Q1 2022 Grid Dynamics Holdings Inc Earnings Call
Our geographic footprint across Europe , North America and Asia.
In Europe , but not only been expanding our existing locations, but also adding new ones given our increased presence we opened our office in Switzerland will become our European headquarter.
Our existing NGL locations in Poland, Serbia in Mexico, and our media are witnessing strong engineering group and we have doubled our effort to hire new talent in these locations. Our newer locations are also ramping up.
We are about to open a few more locations very soon which will inform me.
In addition to hiring new employees similar location, a receiver and a substantial number of reallocated engineers from Roche.
During the quarter, we started ramping our hiring in India, which included formation of our core Indian leadership team.
I have chosen Hyderabad.
Our Indian headquarter due to sell advantages such as location.
Talent and infrastructure.
With the help of our partners, we have added close to 100 engineers.
Indian less employees have started to become available and have been working with our teams across North America and Europe engaging with our clients. In addition to securing down via our partners. We have been hiring directly as we have established our brand and developing as we speak.
As we highlighted some of the best India will play a strategic role in our long term growth and I expect to exit this year with roughly 1000 engineers in the country.
India growth is not just centered around the locations. We also focus on a unified brand of high quality engineering teams spread across the world in this context, our Indian based team will be a part of our global.
<unk>.
Now come into the first quarter.
Our revenue of $71 $4 million, well exceeded our expectations and we shared which we shared with you last quarter and it was higher than our mid quarter update on April six we ended the first quarter with an adjusted EBITDA of $11 7 million representing a gross we're all 12 three times.
In the same period of the previous year.
The better than expected growth. This quarter was due to several factors first we witnessed stronger demand across our industry verticals and customers second.
Aggressive hiring across our locations resulted in higher billable head count more important underpinning. These trends was the strong customer interest in engaging very dynamic services around digital engineer as these programs take the central stage priority across the enterprise World.
The first quarter, there were several positive trends, which I would like to share with you, including some of the notable ones.
First <unk>.
Good demand trends in the first quarter the demand across our verticals and customers was going strong. This was indicated by the growth across most of our industries and majority of our customers.
During the quarter some of our largest technology customers continued to grow with three dynamics as we expanded into new geographies and we see continued interest from the new technology clients.
It's our retail vertical we saw growth across a e-commerce friendly apparel retailers, along with our traditional brick and mortar department store customers CPG and manufacturing was our fastest growing vertical in the quarter as well.
This continued growth in our largest CPG customers.
Number two.
Continued head count increased during the quarter, we added about 400 employees, making us one of the largest headcount increase in the company history weakness continuous demand for head count across our customer base.
The majority of this has been due to the effort and scaling talent acquisition in the region outside of Eastern Europe .
The continuing decrease our internship programs in Central Europe , and North America.
Number three local momentum on new member tradition to our gaining business continues to be robust in the quarter, we added six new logos.
Six new logos four of them were in the TMT space.
Number four partnerships.
In addition to our organic sales development.
Efforts on the partnership front are paying off.
In the first quarter, we achieved the advanced care partnership with AWS and the launch of price optimization started kit with Google with <unk>.
<unk> built a strong network of partners like commerce tools to help.
The tier one clients transform their digital commerce platforms to modern architectures going forward. We believe partnerships are going to play an increasingly important roles in our growth.
And final number five.
Expansion related spending.
As I highlighted in my comments earlier, we're in the midst of growth, we're opening new locations and offices around the world and aggressively scaling our high across India, North America and Europe . While this has been important in Australia alone. The war has made us accelerate the progress of expansion.
Example, is India, where have moved our timeline, but almost a year.
We believe this action are necessary for us to become a company with a global scale.
Bringing on more rotational global delivery footprint will add cost, we will compensate that overtime well scale of operation at each of our locations and make global more significant scalable offerings to our clients.
During the quarter presenting has delivered some notable projects.
Number one at all.
Our global Technology company.
We have implemented an analytics solution that predict customer behavior decent machine learning approach. This system utilizes a combination of streaming version cloud technologies, providing faster execution with significantly reduced resource consumption.
Heritage traditional approach. This system was designed in collaboration between the data science and platform teams and manages thousands of jobs and datasets.
Another example.
