Q4 2021 Globant SA Earnings Call
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Good day and welcome to <unk> fourth 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 on <unk>.
Only mode. After today's presentation there'll be an opportunity to ask questions.
Please note. This event is being recorded and stream live on Youtube by now you should have received a copy of the earnings release. If you have not copies are available on our web site investors that globin dot com or.
Our speakers today are Martin Mcgwire co founder and Chief Executive Officer, Quanta, Thiago <unk>, Chief Financial Officer, Patricia <unk>, 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 such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC.
Please note that we follow Ifr as accounting rules in our financial statements. During our call today, We will report non ifr S or adjusted measures, which is how we track performance internally and the easiest way to compare globe into our peers in the industry.
You will find a reconciliation of <unk> and non <unk> measures at the end of the press release, we published on our Investor Relations website announcing this quarter's results.
I would now like to turn the call over to Martin Mcglynn, our CEO .
Thanks, Amit and Hello, everyone.
I'm happy to be back after another strong quarter and full year.
Global continues to deliver solid performance.
And we aim to surpass expectations of our stakeholders and clients.
As we look back over the past 19 years.
Since we started the company 2021 stands out.
This was one of our most transformative years ever.
Our Q4 2021 revenue reached 379 $8 million.
This represents 63, 3% year over year growth and 11, 1% growth over Q3.
For 2021, we became a billion dollar revenue company for the first time ever.
The top line reached nearly $1 3 billion.
Representing 59, 3% year over year growth.
This is the strongest annual revenue growth since our IPO, our CFO <unk> <unk> will go into detail later in the call. These strong results have been made possible by the team of talent we have cultivated.
I've never been more proud of our growers.
They are creative and adaptable they work together as one team throughout 18 countries.
Our business fundamentals are stronger than ever.
We're in a position to capture the significant market opportunity in front of us as we know reinvention and transformation is not an end to end process. It is a constant state of adaptability to grow in the face of challenges.
This time, a full adoption of digital transformation is here.
The ITC has forecasted global spending in the sector to exceed 10 trillion dollars.
Over five year period.
We aim to be the partner of choice of our clients and to help them bridge the gap between the innovation opportunities and action our transformation.
We are executing this strategy through the pillars of growth that I laid out in 2021, our geographic expansion, our reinvention studios and our growing platforms.
First.
Our geographic expansion.
Global footprint continues to grow throughout the regions, where we work.
Lately, we added two new countries to our Latin America operations, Costa Rica and Ecuador.
This solidifies our already strong presence in the region.
In Europe , we have recently announced our expansion to Germany, Austria and Switzerland.
In North America, we continued to expand our local presence throughout the United States and Canada.
We are reaching new clients and hiring more talent in all those regions to lead this growth.
We have also brought on new talent and expertise through strategic M&A in 2021 we incorporated five new companies to the global family.
These companies have combined operations in 12 countries there.
They are talent has reinforced our capabilities in multiple spaces from blockchain to digital sales and marketing AI Salesforce and more.
As we look to the major trends of the near future. We're already working on consolidating our capabilities in these spaces.
A major transformation for how brands relate to consumers would be brought on by web three point all web users in the first generation of the Internet where exclusively on the receiving end of information.
They later became content creators at consumers and participants in the second phase.
In this new phase they will become owners through blockchain technology and decentralization web three <unk>.
Puts the user in the driver's seat.
They will have more autonomy in their consumption creation and interface with the internet.
This is actually part of a larger change.
Throughout the digital and cognitive Revolution focus has shifted towards the consumer.
This is a huge opportunity for global.
Since we have build our core business around these revolutions for the past two decades in this era the most successful brands.
Once that can apply the right technology to improve relationships with their stakeholders.
A major way that people will experience this new phase of the web will be the metals.
Organizations will have a new spaces and platforms, where they can extend their presence offering and creativity.
They will be able to maximize engagement with their customers and employees.
Last year Global launched the met our studio to get companies in taking advantage of these opportunities. Although many will see the potential they need a partner with the technology and the expertise for best in class execution Global and believes that these and other trends in AI mass.
In learning and teamwork agility, we will have a strong influence on our world in 2022 and beyond.
We have done a deep dive on many of them on our trend report 2022, I encourage you to check it out at trend that global Dot com.
We also continued to develop our product and platform offering under glove annex. The goal is to keep expanding our existing products such as star me up augmented testing and augmented coding among others.
At the same time, we will continue to add new offerings to our product portfolio.
For example, global next is developing an MVP of our new platform project yard yard is a diagnostic tool that aims to reduce the carbon emissions and operational cost of digital products and services. It identified solutions by designing leaner digital services asset.
<unk> energy consumption of software.
It pinpoints areas, where energy emissions and costs can be optimized by up to 25%.
We believe that technological innovation is a force for good.
However, we are mindful of the potential side effects that come from misuse or access.
We see several concerning examples in our society.
From texting and driving to cyber bullying to Internet security to privacy just to mention some so as you may remember last quarter, we launched our <unk> Tech fund.
We will support them fund startup that develop apps that bring solutions to these challenges.
Today, we're proud to announce three world renowned ecosystem partners.
And as ever.
New love and laughter.
