Q2 2022 Grid Dynamics Holdings Inc Earnings Call
[music].
Good afternoon, everyone.
Welcome to <unk> second quarter 2022 earnings conference call.
I've been Chang head of Investor Relations.
At this time, all participants based on old evolved.
Joining us on the call today.
Yields damages issues and CFO Robert.
Following their prepared remarks, we will open the call for your questions.
Please note today's conference is being recorded.
Before we begin I would.
I'd like to remind everyone that today's discussion will contain 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 described in the company's earnings release and other filings with SEC.
During this call we will discuss certain non-GAAP measures of our performance.
GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the earnings press release.
AK filed with SEC.
You can find all of the information I have just described in the Investor Relations section of the call that site.
With that I will now turn the call over to the entered our CEO .
Thank you Ben.
Good afternoon, everyone and thank you for joining us today.
Q2, 2022 was another record revenue quarter of $77 3 million and this marks the eighth consecutive quarter of record revenue in the company's history.
I wanted to emphasize these results, which are definitely exception given the circumstances the world has been facing or the best five months.
<unk> executed flawlessly and transitioning a significant proportion of the workforce, while continuing to do projects in a timely manner.
I will go into details shortly.
Three months ago, I committed that we will exit Russia.
Today I would like to report, we seized Russian activities and we're now geographically more diversified as well as continuing to expand the growth although industry client verticals.
More importantly, our.
Our customers demonstrating unwavering faith ingredient naming <unk> capability.
Confident our strengths and our ability to successfully navigate the business in the future. Despite the geopolitical challenges.
As our quarterly results reported we progressed across multiple fronts of our business.
This includes scaling our global.
<unk> with new occasions, expanding our partnerships and adding new customers.
<unk> solid results over the past several quarters have shown the company incredible resilience and bonds you can back stronger from the global pandemic crisis first and recently from the war for Pretreated by Russia.
It is a true testament of the Companys strong fundamentals teamwork and commitment to the business and the shareholders.
On this call we will provide insights into the demand environment global operations and financial performance for the second quarter 2022.
And also provide outlook for the third quarter.
Again in the second quarter, our revenue of $77 3 million well exceeded our expectations that we shared with you three months ago.
We ended the second quarter with adjusted EBITDA of $13 million, which is 17% of our Rubin.
The better than expected performance would you do a couple of factors.
Weakness stronger demand across our industry verticals and customers Cigna.
Cigna.
We had minimum disruption to bill ability as we transitioned out of Russia.
And more importantly customer interest in engaging our services around digital engineering continued to be strong this quarter.
During the quarter, our geographical footprint grew across the world in Europe , Our new office in Switzerland will become a European headquarters, while London and Amsterdam, We will continue to serve as customer fusion centers of excellence.
India, Mexico and Poland.
Please strategic rules.
Scaling delivery footprint.
India, We did extensive Tony will offer an unmatched ability to scale, our operations and the long term, Mexico, where there's a large pool of talented engineers, we can be in them zone to our U S based clients over an excellent near shore presence.
Clients to welcome on near Shore strategy had expressed interest in partner with our Mexican operation and finally in Poland with advantage being one of the largest country in central Europe with a strong.
Presence will continue to support operations as with scale in Europe .
We also ramped up hiring of the June Don when several countries such as Romania, Our media in Serbia and some others.
Each of these countries over a unique advantage in our global growth.
In the quarter there were several positive trends.
Which I would like to share with you.
And there are a few notable ones.
Demand trends.
In the second quarter, the demand across all verticals and customers was strong.
This was indicated by the sequential and year over year growth across all of our industries and the majority of our clients.
As you know the current macro recession concern has been on everyone's mind and our clients have been no exception.
Currently we're not witnessing significant widespread headwinds, it's still more customer specific in nature.
And there are a couple of reasons for that.
But many of our clients digital transformation initiatives are given higher priority and we're increasingly enrollment project strategic importance in comparison to some of the best experience.