For a large U S specialty retailer, we introduce cutting edge artificial intelligence and machine learning management technology system.
New cloud based platform offers declined easier better and faster data management or the legacy approach, which opened new possibilities for their specific recommendations analytics and customer behavior prediction solutions.
For another retail brand we are building a state of the art software to reinvent their legacy inventory management system.
Partnership has already helped decline to transform their or supply chain function and it will further improve their digital marketplace capability improve cost cost efficiency inventory visibility and ultimate customer experience.
And last but not the least is a global pharmaceutical company, we implemented and expect experienced recommendation solution, which analyzes historic and direction data and provides recommendations for health care personnel to engage across marketing automation platforms. This solution has already been deployed.
In four distinct markets worldwide.
With that let me turn the call over to our new who will discuss Q1 results in more details.
Thanks, Lynn good afternoon, everyone.
Our first quarter revenues of $71 4 million exceeded our guidance provided in our mid quarter update of the <unk> hundred $65 million on April six and was up seven 3% on a sequential basis and 82, 5% on a year over year basis and better than expected revenue in the quarter was driven by strong demand.
For our services across industry verticals and customers.
During the first quarter retail our largest vertical representing 32, 6% of our revenues grew six 6% on a sequential basis and 162, 4% on a year over year basis, the strong sequential and year over year growth was driven by strength across our customer base with E Commerce currently and Brent.
Modern retailers continuing to focus on dish and transformation initiatives.
Our TMT vertical was our second largest vertical NAND represented 30% of our first quarter at Nielsen grew nine 6% on a sequential basis.
48, 8% on a year over year basis growth in the quarter largely came from some of our large key customers will continue to grow with us as we expanded into new geographies.
Here are the details of the revenue mix and other verticals are CPG and manufacturing represented 21% of our revenue in the first quarter and grew nine 9% on a sequential basis and 71, 7% on a year on year basis.
<unk>.
During the quarter, primarily came from brand and our largest CPG customers.
Finance represented six 3% of revenue decreased five 3% on a sequential basis and grew 31, 7% on a year on year patients and finally, the other segment represented 10, 1% of our first quarter revenue and was up six 9% on a sequential basis within this vertical we witness.
This continued events at some of our pharma and health care clients.
We exited the first quarter with a total headcount of 300.
<unk> thousand 671 up from 3274 employees in the fourth quarter of 2021, and that's from 2056 and the first quarter of 2021.
The sequential increase of 397 employees or 12, 1% was largely due to increase in engineering headcount for an improvement in demand.
The increase from 2021, plus actually gives you a combination of improving demand.
And head count increase combined with our acquisition of tacit knowledge.
And the end of the first quarter of 2022, our total U S head count was 318 or 9% of the company's total headcount. This was slightly down from 10% in the fourth quarter and downturn, 12% in the year ago quarter.
Year over year decline as a percentage of the total headcount was largely driven by a greater mix of offshore engineers to the overall head count.
Our non U S headcount, which we sometimes refer to as offshore located in central and Eastern Europe , UK, and Netherlands, Mexico, and other locations was 2353 or 91%.
In the first quarter revenues from our top five and top 10 customers were 42, 8% and 58, 3% respectively.
During the same period, a year ago, our top five and top 10 customer concentrations were 51%.
Six 7% respectively.
The diversification across our top five and top 10 were driven by a combination of factors that included new logo rat.
<unk> diversification and our acquisition.
During the first quarter, we had a total of 213 customers down from 221 customers in the portfolio.
Of this 195 came from our organic business and 18 came from Tesla.
The sequential decline in our customers was largely driven by our commercial business or <unk>, which we acquired in December of 2020.
In the first quarter of 2021, our total customer count was 184 customers the year over year increase was driven by growth in customers across our business, but does not include any customers fantastic as it was acquired in the second quarter of 2021.
As a reminder, we only count the revenue generating customers in the quarter and do not include customers who are inactive during the quarter.
Moving to the income statement, our GAAP gross margins during the quarter was $26 8 million or 37, 5% down from $27 3 million or 41, 1% in the fourth quarter of 2021 and up from $15 3 million or 39, 2% in.
The year ago quarter.
On a non-GAAP basis, our gross margin was $27 million.