Thanks to their extensive network will we be able to engage with a greater number of high quality interpret nurse and startup.
We have dozens of submissions and we continue open to receiving applications from startup at behind Tech Fund Dot com.
I'd be happy to see our team's effort generating greater recognition of <unk> brand identity.
For the first time in 2022 pronged finance has ranked <unk> on its list of the top 10 strongest service brands in the world.
The report studies marketing investment stakeholder equity and business performance.
It showed an estimated 31% growth in global brand value in the last year.
This is great news for us and we hope to continue improving our positioning moving forward.
With that I pass it over to Diego thorough thorough our CTO to comment on our studios and clients. Thank you very much and looking forward to see you soon.
Thank you Martin and Hello, again, everyone. It's good to be back as Marty mentioned, a major pillar of our growth strategy as a new industry re measure studios, which we announced last year.
This is the next step in the evolution of our signature studio model instead.
Instead of focusing on a specific technology or trend this new studio seek to transform the industries themselves.
This widens the scope of our work and increase the potential upside.
Each re mention studio is supported by the expertise of our digital studios in area, such as the murderers video and AI blockchain and much more.
I'd like to Doubleclick today on the life Sciences industry re measure the studio.
Its goal is to provide organizations with technology driven solutions to face challenges in the health care value chain.
These stakeholders include patients and relatives healthcare professionals public private players and institutions academia pharmaceutical and medical device companies among many others.
<unk> has appointed hour still landmass of this new studio <unk> managing director.
Building on his experience as a pharmaceutical executive at Astrazeneca and GSK, we're happy to recover we've seen on board as we reinvent this industry.
The life Sciences studio will be a hub of modern design thinking combining bioscience talent with our digital expertise across other industries.
Now some remarks on the ongoing work with our clients.
Continuing the focus on life Sciences last quarter, we started partnering with Albert a leading multinational health care and medical device company.
Our teams integrated with <unk> to understand their challenges and we are redesigning their analytics platform solution.
New data platform will allow for faster more efficient data processing, enabling more intuitive decision, making in the same industry. We're also working with via medical to help with modernizing and redesigning their birthday later interfaces site.
<unk> is a global leader in the respiratory diagnostics ventilation anesthesia delivery and patient monitoring segments.
We're also working with them on redesigning the UX under medical incubators screen interfaces.
Martina explain the meta versus a concept that is quickly becoming reality on one of the resource way, we created our metal or a studio.
In December 2021, we formed a partnership with big swings, a leading music with diverse gaming platform.
<unk> is developing a new virtual rewards ecosystem that will allow artists to launch their own interactive environments, and monetize them through and Fps, social music experience and virtual performances, our expertise in mid averse blockchain and gaming along with their deep knowledge of the industry are allowing us to.
<unk> accelerated the reinvention of the music industry together, we're also proud to be working with the upper left the creator of the world's most successful digital collectible blockchain apps, including NVA Topshop and crypto curious.
We're helping them optimize their processes as we automate the creation of Nfc's.
We have a long track record of working with companies as we bring our technological expertise to irrigation.
Recently being working with over five.
<unk> enables private public and social sector organizations to respond to some of todays most pressing challenges through education activating community engagement that scales delivered as a service through its technology and learning platform <unk> has reached more than 45 million learners globally.
While also delivering critical insights to corporate partners. So they can measure it and amplify impact on the educational programs.
We partner with them to build their brand new and more than an enrollment platform.
We're building a more robust scalable foundation that integrate with third party sources of information and eliminates data mismatch and keeps roaster in as a core service.
It is extremely important for companies to remain human centric as they embrace technology to improve their own processes and services the.
The implementation of conversational interfaces is a great example of this.
This past year, we've begun an exciting engagement with Debbie scar a CX loyalty technology platform, which is a division of JP Morgan Chase.
<unk> CX loyalty build products and solutions that empower some of the world's leading customer engagement and loyalty programs.
And there are constantly transforming the way brands engage and reward our most loyal customers.
The first project called Chatbot recently went live.
It helps them improve their service offering our relationship with customers to meet business goals.
In the food and beverage space <unk> has partnered with global <unk> for its transformation to a data driven company by applying AI, we're empowering them to have a higher and more insightful level of understanding of their shoppers and consumers and improve the route to market.
We're working with a gel methodologies of modernization of their platforms, improving the capacity to respond to context changes and to capture the new opportunities that the market generates from changes in consumer behavior.
Thank you everyone for your time again and look forward to <unk> continuous expansion of the array of expertise to keep delivering superb 360 digital transformation.
With that I'll hand, it over to <unk> our CFO .
Thanks, Diego Hello, again, everyone before I get into discussing our talented covers a few notes to reflect the strength of our operations and our performance with our clients.
The Walt Disney Company continues to be our largest client growing this quarter at 69, 1% year over year, and seven 1% quarter over quarter.
We continue to be a very well diversified within Disney and serve a multitude of its business verticals. The rest of our accounts collectively grew by 62, 6% year over year, and 11, 6% quarter over quarter, Our 100 square strategy continues to advance.
Over the last 12 months, we have 12 accounts that brought in more than $20 million of revenue compared to seven from last year. We also had 185 customers with more than $1 million of annual revenue compared to 102009, one year ago.