Second we're now more diversified company with less exposure to recession sensitive retail brick and mortar business human in our retail business. There are mix shifting away from some of those sensitive areas.
Finally, a third healthy pick up in our new logos over the several quarters enabled us to be more resilient as we grow across a larger customer base.
Turning to some additional second quarter Sigma commentary.
Similar to last quarter, our largest technology customer continuing to ramp aggressively and to support our growth as we expanded expanded into new geographies within.
Retail business strong sequential growth was driven by our e-commerce friendly retail customers at our largest CPG customer we continued to grow and more importantly, we've finalized on several key programs not just for this year, but for 2023 as well.
We're bullish on our prospects and continue to leveraging our position as a strategic partner of many.
Logo momentum.
In the quarter.
Added five new logos across industries.
Of this one was a global footwear manufacturer and retailer one was one of the largest.
And distributor of beverages in the United States. One was a delivery service operation. We also had additional logos and technology and healthcare space.
Our pipeline in the third quarter is healthy.
And I expect to share some significant logo wins next quarter.
Partnerships, we are witnessing good momentum on the partnership front in the second quarter, we saw healthy growth in our pipeline and expect partnerships to play an increasingly important roles in our growth.
During the quarter, we received an award from the Mega Alliance for the Best Health Care project.
Our capabilities and strengths are gaining greater prominence across our partners ecosystems and this in turn is leading to the new opportunities, but also enhancing our team by adding a senior sales executive to focus specifically on building opportunities one of the top three cloud providers and finally done.
The largest cloud provider partners will launch new products started Keith and enhance our competencies and specialization.
During the quarter.
Great dynamics delivered also some of the notable projects.
We're a global technology company, where build a centralized continuous integration platform.
Our solution standardized best practices for collaboration and one engineering teams and increases their productivity and transparency for the engineering leadership.
The platform currently serves over 1000 engineers and is planned to be rolled out on a company wide basis.
At a global CPG company, we implemented a unified interface system for wholesale orders. This system will not only significantly reduce the amount of manual work, but also speeds up ordering processes and fulfillment.
As a key technology partner to global Cyber Security company <unk> helped to build the next generation cloud solution with a security incident and event management.
Our solution migrated the on premise storage model.
Major cloud platform.
We've built a high volume high velocity security event ingestion pipeline.
Anomaly detection and behavioral analytics.
This solution enables a competitive edge in the marketplace by offering near infinite scale speed and low cost of ownership.
We're one of the largest manufacturing services company, we developed an intelligent cloud based supply chain platform that provides real time visibility across the entire ecosystem.
It covers the whole process from planning to delivery and utilizes big data machine learning and predictive analytics.
This system allows us to breaking identified and quantified potential risk losses and suggest mitigation options with the proper cost estimates.
Currently our client uses the system to manage tens of thousands of suppliers across the globe.
With that.
Let me turn the call over to <unk>.
Who will discuss Q2 results in more detail.
Yeah.
Thanks, Lynn good afternoon, everyone, our second quarter revenue of $77 3 million exceeding our guidance of 72.
To $73 5 million and was up eight 3% on a sequential basis and 62, 2% on a year over year basis.
Better than expected revenue in the quarter was driven by strong demand for our services across industry verticals during.
During the second quarter maintain our largest vertical representing 32, 9% of revenues grew nine 2% on a sequential basis and 100% on a year over year basis, a strong sequential and European growth was.
It was driven by strength across our customer base from ecommerce friendly in brick and mortar retailers and we continue to focus on digital transformation initiatives.
Our TMT vertical was our second largest vertical NAND represented 32% of our second quarter revenues grew nine 1% on a sequential basis.
From 45, 2% on a year over year basis.
And strength across our customer base. Additionally, during the quarter one of our largest technology customers aggressively grew as we expanded into new geographies.
Here are the details of the revenue mix and other verticals.