37, 8% down from $27 6 million or 41, 4% in the fourth quarter of 2021 and up from $15 4 million or 39, 5% in the year ago quarter.
non-GAAP EBITDA during the first quarter that excluded stock based compensation depreciation and amortization expenses related to the ongoing conflict in Ukraine.
Actions and other related cost was $11 4 million.
A 15, 9% down from $11 6 million or 17, 4% in the fourth quarter of 2021, and that's from $5 2 million or 13, 4% in the year ago quarter.
During the quarter. The one time charges reflects related to the concept in Ukraine was roughly $1 million.
The sequential increase in EBITDA as a percentage of revenue was largely due to a combination of declining gross margin percentage highlighted earlier and higher operating expenses.
Our GAAP net loss in the first quarter totaled a loss of $2 7 million or a loss of <unk>.
Based on a share count of 67 million shares compared to the fourth quarter loss of $3 6 million or <unk> per share based on 66 million shares and a loss of $2 1 million or <unk> <unk> per share based on 52 million shares in the year ago quarter, a sequential decrease in GAAP net loss was largely due to higher rent.
And lower operating expenses.
Offset by lower gross margin and higher taxes on a year over year basis. The increase in GAAP net loss was from a combination of higher levels of revenue offset by higher levels of stock based compensation operating expenses and taxes on a non-GAAP basis in the first quarter. Our non-GAAP net income was $6 9 million or <unk>.
<unk> per share based on 70 million diluted shares compared to the fourth quarter.
non-GAAP net income was $7 1 million or 10 cents per diluted share based on 72 million shares.
And $3 1 million or <unk> <unk> per diluted share based on 60 million diluted shares in the year ago quarter.
The key reason for the decrease in non-GAAP net income on a sequential basis was higher operating expenses.
And the increase in non-GAAP net income in comparison to the year ago quarter was slightly from iron levels of revenue, partially offset by higher operating expenses.
Coming to the balance sheet on March 31, 2022, our cash and cash equivalents totaled $153 million up from $144 4 million in the fourth quarter of 2021. The key reasons for the increase was largely from higher cash operating profit combined with our drawdown of roughly $5 million from our line of credit.
Now turning to the second quarter guidance.
We expect revenues to be in the range of 72 to $73 5 million.
And we expect our non-GAAP EBITDA for the second quarter to be the range of $5 million $11 million or 13% to 15%.
For the second quarter of 2022, we expect our basic share count to be in the range of $67 million to $68 million.
And our diluted share count to be in the range of 71 to 72 million shares.
That concludes my prepared remarks.
We're ready to take questions.
Yes.
Okay.
Thank you Neil.
And when we go to the Q&A session.
I will announce the name first please.
Please turn on your camera and that turned out.
Mexico that you would maybe able to ask questions.
Our first question comes from the line.
Miami Tandon from Needham.
Please go ahead your line is open.
Yes.
Okay.
Okay.
Okay.
I am.
Erez.
Okay.
Hum.
Sorry about that can you guys hear me okay.
Yes.
Great. Thank you so much our first aligner Anil congratulations on the quarter great job navigating.
What was I'm sure are very trying.
Tomorrow meant over the last several months I just wanted to first start with the.
The demand side it.
It seems demands really strong across the board.
Could you maybe speak to the monthly trajectory that you saw through the quarter and into the second quarter, maybe help us frame what the.
Second half might look like even though you're not giving formal guidance any kind of framework to think about the rest of the year. Thank you.
Okay.
Okay.
Alright.
We're back in business.
Alright.
Hey, guys.
I'll get my question.
I didn't because there was blood concludes sorry can you just so Mike why don't you repeat it.
Sure Okay.
So I was just basically going to be first congratulations on a great job.
Got it.
Demand is delbert navigating what was a very difficult situation.
I wanted to just pivot to the demand side. It seems demand is really strong across the board.
Wanted to get your thoughts on maybe the monthly trends that you've seen into two Q and even though you're not giving formal guidance for the back half of the year, how should we think about the trajectory of growth into the second half and for all of 2022.
Okay, well. Thank you sorry, I was a little bit of a technical glitch. So.
And I Miss congratulations.
[laughter] among the the key point for US is obviously, we don't guide the second half of the year because of you know continues and service.
And.