In Q4 63, 9% of our revenues were from North America.
23, 5% in Latin America and others.
10.7% in Europe , and one 9% in Asia.
You know, we think of our clients of our partners.
And having long standing and strong relationship is directly tied to our focus on quality.
The net promoter score is a bond issue that we have been measuring for quite some time to keep a close eye on how our customers perceive our quality of service.
There is no official benchmark for this quarter, but most of available men tomorrow positions scores generally between 30 and 40 for our industry.
I'm very pleased to share with you that our scores has been consistently above 60, well over the existing benchmarks. Our score was 64 for the last 12 months.
As Martin said 2021 was a major year of growth and achievement for <unk>.
We are now our worldwide team of 23526, Globus with 22167 beam technology design and innovation professionals 1594 of the new hires in the quarter were it professionals.
Up 45% year over year.
Every year, we have more geographical diversity.
This offers our clients are truly global delivery structure as we now have lowered in 18 countries.
In Argentina are nearly tied as our largest talent markets with a bit over their 5300 lowers it in 2021, India saw the highest growth with head count up 94% year over year.
We remain confident that we can continue bringing strong talent and we envision a strong hiring process moving forward.
Attrition rate is currently 18, 7% as you know our talent market remains competitive and there has never been a better time to work in the AP sector.
For us this is an opportunity.
<unk> us to continuously work on our employees' experience benefits and opportunities to make Logan that place to work in the industry.
We have seen that our efforts and the value proposition, we provide to employees is leading to a stabilization of the attrition rate.
Structure has always respected at work life balance and family support now we are going further we want to enable our talent to fill in control of their own career paths and their life and we have taken the steps to provide that through three unique initiatives.
First one is ensuring that every glover has a clear path to leadership advising and one carrier is a highly sought after goal and providing a consistent structure that allows for that to become a reality within the same company foster a stronger commitment to our vision on our future.
Secondly, we are now offering global flexibility to work from anywhere in the war for up to 30 days out of the year.
This includes the places where we don't have an office.
For Globus, who chose locations with global offices. They are encouraged to interact with local rollovers and experience a rebound office experience.
It's a win win because we grant employees the flexibility they sake and we also ensure a globally cohesive team.
And finally, we have a new platform open carrier that gives glover the keys to their own carrier pass this platform as a career marketplace and talent placement accelerator within the company itself.
<unk> can apply to any of our open position in any project that we have we want to allow them to find more exciting challenges within the company without needing to look at where.
It is a way to promote autonomy flexibility and opportunities worldwide.
And finally, some exciting new updates to our <unk> initiative. This.
This is now an enduring part of global entity.
Our global have taken ownership of it and have made it their own.
Not only are we fulfill its promise we're expanding it so we can have an even greater impact.
As you know Mccann has four pillars, we kind to your peers to the planet to humanity and to yourself.
<unk> appears we are reaffirming our commitment to diversity equality and inclusion.
We recognize that we work in the most dynamic and promising job sector in the world. So by promoting inclusion in the sector at large we are building a brighter future for the industry.
On top of our goal to achieve gender parity, we are setting a new one.
We will grant 15000 technologists core assets by 2025.
<unk> thought leadership community involvement and mental shape, we want to inspire up to 2 million young people to enter this 10 failed.
Because of the planet, we became carbon neutral in 2021.
We are also following reduction trajectories in line with the science based targets at the Thunder aligned with the race to CRE initiative.
Now we are incorporating our neurotechnology, we aim to save 10 million tonnes of Cotwo emissions through a digital sovereignty strategy.
We want to train our clovers on digital sovereignty to be able to educate our world class clients, while designing their digital services and products are they kind of humanity pillar was what inspired the big Giant Tech fund described earlier by my team.
We would cede and support the startups that tackle the misuse of technology within the company. We have the initiative, a big kind labs to help lovers with inspire and ideas and transform them into real projects. Four we can see ourselves we have launched it and new company wellness plan.
Partnering with experts in mindfulness and mental health.
Our objective is for the program to reach and influence of 100% of our clubs.
I am proud to see that this impact in ESG are getting noticed.
For 2022 globally has been included in the S&P global sustainability yearbook.
So we included companies must be rocket within the top 15% of their industry in the key ESG metrics.
As awareness of our efforts to improve our own company and our sectors community. We look forward to see more of this inclusion as we grow.
With that I'll turn it over to Juan to discuss our financials.
Thank you and good afternoon, everyone I hope, you're all doing well, let me start by summarizing the results of our fourth quarter and full year 2021, I will then discuss our guidance for the first quarter and the full year 2022, we are delighted with our overall results for the fourth quarter of 221.
As our business continued to show robust momentum willingness for Q4 were $379 $8 million.
Ending 63, 3% year over year growth and 11, 1% sequential growth.
<unk> continues to deliver industry leading growth.
Expect this trend to continue for the foreseeable future.
We estimate organic revenue growth for Q4 was around 54, 5% year over year.
As discussed earlier the demand for our end to end digital services and platforms is much stronger now than what it was before the start of the COVID-19 pandemic and at this time, we are not witnessing any material impact from COVID-19, Dover business, we feel confident in delivering robust.