Our CPG and manufacturing represented 28% of our revenue in the second quarter and grew seven 4% on a sequential basis and 62, 5% on a year over year basis.
The growth during the quarter, primarily came from the ramp at our largest CPG customer.
Finance represented six 5% of revenue increased 11, 5% on a sequential basis and grew 24% on a year over year basis and finally, the other segment represented nine six of our second quarter revenue and was up two 8% on a sequential basis.
Growth came from healthcare as well as our new customers.
We exited the second quarter with a total headcount of 3763.
Up from 3617 employees in the first quarter of 2022 and up from 2510 in the second quarter of 2021.
In the second quarter, we hired aggressively across our locations in Europe , India and North America.
This head Count addition was offset by a couple of factors first asking exited Russia. There were head count predictions that included ramp down of overhead and administration personnel.
We scaled down our bench of engineers, which had grown to compensate for any more related supply disruptions.
As we progress through the second half of the year, we expect our head count to continue to expand.
At the end of the second quarter of 2022, our total U S. Head count was 326, 9% of the company's total headcount and remained on the same level compared to the first quarter of 'twenty.
22, and down 11% in the year ago quarter, the year over year decline as a percentage of the total headcount was largely driven by greater mix of our U S. Non U S headcount, our non U S had comp, which we sometimes refer to as offshore located in central and Eastern Europe , UK, Netherlands in Mexico and other locations.
<unk> 3437 or 91%.
In the second quarter revenues from our top five and top 10 customers were 44, 2% and 62% respectively.
During the same period, a year ago, our top five and top 10 customer concentration was 45, 4% and 62, 3% respectively.
The diversification across our top five and top 10 was driven by a combination of factors that included new lower ramp industry diversification and our acquisition.
During the second quarter, we had a total of 208 customers down from 213 customers in the first quarter and 212 customers in the year ago quarter.
The sequential decline in our customers was largely driven by our commercial business, our ducks, which we acquired in December of 2020.
As a reminder.
We only count the revenue generating customers in the quarter and do not include customers who.
Were enacted during the quarter.
Moving to the income statement, our GAAP gross profit during the quarter was $28 $9 million or 37, 3% up from $26 8 million or 37, 5% in the first quarter of 2022 and up from $19 8 million or <unk> 41, 5%.
In the era of low quarter.
On a non-GAAP basis, our gross profit was $29 1 million or 37, 7% up from $27 million or 37, 8% in the first quarter of 2022 and up from $19 9 million or 41, 8% in the year ago quarter.
Sequential and year over year increase in gross profit was largely driven by increase in revenues.
non-GAAP EBITDA during the second quarter that excluded stock based compensation depreciation and amortization expenses.
Expenses related to geographic reorganization transaction and other related costs were $13 3 million or 17, 2% of revenue up from $11 4 million or 15 nine.
9% in the first quarter of 2022.
And up from nine $7 million or 24% in the year ago quarter. The.
The sequential increase in EBITDA was due to a combination of higher levels of revenue and flattish operating expenses.
Our GAAP net loss in the second quarter totaled a loss of $13 2 million or loss of 'twenty.
Based on a share count of 67 million shares compared to the first quarter loss of $2 7 million or a loss of <unk> <unk> per share based on 67 million shares and a loss of $1 5 million or a loss of <unk> <unk> per share based on 54 million shares in the year ago quarter.
The sequential and year over year increase in GAAP net loss was largely due to higher levels of stock based compensation and geographic organization costs offset by higher levels of revenue.
During the second quarter, we incurred $6 million in geographic reorganization cost.
On a non-GAAP basis in the second quarter, our non-GAAP net income was $8 2 million or <unk> <unk> per share based on 70 million diluted shares compared to the first quarter of 2022, non-GAAP net income of $6 9 million or 10 cents per diluted share based on 70.
Million diluted shares and $6 1 million or <unk>.
