a strong pretty strict fiscal 'twenty one.
I wanted to start by just asking you in terms of the capacity you know when you talked about being able to scale. Other markets could you talk about how much capacity you have sort of extra capacity in some of the other regions that are able to maybe take on the extra workload and then as you think about expanding into other hubs.
Well that'd be more of an organic effort or will that be maybe a combination of M&A and organic.
So you're wearing.
So I.
I would say there are several parts of this.
The answer to this question, so first and foremost.
We are scaling organizations both in central Europe .
In Latin America are getting.
That has been happening even before the war.
Just accelerated the approaches as a result of the BCP.
The scaling of the operation in India comes first.
Their ships.
We have been in discussion with several companies.
Again.
M&A from beauty perspective.
Adverse events were exploring them, that's where you have heard about the announcement we will.
We'll continue to do so.
While in Europe , and in Latin America, it's a combination of relocating pupil and organic growth.
In India is going to be growing quite rapidly by leveraging the partnership with <unk>.
Got it that's helpful. And then maybe Aneel I don't know if you could breakdown the <unk> outlook in terms of your expectation for March and is it reasonable to think of March maybe the run rate there as maybe the near term monthly run rate for at least the second quarter.
Until the capacity builds up and then you're able to scale and some of the other regions to be able to meet demand.
Sure. Thanks for your question Bank, so look beyond.
The first quarter, obviously, we've not given guidance, but I'll give you a couple of points too.
Get the perspective.
Cornered the guidance that we gave out.
Both on the revenue and EBITDA trends.
Is with the full month of January and February and obviously, we've made some expectations on March <unk>.
On the EBITDA front.
Our EBITDA would have been much stronger, but as you know we are spending.
Certain amounts of money as we move people around and we just don't know how much of it will be a one time charge versus how much of it will be in our opinion.
As we go into the course of the year I can just leave a couple of things maybe lennar can give a little bit more color. The demand environment is solid the capacities improving our operational.
Operational metrics are improving and Leonard maybe you could.
Yeah.
Mentioned.
We've been quite conservative in Q1.
Not necessarily because of all the capacity constraints, but because of the costs associated with older logistics government sorted out what is going to be one time charge. We will continue to do obviously there are costs associated with the continued scaling of the organizations.
At this point.
I really wanted to appreciate the fact.
Ben.
Right.
Phil gratitude to the Oh claims because they are very patient.
New work very diligently with us to continue to see the accelerated.
Utilization and efficiency of our organizations not only in Europe , but around the globe.
Thank you Leonard I appreciate you taking my questions.
Thank you.
Thank you.
And our next question will be coming from Josh Ziegler with Cantor Fitzgerald. Please go ahead, and Amit yourself and your camera. Thank you.
Yes, hi, Thank you for taking my question.
We just want to reiterate our thoughts are with your effected employees today.
And for the past month.
My first question is following along that line of thought is there been any disruption in your ability to actually avs impact employees, both in Ukraine, as well as in Russia as well.
Okay.
Oh, Okay premiums.
Not at this point again.
The BCP pen planned planning.
In advance of the events.
The situation as you know in the region has been mounting for some time.
It will provide us sufficient cash.
Reserves.
And both of those countries.
Understood.
Thank you that's super helpful and then.
With the recent decrease in valuation.
Market.
How has been viewing the market right now has the acquisition market improve do you have any.
David thoughts along those lines.
Thank you well.
Frankly right now.
The acquisition is not in my top priority in the last 60 days trade.
But the partnerships are.
The market situation the margin deterioration and of course, the impact on Green dynamics Scott.
Right.
We had a peak.
December 20 films and then we had a correction associated with the market.
Then there is a bit of a penny related to the eastern Europe . Some coverage was.
Increasing even more by pointed the degree dynamics as a weaker Lee.
Which as you see today and you will see that continue to and it's by far not the case.
Well, we were in a blackout period, where can I see right today I can say with a high confidence that our resilience from 2014 and other very disruptive events continued to buildup Sue partnerships relationships, we will see when they get out of this situation of the war.
We're going to resume obviously the list is growing but the regions of investment for M&A, obviously shift.
Great. Thank you very much for taking my question.
Thank you.
And our next question comes from Maggie Nolan with William Blair.
Please go and on me yourself and I'll be your camera. Thank you.
Thank you I wanted to acknowledge your strong results and more importantly, everything that you're doing for your employees.
And thank you for taking my questions and.
First I wanted to know if you could give us maybe quantitatively or qualitatively.
Some idea of the economics of your deal with at the partner in India.
There's obviously going to be a lot of puts and takes on the margin at those projects. So any color you can provide there would be helpful.
Well would you maybe it was you saw an announcement is just the tip of the iceberg. There are a number of partnerships in India in progress if you noticed.
Our CTO has been assigned.
X gene head of.
Greed and index of India.
He is on his way.
We started with a very generous partner to kick off the process. We have several more in the next weeks to come.