Just levels of growth in the upcoming years.
Turning now to profitability, our adjusted gross profit for the period increased to $149 $7 million, representing 39, 4% adjusted gross margin compared to $92 million, representing 39, 6% adjusted gross margin in the fourth quarter of 2012.
Our adjusted operating income for the quarter amounted to $63 6 million or 16, 7% of revenues compared to $37 9 million or 16, 3% of revenues for the fourth quarter of 2020.
Demand and pricing environment continues to be strong offsetting the ongoing inflation in the labor market and we also continued to drive SG&A efficiencies with our increasing size. In addition, we continue to drive an increasing amount of revenues from services products and platforms that support.
Breaking revenue on employee growth linearity together this will help us maintain a healthy adjusted operating margin profile and continue making the required investments in the company to seize the attractive market opportunity in front of us our ifr as effective.
Effective tax rate for the quarter was 23, 4% largely in line with our guidance adjusted net income for the fourth quarter of the year totaled $45 8 million.
Sending 12, 1% adjusted net income margin compared to $27 $6 million, representing 11, 9% adjusted net income margin for the fourth quarter of 2020, adjusted net income for the Q4 implies 65, 7% year over year growth.
Above our Q4 revenue growth rate.
Adjusted diluted EPS for this quarter was $1 seven.
Based on $42 8 million average diluted shares for the quarter compared to 68 for the fourth quarter of 2020 based on $40 9 million average diluted shares for the quarter.
Adjusted EPS for Q4 implies a solid 58, 3% year over year growth.
Moving on to the balance sheet, our cash and cash equivalents and short term investments as of December 31, 2021 amounted to $464 million during.
During the fourth quarter, we generated strong free cash flow of $47 9 million versus $27 million in the fourth quarter over the last year. During this quarter, we paid $64 2 million lawyers for acquisitions currently or encourage facility is fully undrawn.
We also continued to successfully execute on our capital allocation strategy with integrations of recently acquired companies going as planned.
Now, let's look at the full year 2021 performance revenue for 2021, we're a 1 billion $297 $1 million, implying a solid 59, 3% year over year growth.
This represents by far our strongest year over year revenue growth since we are a public company.
Estimates, our 2021 organic revenue growth to be above 45% year over year, our M&A views from 'twenty to 'twenty. One also continued to perform strongly with cross selling of services, creating synergies.
Adjusted gross profit for 2021 was 500 doors for $7 million or 39, 5% an increase of 40 basis points year over year.
Adjusted profit from operations for 2021 was $214 $3 million or 16, 5% adjusted profit from operations margin compared to 124 million orders or 15, 2% adjusted profit from operations margin for the last year. This represents an increase.
<unk> of 130 basis points and is driven primarily by the improvement in gross margins and SG&A efficiencies achieved during 2021.
221, we also continue to strongly invest to capture the significant opportunities in front of US adjusted net income for 2021 was $158 4 million or 12, 2% adjusted net income margin compared to $96 million or 11 one.
Adjusted net income margin for the last year adjusted net income increased 74, 9% year over year solidly above our 2021 revenue growth rate adjusted diluted EPS for 2021 was $3 70, <unk> based on $42 1 million average diluted.
<unk> for the year compared to $2.28 for the last year based on 39 7 million average diluted shares during 2021, we generated strong free cash flow of 102 $6 million versus $47 $4 million during 2020.
An increase of 116, 6% year over year, and implying free cash flow to adjusted net income of 65% during the year, we paid $144 $5 million for acquisitions now I would like to talk about our guidance for Q1 2022, and the full year 2020.
<unk>.
As discussed the demand environment remains robust base.
Based on current visibility, we expect Q1 2022 revenues to be at least $395 million or 46, 2% year over year growth at this point, we do not expect any FX impact to our first quarter revenues Q.
Q1, adjusted operating margin is expected to be in the 16% to 17% range.
As far as effective tax rate is expected to be in the 22% to 24% range for Q1 2022.
Adjusted diluted EPS is expected to be at least $1 16.
Assuming $42 9 million average diluted shares outstanding for the quarter.
Regarding the full year 2022, we expect revenues to be at least $1.751 billion or 35% year over year growth. We currently assume no FX impact or full year 2022 revenues for 2022, we expect our own.
Adjusted operating margins to be in the 16% to 17% range. While we continue to strongly invest in training programs in cutting edge technologies and expand our sales coverage to further develop our business. Our U S. Effective tax rate is expected to be 22% to 24% range for the full year 2000.
22, finally, we expect our adjusted diluted EPS to be at least $4 86 for the full year 2022, assuming $43 1 million average diluted shares outstanding for the full year.
Thanks, everyone for participating in the call for your coverage and support.
Okay.
Okay.
Okay.
Yes.
Okay.
Yeah.
Thank you so as we go to our question and answer section I'll announce your name at that point. Please on mute your line and ask a question. Please mute your line. After your questions are done. We also request you to please limit your time to one question and one follow up. Thank you very much. So the first question.
<unk> comes from the line of Tien Tsin Huang from JP margin, David Morgan Tianjin. Please go ahead.
Yeah.
Thanks, Amit I appreciate it nice results again here.
I'll ask maybe if you don't mind just on visibility.
In the past.