<unk> per diluted share based on 61 million diluted shares in the year ago quarter. The key reasons for the increase in the non-GAAP net income on a sequential basis were higher levels of revenue and flattish operating expenses.
The increase in the non-GAAP net income in comparison to the year ago quarter was largely.
From high levels of revenue, partially offset by higher operating expenses.
On June 30th 2022, our cash and cash equivalents totaled $150 million down from $153 2 million.
First quarter of 2022 and up from $144 4 million in the fourth quarter of 2021.
During the second quarter, we paid down our line of credit to the amount of $5 million. Additionally, in the second quarter, we accrued short term liabilities of roughly $3 million that we expect to pay out in the third quarter. We also invested $1 million into a technology company.
Coming to the third quarter guidance, we expect revenues to be in the range of $78 5 million to $80 million we.
We expect our non-GAAP EBITDA in the third quarter to be in the range of $12 6 million to $13 6 million or 16% to 17% of revenue.
For Q3, 2022, we expect our basic share count to be in the $67 million to $68 million range and our diluted share count to be in the $70 million to $71 million range.
That concludes my prepared remarks, Ben we're ready to take questions.
Yeah.
[music].
Thank you O'neil.
Let me close with the Q&A session. This call I will first on LCR ne at that point, Chris musical Ly and turned out a camera.
Our first question comes from Puneet Jain from Jpmorgan.
Your line is open.
Hey can.
Can you help me.
Yes.
Please turn out a camera.
I'm trying to.
And if I can.
Oh, sorry.
Nice quarter like really nice quarter.
Just heart like a quick question like us.
The relocation of employees.
<unk> suffering from eastern Europe completely behind you now.
And should we expect you to operate in like a steady state.
From here onwards.
Okay.
Okay.
It's more stable than the question Jim good to hear from you Yes of course.
Grocery is behind US I mean, there are still a lot of.
Uncertainty in the region as you know.
Or is far from being over.
We look very optimistically as we grow our position.
I would say outside of the traditional risk area, we still feel very committed to Ukraine and continue to operate from Ukraine.
With the diversity of the workforce and scalable capabilities and wish you a very positive reaction from our clients.
And then I should think about the macro environment, specifically over the last few months are there any defensive in client behavior or their product needs across different verticals, maybe like retail CPG clients might be more impacted from inflation versus like tech vertical all of them.
Verticals like have you seen any changes in client behavior.
The spending pattern type of projects execute across different verticals.
Sure.
There is a difference.
<unk> seen several customers.
Which have tighten their budgets already.
We're seeing some other customers richer considering to tighten the budgets.
We're not 100% immune.
But we feel very good where we are.
There will be some softness I mean this is the reality of the world we were more diversified we reward.
If you noticed.
We're delivering on our growth.
We also.
Our positioned.
More strategically than before not ever had before.
And I believe that.
The importance is how deeply entrenched with our customer execution on the strategy.
One thing about retail June because im sure. This question will come back again.
The e-commerce related or more.
E Commerce, driven enterprises, and the retail Cpus piece.
Our more capable to withstand.
Variance on our markets and somebody who is much more brick and mortar.
Thank you.
Thank you.
Thanks, Tony.
Next question comes from <unk> Tandon from Needham.
Please go ahead.
Okay.
Right Oh letter that I know, you've got to see a reservations on the quarter.
I just wanted to ask you about the guidance coming off this really strong second quarter performance. If you look at the <unk> guidance. It does call for a deceleration maybe you could speak to that and also any sort of framework to think about for Q and maybe.
All of you a little greedy here asked about any initial indications for 2003 as well.
Alright.
I'm going to start a little bit on a higher level and then I'll have.
Neal to give you a little bit more color on the guidance.
<unk> as you know we are conservative.
We would like to be conservative because as you know from the week. After we became a public company in the world got into turmoil in March 2020, and it seems like never stops.
We look at macro indicators, we look at other factors and we just want to make sure.
Did we react appropriately.
The growth.
And profitability.