We will stay very bullish and very positive because not only were able to overcome some of the initial challenges, but we also see a continuous demand from our clients, we embrace our new locations or new capabilities as well as.
Existing locations as well so.
The demand is strong the demands as across pretty much all the verticals. So I would say that.
We're cautiously optimistic.
Because you know disruptions. It's one area you know U S economy is another one but at this point, we are fairly bullish going forward again.
Knowing that the variances are so big complex.
Got it.
And then I'll just switch to the pricing question.
Have you seen pricing leverage come through and is it enough to mitigate or maybe helped soften the impact of the wage inflation impact that I'm sure you're seeing as you look to scale, our head count in different geographies.
Okay.
Yeah I mean.
The dynamic is still a relatively small company compared to the Giants withdrew board the colossal challenges with it.
Inflation in Europe .
Price erosion rooster.
We are a technology company in digital space of customers.
You know our favor in the long term innovative digital transformation.
We mentioned before introducing our pod models and some complexity of customers to be resolved by very efficient return investment green delivery schemes.
I think the customers vote with a wallet.
Two broad grid, where the good opportunities we do see obviously some.
Wage inflation is mostly driven by structures when obviously immune location you're building T mob, but we.
We're expecting it to be tapered as well as with scale operation. So overall, we're comfortable to see in general.
On the behavioral green dynamics in a relative scale to others.
Great.
Thank you so much congrats again I'll get back in queue.
Bakery.
Thank you Max.
Our next question comes from Maggie Nolan.
From William Blair.
Megan Your line is open.
Hello can you hear me okay.
Okay.
Israel.
Hey, congratulations from lower quality.
Okay.
That is a profitable product.
A little bit more clear.
Carl.
I'm curious about I don't know.
Hey, John .
Yeah.
Quickly are you okay.
Global competition.
This is a client and then what was the impact.
On gross margin.
Got it.
Okay.
Well.
The gross margins.
Various factors and probably.
I would say that our new.
You can make some more specific comments on that.
When it comes to pricing.
Are you kind of controlling the mine towards.
Obviously there are discussions.
But there are discussions not because of awards and because of relocation.
Because of the Italia of the projects.
We've become a global company with a broad service offering.
And.
Not only we're flexible with a system approach to the value of low pricing, but is also customers understand.
There are certain key budgets, which are driven by again return on their investment the competition is always fierce.
But we have not seen so far.
Zimmers do they run away from us.
They're very supportive of agreement hirings or trying to let's say.
No debate the pricing I think it's the operator of those very professional way as we do with them.
Suddenly occasionally require perhaps a higher.
Pricing from the.
From the value, we don't base oil pricing. Okay. You know you'll move engineer from execution of allocation you pay them on delivering.
They're going to have to compensate with.
How you deal with the clients. If you look at the system approach that we believe are holistic approach would you do create accomplished global teams without pod model or fixed model pricing and with the services, we provide it becomes metro so.
Been out on the side you Omega had been on the client side for a long time.
The best thing customers. Appreciate when you look at their value than just trying to make a dollar here there and again.
I'm pretty bullish going forward.
Customer receptor with a fair degree dynamics, because we're bringing value to that so maybe I'll address the pneumonia.
Sure. So as you know there was about 402 bits of compression on a non-GAAP basis between Q4 and Q1 now remember that seasonal it's largely driven by the month of January where we have on the season and then we have a shorter month in February so typically that's what we see so as Leonard pointed out it.
Is more of a seasonal trend you should not extrapolate anything on the pricing front and that's something that we work our way through now as you look at any quarter end. Even so this year you know we start off with that bottom and generate X up in February and then you have another pick up in March so it comes back.
Okay.
I'll Ramble a mall.
It might be.
Tomorrow.
On behalf of <unk>.
Turning to slide four.
Okay.
Okay.
Okay.
Oh.
Very good well I mean, you always ask great question last time, you asked my question about the new customer that was very timely so on Monday I'll be in India.
And we have a management team we're scaling all of US will open our own office, we have great partners.
There are there is not just a focus on India, it's overwhelming.
Kind of concentration of effort both from the client in relationship to our hiring process to onboarding the process.
It's too early to say, how this scale factually affect the business I mean, we hired people, but not to the scale. We're talking in the hundreds of thousands people overtime whats important is the first few resolved would I'm glad there are some very senior people.