Great.
Okay.
Turning to guidance for the first time in gist.
Curious on visibility how it stands how does that compare to this time last year and especially in the second half.
'twenty, two and your ability to replenish.
Your backlog in.
Whatnot any thoughts there would be great. Thank you.
Okay, great. Thank you how are you.
Thank you for the question.
Look there is a pretty good disability DSO with our numbers for the quarter.
And the year looks great in terms of the quality of the relationships with our customers and.
I believe.
As compared to the first quarter last year.
We're seeing pretty solid demand on the table.
We're seeing.
Pretty much the same strength as we were seeing last year.
But.
There is always caveat in terms of.
How the world.
Going to be evolving in terms of amount of investment and so on and so forth.
But we're not feeling that yet.
In the in the remarks.
So in terms of visibility and expansion of our basis is what we're seeing.
In terms of being able to fulfill.
The demand.
Concrete the backlogs.
Still extremely healthy and.
We're seeing.
Our ability to recruit.
Steel.
<unk>.
Attrition in the control and going down.
Growth is going down a little bit.
And.
I believe that we won't have any problem moving forward. Neither challenges of course, there's always challenges, but we won't have any any any issue I feel with fulfilling the backlog and the demand we're seeing.
Okay. That's.
As Greg just a quick follow up then.
One I know we've talked about.
Margins a lot.
And of course, everyone is aware of all the supply issues on the labor front. So you gave a pretty wide range, 16% to 17%.
You take the midpoint of that in 'twenty one.
Which way might it lean what factors should we be considering.
In terms of where you might land in that range.
And then also just wanted to add to Martinez answering the previous question.
If you remember over the last two quarters, we've been talking about 2022.
Now we're more like in the $25, 2.5% guidance for our initial guidance for 2022.
Now.
Significantly raised our number 235%, which is roughly two 5% organic plus 2.5% coming from the acquisitions that we have already done. So I think that is a result of the level of confidence from the assembly we are having.
In 2022.
Now looking moving into where operating margin is going to land.
I think.
Our expectation is.
It happened during 2021 being able to offset.
Cost inflation cost increases, which are happening are going to happen.
With price with pricing with the fleet with utilization.
We have done the enduring 21, where we're able to increase our gross margin for the year.
Around 40 basis points. So we do expect at this point to land.
Okay.
Between the middle and the upper part of the operating income guidance.
Okay, and thanks for pointing it out right I mean anything north of 30 years.
So it's a big upgrade but it does speak to the confidence and the visibility. Thanks, guys. Thank you Tunica DG scale.
There is always.
Thank you very much Tien tsin. So the next question comes from the line of Ashwin <unk> from Citi Ashwin. Please go ahead.
Yeah.
Yeah.
Hey, guys.
Good afternoon, congratulations on the solid print and.
Equally solid outlook.
I guess I just.
Wanted to start perhaps.
Question one.
The point that you just made.
The sharp increase in and outflows from what you said you said the last time.
And maybe to delve into that is that driven by you know.
He is bringing on.
New clients is that.
<unk> bye.
<unk> ramps.
And sort of your order book that you sort of see.
What what has led to the sharp increase that youre seeing.
Thank you for the question.
Combination of factors.
One is that we have completely removed.
Cautiousness that we used to have in our guidance over the last two years, we believe that Korea.
<unk> is pretty much behind us and we have to drive where we feel we feel that we're going to be able to land and hopefully exceed by a little bit. So we remove a little bit of a conservatism that maybe wasn't there is over the last two years I think not just by us.
For many companies you know.
In the market, it's the right time to recovery of that on top of that Spartan is set at the beginning.
We continue to see strong relationships continuing.
And expanding for 2022.
Disney for instance, performed during 2021, how the top five top 10, 11% <unk>.
11 to the end accounts performed we have seen like multiple areas of growth we closed the year.
Over.
12 accounts above $10 million, which is a significant increase compared to last year actually the number is higher.
Give me one second.
I give you that number.
So I think it's an important number.
Uh huh.
Together with US we continue to see.
Our our our our top accounts.
Becoming larger.
And expanding those strategic relationships in line with a 100 square program Doug.
But we have in place we can sorry, we've closed the year with 12 accounts over $20 million.
22 accounts over $10 million that is a significant increase compared to last year and I think it is a clear proof of how we are able to penetrate those accounts.
We're able to become more strategic in this type of relationship that we have and of course at the end of the day. This is what is giving us the confidence to increase our guidance relative to what it was in our government horizontal.
That makes sense.
My other question is with regards to sort of beef.
Expected cadence.
As we go through the quarters for growth and margins.
And maybe just a small clarification on what you said.
Does it does.
Caution comment.
Right from the fact that your clients now.
For example, the theme park side of business.
Travel clients that classic has now that that volume is now come back.
When you look at how travel is performing when you look at how this means the results reported recently by Disney.
But not just those those two sectors <unk> seen strong growth I mean, if you look at the industry evolution.
Pretty much every industry Hasnt gone has grown significantly.
So we do believe that.
There is multiple areas multiple customers multiple industries, which I want to help us drive our growth.
We will see margins kind of stable over the year, we don't see big big swings between the different quarters at least at this point do you know of.