We will have to and we want to make sure we continue responsibly.
Continue with the ability to scale and I'm a big focus.
<unk> to be under technology innovation, regardless of region, where we are talking about client offerings.
I believe that we are on a path of continuing to grow but.
But in terms of specific sensitive or variance in terms of the forecasting I think anew.
The chairman please.
Thank you and thanks for the question you're right as you go from Q2 to Q3 seasonally you will get you all know how the quarter shapes out which is a strong sequential growth I think Leonard summarized it very well look I mean, we look at all of our clients, we look at their forecast and.
We are in an environment where.
There's a lot of moving parts.
So.
Theres nothing fundamentally there's no loss in clients, there's no loss in business there is no loss.
Any any of the customers, it's basically a bottoms up analysis of how we're looking and giving the best forecast as we can.
At this stage again look we'll see how the macro plays out.
And we'll come back in three months.
Okay.
Youre on mute Mike.
Yeah.
Not letting me on mute.
You hear me now we can okay little lag there just a quick follow up question on the supply side, given all the cost assure that everyone. In the industry is seeing how are you able to offset that.
Your clients receptor through price increases at least call a provision and any commentary around that would be very helpful. Thank you.
I wanted to start a sale would cost issues right. So.
There are certainly pressures and theyre variance, but no.
There are cost issues on one side, there is actually a bit of a tailwind and a stronger dollar.
We're talking fundamentals the fundamentals obviously.
When you.
<unk> teams right.
And you're moving from one cost operating zone to another Corso pruning zone.
The driver is how well your position.
With extracting the young tones, which becomes viewer.
The sphere.
So we believe we prepared well.
For key countries, which are described in there.
And all our remarks, so we have the mitigation plans.
When we look at more senior talent. There is obviously there is over more cost pressure, we're growing we're still at a fairly young company and I would tell you from the customer perspective.
There is a fair level of understanding.
The high quality and performance of the teams we are offering to them.
Our strategic projects.
Okay.
We're not out of the woods from the World, where we're stronger feel very comfortable on the balance sheet the regions the talent and client relationships.
Thank you appreciate it thank you.
Thank you Mike.
My question next question comes from the line Maggie Nolan from William Blair.
That's correct.
Hi, guys. This is jesse on for Maggie Congrats on a nice quarter.
We had a couple of questions for you guys on talent. So first could you talk about how.
Progress is going in India, and Mexico annoying when talking about expansion plans.
Those two geographies recently.
Right. So thanks for the question and obviously very relevant.
I believe when we look at Mexico.
Steady.
We're growing.
I see more and more real issue with University, a few more and more hiring.
They see more and more of our contracts with our clients would include Mexico, but its proportion.
India.
I've been on disproportional growth will return.
And Thats, a very strategic number one location.
Let's say today is that the growth is a little bit slower than.
I would like to see at the moment not because it's.
It's an issue for us, but we had to go through incorporation.
We have direct hiring now we go through all these hoops with the formality of Barclays helping us.
So that's.
That's going well.
The other factor, which plays the role overall the picture is that you may have noticed that.
We planned for.
Some catastrophic almost get historically around one of the countries.
So far knock on wood, the resilience of our delivery and the quality of work.
Basically the efficiency of the environment they are in.
Pull strong.
Most of the.
Russian engineers reallocated.
Ukrainian team performs well in other countries as well so.
While we see India growing this you know absolutely urgent demand is in line with I would say more continued growth who will give you the updates as we grow the good thing is we jumped over the formula the hurdles and but one thing is for sure the indium Green dynamics will be.
The same quality the same performance the same capabilities many of their locations and that's where we're going to accomplish in this work from full steam behind.
Okay. That's helpful color and then.
For my follow up I wanted to touch on attrition.
If you adjust out the exit from Russia.
Attrition a trend in this quarter and what do you think what do you think are the puts and takes there.
Well I think our Neil summarized in his part acquired well it's in line with the past.