In India joined Green dynamics, so when we go to the office will cut the rumored we will actually see some very strong presence of experts to me he's like in strategy comes with that.
Having their keep talent and keep telling us.
This leadership technical leadership operational leadership, where we're getting that ROI Arabia within a few weeks since we started so there is a support there.
We're getting support from the local authorities.
Now Green dynamics is unique in its own way you know we as as we mentioned as I mentioned in my statement, we pull the timeline by a year. It doesn't mean, we have not been engaged with.
India and I've learned lessons from other companies a lot of lessons from the company who tried to jump.
Jump into India, and do things, where he'd Indian government trying to jump into Europe . So we've been prepared they will tell how successful the first.
Things are very encouraging, but I think we'll have more color in one quarter.
Okay. Thank you.
Barbara.
Thank you Matt.
Yeah.
Thank you Maggie.
Next question comes from the line of Ryan Potter from Citi. Please go ahead.
Thanks for taking my question and let the reiterate really impressive car for you guys given the circumstances.
I'd like to start with your talent strategy and some of your new geographies.
Is it kind of how quickly pettinger workforce in the places like Romania and India.
What have you put in place to kind of Villa recruit the same high level engineers have the same value prop.
Have that growth culture.
As I felt that comes naturally or is it something that you guys have had really in Boston and palaver Enzo.
Very good.
Thanks, Ryan so.
Obviously pulling in the timeline by one year it would be kind of unfair to me to say that it's all been planned grades. So we had some things, but we had such an amazing leadership team.
Again, some of the key elements of the route comes with their leadership as I said I'll come back to the color on India and a quarter when it comes to Armenia, we started the process of.
Building Armenian location.
In Q3 last year.
Again.
Our global strategy involves mix of the talent.
A lot of very talented Armenian engineers are in the United States and I know quite a few of them.
We'll pick the locations not only by existing joy by capability skill Ito right.
So Armenia is a country of many others, who you will hear from us going forward, it's been up in planning for a long time.
In addition, right now Armenia is one of the countries, where he serves as a real indication of Russian engineers. So it's a it's a good mix of some of the existing talent and some of the new Dawn. So location is Brian really nicely our.
Head of the global delivery volume because there are quarters right now in eurobond.
And you know.
We are we're just executing superfast, but the foundation it was been blending for a long time, so the theres only one recipe for the talent.
As universities and relationship with the young ton in Georgia, we already having internship programs no locations you mentioned.
Got it makes sense and I guess sticking on some of those newer geographies.
Sounds like the margin Bryan are you guys initially having to offer a more kind of competitive wages to attract talent other than employees might be relocating from Russia, and I guess, how do you kind of gross margins in some of these newer deals compare versus some buy in San Antonia War.
Scale geographies over time.
You know there is no clear formula. This is just statistical evidence, which is driven by the reputation of the leadership and the local location.
In the scale of the team.
There are always some opportunistic people who like to explore.
Non linear personal benefit.
Again.
Without mentioning all the details, but like I said, we've been in Armenia for a few quarters just to explore market hips one's enthusiasm because people could we have some amazing partners.
There were some incredible partners.
In Armenia wind I will tell you is there theyre very enthusiastic green.
Green dynamics.
The beacon of technology.
And when we go to the regions. We have so much overwhelming support is not another call center or another you know kind of you know by this job or outsourcing and forgive me you know.
So theres no offense of those things, but were beacon of technology and people embraces a there is some.
Excess of pay in the early days of course there is.
You have to invest but it's investing into the top tier talent with drive everybody else. So.
There is a somewhat potential the pressure freight when we talk about it.
I'm not going to go to speculate it's going to take.
Orders are years or forever, it's too early to say the overall trend obviously the faster you want again the top talent.
More expenses, there, but on a low overall scale when we become anywhere.
One of the I would say a formidable player.
Once we get enough young talent through the college programs in Q1 as hard I think that balances out so.
I think you know.
The key for you to think about it when.
When you can start having a quantitative leap for Green dynamics, then you understand that location becomes more set.
Settlement and of course as you go west.
Or is there more pressure on the pricing, that's where we're going into Latin America going to Mexico, but the talent is not cheap anywhere.
And again <unk> is driven by building.