Of course, we aim to see then what happens with any prime currencies, how they're going to move relative to the dollar as you know we are operating in 19 different countries and they may have an impact on on cost <unk>.
Typically a strong dollar is good news from loans, we'll see what happens in the future.
Yes.
Right.
And on the on the cadence.
Well I mean, the guidance for Q1.
<unk> has been quite solid 46% year over year that is primarily it's about 41% organic coming from the acquisitions.
And the rest is the remaining 5% coming from the acquisitions that we did during 2021 for.
For the full year at this point we guided.
75% as I said before.
Have we estimate to be organic.
Of course as the year progresses, hopefully we are able to.
<unk> like all of us, but at this point, we feel that that's the type of guidance, we feel comfortable to provide and again, removing a lot of the conservatism that wasn't there as in prior quarters.
Thank you Ashwin good to hear thank you.
Thank you Ashwin.
Thank you very questions Ashwin now, let's go to Bryan version from Cowen Brian . Please.
Hi, all good to see you. Thank you.
Wanted to dig into the global diversification efforts that you're making so im curious how youre thinking about the onsite or the end market mix, how that might evolve and whether that's an added lever for you that you may consider raising or should we expect.
Mr remained relatively consistent and when I'm talking about is kind of end market in the U S market in Western Europe .
Yes.
Hi, how are you.
Again.
Well right now we're at 95 five so we are.
95% offshore 5% onsite.
We are looking into expanding that relation and we have been.
Decreasing for the massive amount of growth that has been.
Led during the Covid.
On the absence of <unk>.
What specific location.
People didn't data pretty much.
It was not a problem where those guys were located and.
This is something that helped us too.
Keep moving people.
Of the operation around many of different countries now on the onsite side, we're basically out what where our basis is.
We are seeing a trend of increasing.
And increasing now that things are going back to kind of normality, which is October .
Point is getting back to slowly.
They are still out there, we're seeing like increased on that demand.
And the amount of people that were hiring for that.
And also it could also have some effect on <unk>.
Companies that we acquire or with local footprint.
Those are the changes to the changing factors and risks that we see moving forward and in the revenue per head from last year to this year grew about 12% in terms of.
But that without pushing down the mix so separately branded performance in terms of improving margins are improving.
The revenue per head right.
The rates that we're seeing in front of our customers and that's the base for us to say that we don't see a massive price pressure on the on the on the market. There's always competition of course, but.
We see a healthy situation there.
Okay. Thanks.
And then just a follow up on attrition here. So it looks like it's stabilized quarter over quarter, just based on what you've seen here through January do you think thats reached the plateau.
Let me just talk about how you see that progressing in 2022 and.
That might compare as well across some of your key regions.
Hi, how are you I think that we are going to say something like quite similar like what we announced in this quarter, but I think that we have been growing fast and then we are more than 23000 Glover and we have been hiring and I think that we are in a record of six.
And more than 6000 bloggers.
<unk> in the last quarter and 19 that the incoming quarters are going to be quite similar or more so we don't see any any problem in the demand then of how we are hiring so that that is something that is really where we feel really proud of that of course, we are expanding our places and then we will.
<unk> Chen <unk> everywhere.
And the strategy that has to do with when they go into find the correct talent and and how then achieve their career path in Anglo and so I think and that of course, we are still thinking that we're going to get into between 15 and 17 that of course, where we are.
We're working very closely we're high teens there.
I think that we are right now it's going to be normalizing probably in two or three quarters.
The demand has been really really hot.
Just a clarification 6800 people.
Additions for the year not for the quarter.
Great quarter.
Got it.
Alright, Thank you very much. Thank you. Thanks.
Thanks, a lot Brian .
Now the next question comes from Maggie Nolan from William Blair Maggie Please.
Hi, how are you.
I wanted to ask about.
Some of the conversation that's been had around pricing and the revenue guidance.
Lastly, pricing as a contributor to that strong guidance, there and you've noted that the increase is more than offsetting the above average wage inflation. So when we're looking on kind of a multi year basis should we think about some of those pricing increases having to kind of moderate in the coming years.
Yes.
I think at the end of the day.
Pricing is also related to the value that Dr.
Of course, with what is happening in the labor market right.
During 2021, we saw a strong labor market.
And a lot of demand and that enabled.
Pricing discussions.
In our case help us offset the cost pressure that we saw in 2021 getting into 2022.
Starts again with strong demand.
So there is a strong demand for talent that will imply.
Pressure for most companies.
Our expectation at this point in time is that we.
We'll be able.
To offset again that increase.
On price negotiations in Orange County, with some utilization improvement.
We think that we are targeting to maintain or to be able to offset.
Cost increases that we are adding more value with our employees we are.
Sure. So our customers we are expanding our superb value proposition.
We are becoming more strategic and many of the accounts that we are servicing as shown by the how we are growing with those accounts.
And we really have all of that combined should help us offset.
Whatever happens on the labor market.
Okay, great that makes sense.
And then.
It's great to hear some of the things you are gaining on the talent side and you can definitely see how that will help with retention at the organization.
Interested in kind of the dynamic of this creating a path to leadership and how you kind of balance that with the fact that an inherent differentiator for globe has been the fact that you are kind of a horizontal organization and an agile organization compare to some incumbents.