The economics of the relationship will depend.
Well, we were able to conclude their hiring because it's really hiring under agreed dynamics hospices is a point to ship.
And the most important part is we are demanding.
On the quality and capability of our Indian colleagues as always has been with the company. So obviously the proof is tight however, we're confident that the number of hires will go into the one hundreds.
Okay. Thank you and then do you think you'll have the ability to bring on new clients in the coming year as you kind of balance that with your focus on business continuity.
Testing client base.
Well, we just got a new customer today.
<unk>.
It's a very interesting world.
I'm.
I believe in the humidity and humanity must prevail, but at the time of the world will need to residual at the same time, if we don't blame for the great hope for the future.
We would not succeed.
And in terms of the client base I can give you all agree during the accretion of the people. We got the first child delivered during that transition in our office. So we have agreed to agree dynamic trial. So we can deliver kids in the office, we can renew customers degree.
Very weighted to continue grow the business.
That's incredible thanks for the answers.
Thank you Manny.
Thank you.
And our next question from the phone comes from Puneet Jain with J P. Morgan. Please state your question.
Hey, Thanks for taking my questions.
So glad to hear its like the actions you took to ensure safety of all of their employees.
But from a risk management perspective, how quickly you can remix delivery away from Russia, Ukraine, Moldova plus.
Plan, if client startup that seemed like a higher risk profile to those regions over the long term like you talked about on the call like Ukraine is about <unk>.
42% head count.
So how do you see that mix going over the long term.
Oh, I thought you meant 44%, 42%, but it's close enough right.
Uh huh.
So yes.
24% now obviously, we have lesser number.
And as far as other countries you mentioned.
The processes involved the BCP plan.
Both countries you mentioned.
Associated with that particular plan.
We have increased our capacity in Serbia significantly we have increased our capacity to scale into Romania, as well as Armenia and few other countries and also Mexico.
Because of the safety and security of our employees or other countries.
Could not get into the specific details who goes where.
As the plan unfolds, we will keep you brief.
But it's a multifaceted multi phase process. So when you talk about long term.
Goodbye the midterm.
Understood that's helpful and with many companies trying to re locate employees to Poland, Romania and increasingly ramp at those locations can you talk about like supply environment.
Those countries, especially in Poland for you.
Well, we have three locations we have three offices, we have crackle.
We have growing slow and we have done.
The supply is always tied for the smart people no matter where they are.
The question is.
The intellectual.
Alignment with the company the quality of the relationship.
And in our case, it's also come rather.
We continued to hire people in Poland on a regular basis and not only among the local Polish population, but among people who migrated earlier.
People can talk about neutrality.
I'm a straightforward.
There's no neutrality.
We stand strongly behind Ukraine, and their defense against the aggressor.
Its award time so.
People, who chose the freedom a longtime ago. They see that maybe we are one of the beacon of that support and it helps us in the country now Romania.
I think the trend will go we just scratched the surface. So I don't want to speculate until we get there.
The certain thank you I appreciate the comments.
All the best.
Thank you Tony.
Thank you and our next question comes from Ryan Potter with Citi. Please go ahead and meet yourself.
Alright.
Taking my question I guess, Jeremy yes.
Thanks for talking my question and like to reiterate all of your employees are staying as safe as possible.
Just wanted to get an update on client sentiment. Thus far I guess, how are clients reacted to the situation as far is there any way you can characterize or quantify how many clients have asthma afterwards, I'll move out of Ukraine, and Russia versus how many are more in kind of a wait and see approach.
And from people, who have asked to move if any how much do you think of like permanent like risk golf situation versus kind of a temporary move.
Very good.
So there are like.
Three or four questions you have in phase one right.
Well, let me start with the first one.
How do clients feel about greet them.
You know.
I would really citation of one of the leader or one of the clients who said meet today.
I wanted to keep your talent.
You are incredible.
We have great people.
So we'll do as much as we can to maintain that continue which means.
So far we're blessed with.
All of our customers.
<unk> relationship with over the years.
Give us the breathing room and how the customers react.
First the stand strongly behind us.
The supporters.
There are patients we work and continue to plan the productivity in majority of declines went from 50% to 80% plus.
And we monitor daily so there is a trust in us.
We want to see progress there.
Their resilience their generous with their donations and they're a generous to support our billings and continued to grow with us. So that's what comes to the clients.
The risk and permits and all this stuff look it's a case by case.
People displaced but people are not away from networks, we have built a significant redundancy networking capability globally. So even people who are cord displays and again from safety and security I would not mention all the places we are their function.
And in many cases redundant she comes in when they go to the safety.
They work in a much more comfortable environment, especially when their families. Their kids and their parents are also taken care of.
Psychological plus infrastructure capabilities of resilience.
Got it that's good to hear.
Russia in terms of the impact of sanctions have you guys seen any impact from the announced section so far on your Russian business and could you, perhaps broadly kind of go over financially how business in Russia is kind of conducted if theres any cash held there or how you pay your employees and whatnot and I guess, just one more thing.