Thanks, and congrats again on the Gregoire.
Yes.
Thank you.
Thank you Ray.
Next question comes from Puneet Jain from taking Oregon.
The classic.
Thanks for taking my question and let me also congratulate you on navigating the visions that makes.
Commendable that you added higher organic revenue on a year on year basis in Q1 than you did in Q4.
That's not.
Not what we expected given the challenges in cancer.
Let me ask about demand environment, specifically on the backdrop of sedans.
Market reaction in multiple overhangs in macro economy like inflation oil price supply challenges.
Are you seeing any signs in any other vertical.
The slowing macro economy.
And if you can remind us how the business.
How you expect that business to a pay it if that is like a slow down or if that is.
Is like a recession over the near term.
Yes, yes so.
There is always a question of gloom and Doom.
So.
We had a gloom and doom three years ago.
We had covered which impact degree dynamics very rapidly.
One of the learning lesson as always differentiation. The TMT is adding the quantitative numbers, but you also noticed that retailers speaking this is a different retail.
We've learned the lesson from brick and mortar guys. So it kind of.
Becoming more diverse.
The pharmaceuticals, commenting manufacturing common man.
We have.
The CPG guys. It's always a question about discretionary spending right.
First people.
Voting with their wallets means the consumers right.
So I'm.
Noticed today like Facebook freezes the hiring for example, so we're not nave we.
We understand as inflation goes up.
There will be some level of adjustment now.
What level of recession, how complex has become.
Which areas are going to take we don't know, but we knew.
We are need to be a defense.
And that's one of the reason.
You'll see our forecasts to be somewhat conservative some people ask us.
Why are you more aggressive than others.
Trends are very good sorry, I'm, sorry, so the definition of conservative.
Means that we are taken into account how diverse we need to be.
We're adding Europe , we added Switzerland, as our European headquarter we.
Fully absorbing right now so we don't use the word docs anymore. It's part of grade acid completed their period of that transition. So we're blending the forces were adding more focus on their on their markets. So the.
There will be impacts cause somebody to tell you I don't worry about this is this is just another Blake no. We're conservative we are flexible we are focusing on building our.
The bench in the area of the most decisive impact from our clients and we assess our critical positioning with our clients in the area, where we are we're doubling down.
And let me switch gears, a little back ask about margins given that changing delivery mix.
How should we think about normalized margins for the company in steady state when.
Maybe next year ROA.
Or sometime after that as well as how should we think about incremental margins a bit is revenue upside in the near term.
How should we think about incremental margins of that.
High revenue that you generate.
Okay. So OLED of course.
I need to have a joyful hamstrung them Marshall also gabbard margin.
So.
He loves to talk about my I'll leave with margins every single day right. So our margin is our bloodline of their company right I mean, no matter what people say I'm, increasing my Arabia Pemex now I'm.
I'm, an old school Guy right.
You would feed yourself in the queue from what you've heard.
You Gotta be responsible for the earnings right. So the first thing to get as always our gross margin. So the gross margin started getting wobbly you need to understand where it comes from and that's the usual a testament of how well.
Your customers respect you know you can always look at the adjustments when you play with adjustments I'm, an old school Guy.
Our Q1, you know one time charges is probably the lowest you can imagine and our Cogs charge is miniscule.
We've been live with different in the next quarter, we will see how it is but I'm a straightforward guy.
It <unk> so.
The gross margin is what I am focused the first.
There is a little pressure in amount, but the seasonality played some role. So again, we'll see where it goes through the next couple of quarters and right now the early indications that some of them. Some of the early investments in new locations and Alistair refinements you guys spend a good picture, but again I'm concerned the second part.
Is on EBITDA margin.
On a non-GAAP , especially right so.
The value.
For the total company comes down to the earnings.
And non-GAAP EBITDA for me, it's fundamentally is how much I invest into what I invest.
Starting to invest in technology, and I am investing technology in all the regions are now starting to invest in the structure. Yes. There was a little extra you know when you'll have to scale organizations fast, but you have to be smart there are some businesses, which are their business contracts you do things to make sure you spend your money wisely and then Theres a catastrophic.
Countries right now you asked is about the normalized long term. So at this stage. There is no reason for me to change my long term margin targets that we've laid out so we're not even going to revise that and do that now.