Incumbents. So can you kind of reconcile those two concepts for me.
Yes.
And I'm more than happy to go deeper there while we're launching this unwanted leadership thing inside glove and it isn't a strategy in order to help our leaders to be at least 360 meters.
In the way we are living by now there in the Midland discount X. So I think that is.
<unk> the way when you get into <unk>.
You just you are not going to stop your carrier <unk> carrier and we are helping in that I already mentioned about the global University. Many many times that that has been a very successful initiative and on the other side. We just launched this platform in fact will and I think two years ago at that.
Is that open carrier that firm.
The best ethane that we have allowance because each clever can now deciding which projects. They can have their experience and they can change and they can move their career paths as they as they want and they neither side are going to have them in order to grow faster. So that this is a unique platform.
In because that means that when you are inside of <unk> is that you are not going to stay forever in the same project. The same industry. We are now doing this kind of things that probably our competitors are looking further clovers and now we are offering them to the inside of the globe and to keep our talent inside the company and <unk>.
And then go into in different industries different experiences. So that it has a main the main impact in our organization also SCO no. The big answer Yourself initiative has helped a lot in terms of how we are helping our glove has developed their own.
And in mind, and we have this concept of having altogether state in mind and body. So we're helping them understand if business not only just a place away where you work is also a place where we are taking care of each of them and their families. So we have any.
To understand the situation that has changed and some of them working from their harmless as many of us and others are starting to go to their offices and in the middle of it all of that timing. However go into to continue developing my carrier. So I think that is a really huge differentially.
From other competitors.
Thank you congratulations thank you Maggie.
Thank you. Thank you very much Maggie.
Next let's go to Arturo Langa from <unk> Arturo.
<unk> please.
Hi, good afternoon, everyone.
Gratulation on the results and thank you for taking my question just a couple I think the first one is housekeeping, but I believe you mentioned that from the full year 'twenty two guidance about 32 percentage points should be organic growth I just wanted to clarify that and then my second question is regarding going back to geographic <unk>.
Expansion.
Maybe if you can talk about your expectations, particularly in Europe and in Asia in terms of maybe headcount growth and revenue growth and then maybe theyre just detail a little bit the rationale behind the expansion in Germany, Austria and Switzerland.
That caught my interest to it seems like a new and exciting.
Geographic footprint to expand into so those would be my questions. Thank you.
Thank you Arturo there so.
On the first 5%.
Full year guidance that we provided we estimate a return.
5% of the organic the remaining two and a half coming from the acquisitions that we closed in 2021.
As for the geographic expansion.
We want to to discuss a little bit.
Yeah sure with regard to geographic expansion, we expect to have of course, we have <unk>.
Organic and inorganic we see very good opportunities, especially with regards to the reinvention studios when you see the intersection of the re measurement of studio headquarters for some of the large pharma or some other things that we will be launching pretty soon especially in this photo Germany, Switzerland, France.
I expect to have a.
Healthy grow there, especially with the and probably with all type people.
Typically the way they tend to hire them work in Europe is kind of different from from the U S.
Even from a cultural perspective, so hopefully we will be able to increase the local chemical which is always something.
Healthy.
And with regards to expanding the second question was sorry.
Germany.
Australia and Asia.
While Asia is more I'll say Asia is more complicated I think.
<unk>.
With the.
We have like two different alternatives of course.
The organic versus inorganic we're exploring both I think it's too early to come up with a with announced announcer.
It's actually solid these days, but let's say that we will do it during this year.
On the organic side as you can see by the numbers <unk>, we are having new customers in that region. That's why the revenue number has been trending up in Asia.
But as you said we can.
We look in toys is a big opportunity that we have to explore either more organically or would M&A or with both we are analyzing that.
Perfect. Thank you and congratulations. Thank you. Thank you. Thank you.
Thank you very much Arturo.
Next let's go to Diego Arago from Goldman Sachs Diego Please.
Yes, hi.
Good to see you all.
So ah congrats on the results.
So look it seems that you had a great acceleration on the revenue.
So during the fourth quarter, and if I'm not mistaken it move it from 68.
<unk> thousand.
In the last 12 months as of the third quarter.
Six to nine three.
For the year and so this means that the fourth quarter was a very strong down apparently.
Or even by solid performers within existing clients right. So just wondering if.
This came from Midas specific clients or maybe it was just a trend you saw among different.
Different clients. Thank you.
Yes.
Thank you for the question.
As we were discussing our throughout 2021.
Pricing discussions have been happening.
<unk>.
And of course, the final flaring and prohibit it it is a combination of new customers new projects.
And pricing in existing customers different levels of utilization and they all have been a different point in time.
Its not that youre negotiating all the prices change and understand data. So what you saw during the year Wilson evolution.
And we have been able to do expand our pricing, but at the end of <unk> again. This is not just because we go on rates with prices is this related to the value that you are adding it is related to how strategic you become.
And I think it's a real number one that we saw in 2021, because the mix has not changed so it's basically.
An increase in value on effectively an increase in rates that will happen throughout 2021.
Another and they are just starting.
But we target to be able to also increase oil prices.
Offset eventually whatever happens in the labor market.