You can quantify how many employees are in Russia. I know you said, one four K in Ukraine, but I think I put it down in Russia to would be helpful. Sure. It sounds like you are from the intelligence alright.
Alright.
First of all we do not conduct any business in Russia, with Russian plants and their habits.
There is no relationship.
With any sanctions or unsanctioned companies in Russia.
Two.
The big time.
Given the pre obviously pre-war.
The count in Russian.
Engineering was substantially smaller than you Craig.
And it continues to decline.
Again for sake of them I don't want to know I don't want to tell where they are and what they do because it's not just sanctions from our site.
It's inside of the Russian behavior, one thing I can tell you. They're all my engineers are agreed dynamics engineers, and we would almost care to give them on the harms way in harm's way or not necessarily coming from the battlefields. So I'll stand behind all my engineers, even though my heart and soul is Stan with Ukraine is a country.
<unk> modeled the BCP plan moving people around.
As far as payments concerns again, we had sufficient.
The reserves in Russia.
Part of the BCP plan and payments are associated with optimizing the leaving of the.
Engineers, not only today, but there will be with their families in the future.
So I would say like follow me in some point of time, we'll keep you update that's one of the top priority obviously after the safety and security.
So people in Europe .
Got it thank you.
Thanks, Tim.
Thank you.
And our next question comes from Bryan Bergin with Cowen. Please go ahead enemy yourself.
Ireland and Neil Thank you for taking the question nice work on the quarter and keeping people safe.
First question I have for you just just Mexico and Latam can you talk about your development efforts there and is the model that youre going to pursue in India with the strategic partnership is that also something you can leverage there as well.
Thank you Brian .
This split in two parts.
This strategy has been to grow organically.
In Latam and we started with Mexico through the acquisition in that office and what are the highest growing very nice.
However.
As always you are very proactive of your thinking.
And there are discussions, which again part of the BCP plan for selling very strategic relationships.
It doesn't just go into the specific countries. It goes into this I would say broader lithium which includes also various countries right. It also extends into European demand solid in Europe .
Those relationships.
I would say conditions over time because of our strategic plan again had it not been for the more I would be talking about $1 billion of vision plan, which is very comprehensive. So we just have to carve the chunks of excitement and go very discipline to execute.
The scale and continued.
So that's what I would say today.
Okay, and then just just given the custom nature of the work we understand it it's obviously a challenge to move.
From from team to team and New members you did talk about the distributed nature of your teams, though which certainly helps are there also other methods or learnings that you've had from COVID-19 . Another private prior events that enabling you to be as resilient as you are here in navigating this operational disruption.
Thank you.
Very good point, so yeah. So our team has been distributed way before our coverage.
Our strategy has been for years.
Not a single team a single project single location. There are many risks associated with our concentration right.
The number one objective was all the locations all the capabilities or the trainings has to be distributed that's what was reflected without university trade and trade their internship programs grid University. So we created a lot of custom classes, which are obviously online.
And allowed people to go and learn indirectly somewhere the big part is the coach.
Our top senior talent, obviously is the most senior one from the company experiences.
<unk> been moving very very broadly into the consultancy model. That's why some of the investments you've seen in Q4.
It was associated with Rajiv and his team when we moved a substantial number of people to scale. The R&D not from just innovative perspective, but also to be able to consult and trained people across multiple locations in multiple clients, that's where we are experiencing great.
Okay. Thank you very much and good luck to you. Thank you Brian Thank you Barry.
Thank you and ladies and gentlemen that appears to be our final question I'll now turn the floor over to Mister Leonard Lipschitz for closing remarks. Thank you.
Thank you everybody.
In such difficult time.
It's hard to.
Under mine any effort.
Uh huh.
Everyone around.
I want to say special thank you.
So the amazing <unk>.
You guys are my heroes.
I wanted to say thank you for our partners, who are very generous again today I didn't name all of them, but there are incredible amount of goodwill and appreciation and respect.
I want to thank our customers.
This is the amazing group of people I've been.
When accessing.
<unk> seen the senior leadership.
Of such magnitude.
Which we have not even experienced during the regular times.
I've seen so many clients individuals who contributed to a charity.
But more than that the act as business people understanding the resilience of re dynamics would be resulted in the fixed festival business going forward.
Do you have an opportunity to investors to join the forces and to provide green dynamics support with your support with Europe tension will be able to rebound and grow faster.
Wherever experience.
Again, I want to thank all the good people around the world.
We need not only pray for peace, we need to fight for peace.
The piece is the future not only of our businesses, but our children and generations to come.
And I. Thank you again for everybody to stand with Green dynamics, so with that.
I want to say that every human being is Ukrainian today, because that's association with a future hope.
And I want to say, which is becoming not just the awards, but the symbol.
Good morning to Craig.
Thank you very much.
Thank you and with that that concludes today's webcast and have a great evening.
Goodbye.
Yes.
Okay.