So as <unk> pointed out in the in the near term.
As we get scale in these some of these locations, obviously, we're going to be investing a little bit, but it's not something that is dramatic rate in the bigger scheme of things because our whole approach towards engineering, it's driven by value.
So again at this stage the way we are looking at our business is.
Very focused on the margins, but not overtly how do I say, we're always concerned but it is not something that you know our model is not changing let's leave it at that.
Okay.
Hey.
Great Okay. Thank.
Thanks Electrochromic.
Next question comes from Bryan Bergin from coal.
Please go ahead Sir.
Our bankers Zack as a man on for Brian .
First question from US is just kind of looking to get.
Some more on the ground insights, perhaps as it relates to climb.
Client conversations the revenue trajectory certain speaks to it certainly speaks to it but I'm just just.
Here the ground I'm trying to get a sense of what clients are saying now.
Larger clients continue to grow where else are these large clients, taking you and how much nervousness is there is a way for doing business out of Ukraine today.
However, with good clients large clients contributors to the larger revenue against that.
The first is answer no.
Look.
Larger customers, but the customer who has been our wood minimal agreement named most of them alone is not the customers, but the leadership of the group.
So the larger customers are actually.
More supportive and more positive reaction of agreed upon because many of them move through 2014, right and many of them move through 2020.
The trustco judgments.
Blindly I mean, there were a lot of security audience and all those conversations and how are we going to manage the business in.
There are multiple risk look.
I would be the last person who say they are new orders there are always risks there's a war.
Nobody's safe, but could there are.
Other people in other countries or cities until we win.
There is no fundamental safety so when we go where the customer we plan.
For contingency plan for redundancy and I would say the big ones are very simple.
The bigger question, which actually.
Megan asked me last earnings call, how does the new customers.
This is interesting.
<unk> seen the new logos and some of them are very reputable logos like not ever been on the.
Their wearable enterprise big guys smaller guys a little bit more.
Able to take the risk because of our quality award they say, okay you know.
At <unk>, we will do the right the bigger guys go steps deeper.
They know our reputation in the SSO regrows.
On the question around the smaller guys, maybe growing a little bit more careful.
Because we continuously proven how we'd go but there are a number of them is growing too remember, we're trying to build a better mousetrap, but the big guys knock on wood they've been tremendous.
That's helpful and then switching.
Switching gears looking to dig deeper and to be icy surfaces partnerships that were formed since over the past month or two can you talk about how grid is using these partnerships to help sustain delivery capabilities.
And maybe at a high level can you provide some color around the economics as it relates to these relationships and how might these partnerships evolve over the medium to long term.
So you're not talking about our business partnerships, you're specifically, referring to India is that correct.
Yeah, and there were also.
Some announcements intra quarter as it relates to partnerships in the U S.
Yeah, I'm not sure of the partnership in the U S.
The partnership with U S companies for India.
Everything is around India.
So what we're trying to we were making the comments is about so there are two development. We have a huge number of network partners you would build a business there are top tier names all the big guys, you know Amazon and Google and the.
Microsoft.
Big Geyser in E Commerce space in software I mean listen prep.
When it comes to the partners, who announced their relates to how quickly we can scale. This.
Business in India, and we have showed partners has been very much.
I would say vital for early success.
We plan in advance the relationship going forward in terms of how are we going to turn those partnerships into the.
Build operate transfer relationships or other forms to maintain the continuation of our head count.
And right now I can tell you that from the very short period of time, it's been just north of two months.
So far so good.
The pudding the proof is in or putting in the pudding will come sometime next year. When all is going to be one big Green dynamics, but I would tell you from the agreement perspective from both the facts into Europe .
Is it going to be it looks very good and I'm in India as I mentioned before I mean, all these partners are more amira OLED decision makers and we're constantly in our communications.
So that's to me is a vital part of our kickstart, but the future of Greek banks in India is great dynamics already.
That's helpful and perhaps a resilient and unimaginable backdrop. Thanks.
Thank you thanks Ed.
Thanks, Matt that's a great question.
Next question comes from the line of Chop Stickler from Cantor Fitzgerald.
Hi, Leonard Neil Thanks for taking my question I'd like to reiterate congratulations for the very strong execution this quarter and actually wanted to dive a little bit deeper into this outperformance so with the strong print and excellent guidance can you walk us through some specific areas of your business that are currently outperforming you.