It's still early in the game, but we are confident that our facility for for 2022.
Perfect. Thank everyone and maybe just.
A quick question here on the on the platform business right can you just help us to quantify the size of this business today and how fast is growing thank you.
You for the question.
The global X initiatives continues to evolve.
There are some of the platforms, we already acquired in the past, which are performing really great.
Some of our own platforms that are maturing and continuous continuing that evolution.
We're still not talking neither disclosing any kind of.
Differentiating in those two and those two factors.
And in those two components.
But.
The growth is pretty pretty steady very solid and in the two segments in the segment.
The companies that we acquired and in the segment of the platforms that we are develop developing for ourselves for ourselves.
For example on the winter clothing side whereabouts release like the second version of our original idea.
And that is expecting to have a pretty large impact in many of our customers.
Where we are using it and.
So we are really creating something very interesting on the global next side and on the platform basis.
But we are not right now.
Being able to disclose sort of separate the revenue coming from there.
I know that will be an advantage for another day.
It will be great.
Thank you. Thank you are marketing for that product.
No problem.
Yeah.
Thank you very much Diego next let's go to Surinder <unk> from Jefferies Sandra Please.
Hey, guys.
A question about the push pull between.
Onsite delivery and expansion of pure.
Global delivery footprint can you talk about maybe.
What you expect for longer term targets as we look at it a few years at this point.
And then.
Onsite delivery, perhaps increases does how does that impact margins.
So I'll take it so long term as we have said.
In the past, we expect the business in India to become a larger part of our.
Total head count on a lower level of centers, we expect Latin America to become slightly smaller.
We also expect eastern Europe .
To become a larger part of the business of course.
Given the circumstances maybe.
We are not.
Particularly pushing that reach them very very fast as we speak.
That's in terms of the geographic mix.
The 5%, though with our onshore eventually is to evolve and become.
Around.
10%.
Overtime, but it's that one have been from one day to the next it's not what I have been from one year to the next level.
<unk>.
And we want to do is in a healthy way, we are going to want to grow.
For the U K are open at the end of Europe .
Expense of.
Significantly impacting our margins, we want to make it in a way by which the offshore business.
Somehow offsets any.
In fact that the growth in terms of our markets.
May bring.
I don't expect that growth on the onshore to be meaningful for the margins because it is going to slowly but steadily.
We expect India to become a larger part of our business as we have been saying over the last several years.
I do expect Latin America, there is smaller on finally, eastern Europe has to be a little bit larger than where it is today, which is very small it's around 2% of our headcount.
Yeah.
And then just a clarification when you talk about getting to maybe a 10% 11% 12%.
Onsite model is that kind of a five year type target or what is.
I think I think five years is a reasonable timeline.
Again, we came down a lot over the last few years.
Covid situation basically you know.
<unk> business.
Significantly.
But inventory us.
Things are back to normal we will want to expand deal was just mentioning.
Peak to have more people in.
In Germany, and more people in Switzerland, France, and we have been growing spend quite a lot this year.
We have been also expanding in the U K and the U S. We are landing in Canada much stronger now so I think that five year period to two double the percentage of people that we have on site makes sense.
Related to business I mean, like we know it's going to generate more business once.
If things go back to normal.
Got it and then a question on M&A here, given the really strong growth that youre seeing.
Does that potentially change in the near term you're thinking your strategies.
Is it unchanged at this point are you willing to maybe get a bit more aggressive to.
Maybe see if you can capture more of the market when things are.
To flex at this point, how should we think about M&A spend.
Okay.
I would say that.
The M&A strategy will remain being like.
Focus on three regions Asia Europe .
The Americas in General Northern South America.
And the strategy would be.
Two.
Can you keep on doing them, but of course.
Evaluations has been kind of a crazy crazy situation here in the last few months.
We want to be very careful with it kind of feels megawatts, how we use our own cash.
No.
I would think so.
We will continue to win them.
They will be connecting to a new geography for example to go to Germany or devoted to Asia devote too.
Some of the countries in which we are interested in.
And expanding they.
They will continue being based on the platform basis that we want to build.
They will continue being a.
Based on how we develop our keep on developing our main delivery centers.
In the countries in which we are located.
And those are the three access that.
That will be there.
Central.
All of the M&A strategy.
They need and remain unchanged, but yes.
Of course, we want to be very sure that we are acquiring makes sense.
We're paying.
A fair a fair value for those acquisitions.
And I'll jump like Crazy.
Yeah.
Thank you. Thank you very much sir in there.
Next let's go to our interim <unk> from Piper Sandler RM. Please.
I think our when Youre on mute.
Let's move to Walter from Santander Walter Please go ahead.
Okay.
Sorry, guys.
And I have already answered so thank you for the short term rates results. Okay. Thank.
Thank you very much.
Thank you alright, perfect. Thank you guys. So that will be all for the Q&A session today.
Thank you very much everyone for joining the call I'll now pass the call to Martin to provide the closing comments Martin please.
Thank you very much Amit.
Thank you to each of you for being there for supporting us for helping us.
We're providing the right analysis for our company and obviously for our company and really looking forward to.
See you soon.
On the next quarter. Thank you so much.
Thank you bye bye.
[music].