Our initial expectations for the year.
Are there specific verticals that are driving higher demand than you initially expected and do you believe the demand environment is still benefiting from a post COVID-19 tailwind.
Oh Oh.
Very philosophical.
[laughter] post COVID-19.
If you read the press every day, we have every other day and you covered.
Political after the after party right I'm, not making fun of it but the messier, sometimes and people still need to be very careful right. So the industry opened up legal mentioned recession was the next one.
The general demand for <unk> services is across all the industries.
Traditionally very strong in e-commerce and the good news.
The time will recall green dynamics, either retail supplier, it's gone well.
The specialist in digital transformation.
In cloud migrations in data analytics and artificial intelligence.
Front end.
All of these things mobile technologies.
Automation of all kind of different levels. So yes.
E Commerce is a big part of it but if you think about and you get a little bit more now customers in manufacturing.
Finance and <unk>.
Pharmaceuticals, they all come for the same thing how can we enhance our business experience digital experience, even supply chain experience logistics and all other facets. So I believe that I would not think went on a single industry.
I'd say that the biggest thing for green dynamics from the beginning of the year, which continues through the work continues.
To lessen constrains with of course, I wouldn't call. It end of quarter. So lesson constraints on a cohort is that okay.
Karen would Trump green dynamics.
With the you know.
All of these complexities all the demand on our skills.
Our own decision, making versus much bigger guys.
And.
When people start building the hands on experience with our furnace projects.
Our overwhelming answer is yes.
So the biggest thing I have right now is just working with the logistics of new locations.
<unk> taken the demand book together.
I would say that again.
The Q2 will be a testament to many of those variances.
Some other guys say, let's wait for next year look.
We leave day by day.
Nimble in a very humble company all I can tell that our customers do not question our capability. They sometimes just want to make sure. They are.
They are in say in mind to give us all this ownership of the project and our biggest contribution we have is co locating in our operational capabilities our own teams with our clients and we've learned over the years, there's no better way to earn the trust with the client is to make clients.
Inclusive in your projects and train them, how to manage business, sometimes post grid and then together with it so that's where the answer questions. So the final summary is we have demand across all our verticals.
Alright, Thank you lennart.
The other issue I'd like to talk touch on is logo growth. So new logos remained very strong this quarter. Despite the ongoing geopolitical headwinds to your supply are you starting to see the impact of your sales force build out and can you provide some insight on how you expect the pace of new logos to continue into Q2.
Well I had in my.
The meeting with the head of sales.
Yesterday right and.
The very short as I'm never satisfied with that.
With the scale of growth.
I believe that what's important is the demand is not tapering.
And we are adjusting our model hard to scale with existing clients versus how to provide the growth for the new clients. Obviously the sales force has grown.
What has improved.
Are you now where like Ukraine, where fighting weather and mature.
And that's the path to victory in one area of maturities, we have much more materials.
Immediate proof points test cases, all of these white goods, which are in the hands of the Salesforce one of the biggest change and I talked about it in a couple earnings calls before is an investment into <unk>.
Rajiv goes our CTO technology organization, we have a global technology organization, which anchors innovative Sandra pre sales activities, but also the generation all the artifacts.
So I see that our turnaround from perspective of engaging with the clients actually getting to the projects.
Faster and request less hands on.
Kind of nurturing by the top technology base to me that's a success it means the scaling and the process. So that's where I see the logos, but I don't think I'll ever be satisfied with the rate of growth.
Okay.
Understood. Thank you Leonard and congratulations again on the excellent quarter.
Thanks, Josh.
Thanks, Josh.
That will be all of the Q&A session for today.
I will now turn the call back to that or for closing comments.
Thank you everybody for joining us on our call today.
Our first quarter results and our second quarter guidance proves that we are a company that can deliver under difficult situations.
The estimate of grid dynamics capabilities and offerings that clients could use as you can appreciate.
The demand environment is robust and our expansion into different geographies is played well and continues to be undrawn.
As I said in my previous interactions, while the current geopolitical situation.
Moses uncertainty I'm confident of reaching a new strengths and our ability to navigate successfully.
Forward to give you a business update in the next three months.
Thank you.