Yes.
In some areas has actually slowed because you know the turbulent time people try to hold to the mothership of the company.
I think we respect a lot how we manage and operate so I believe that voluntary attrition.
Pretty even though I am I would say is not decreasing to some extent.
Well I've been voluntary for known reasons, which we mentioned.
New emphasis.
Obviously higher than other quarters, but I am very comfortable with the direction.
Sure.
Tension of workforce.
Alright, good thanks for taking my questions of course.
Thanks Jesse.
That question comes from Bryan Bergin from Cowen. Your line is open. Please go ahead.
Hi, good afternoon, it's good to see you all.
Wanted to just a follow up on the operating footprint here first so just could you just give some color on how you see that global footprint mix of all of them really I guess as you exit the year at can you give us any sense of a rough composition of just where your professionals are going to be.
Well.
As you know, Brian we guide quarter over quarter right. So this.
This is a little bit more philosophical question. The end of the year Boy what is the end of the year.
And what company, you're going to work for them, there's a lot of changes in the world great. Congrats on the acquisition so.
The reality is we announced our generic footprint.
Right. So we emphasize that.
India, Mexico, and Poland, our three strategic growth from that as you know as well we are.
We're not nearly to call.
Excuse me in India, and Mexico to give today is largest locations.
Have a very strong contingent in the Ukraine, where you're going to stay.
They were stronger with Ukraine hour.
Engineering talent in Ukraine.
Deserves.
Support as much as we can but we grow elsewhere right. So.
<unk> got a bump as you can imagine that quite a few Russian engineers move their sordid Armenia, but.
But where.
Where we are today, and where we're going to be.
By the end of the year, we're going to be next year.
It's actually a fundamental question.
So I didn't want to say generically regions, because usually very brush stroke. So I wanted to view kind of narrowing down India, Mexico, Poland. That's the growth Ukraine strongly behind the rest than our former Roma and of course from the priority of the business, which is very important U S remains exceptionally strong.
Priority for us, but as you can see we're building a bit more focus in Europe again, we mentioned the headquarter in Switzerland.
We emphasized that London and Amsterdam, our plans from girl, we're adding more business resources.
Europe and that kind of also tailored a little bit more to the global expansion strategy as we go.
Okay, Okay understood.
On the margin front, so just trying to understand some of the partnerships that you've developed here and maybe the financial implications around those so understanding you're using established partners to build talent and new locations places like India from a financial perspective is there a significant cost that flows through the model here.
<unk> as a result of that I'm, just trying to think about as you go forward the return to profitability.
<unk>.
Water levels like profitability or whether theres anything last thing we need to consider there in those relationships I thought you asked me a good question about my partners on the business development side, which is super exciting.
Down to this.
Partners on the supply side so.
Okay I'll take the third question for me.
And our partners on the supply side specifically.
<unk> in Europe .
And as I alluded to before.
We have established operational direct organization. So the priorities for the growth will be direct of course for their immediate needs and blessed to have reliable partners and there will be still contributing but I believe from the financial overall perspective, it's not going to be.
A very significant impact, but again any of you want to chime in I think I think that's exactly right. Because so we always had a two pronged strategy that limits and going directly and partnering with these guys and as we scale up directly.
Reliance on partner diminishes and also Theres also transfer of those Parker employees to our direct hiring too. So whenever we were giving them goes back in our pockets.
Okay. That's fair Larry since you opened it up I'll ask about your corporate development partners I know you've got plenty to do organically here, but just how are you thinking about potential M&A in this environment.
Alright.
It's not exactly a bunch of partners, but that's okay.
So M&A strategy is very critical.
It is very critical because when I look at the broader world.
We have very ambitious plans for expansion you know and our investment primarily goes from the <unk> point of view and the innovation, but innovation is related to the specific.
I would say related fields and when we talk about the fields, it's a combination of technology and knowledge and capabilities business acumen, as well and we're focusing more and more on their core knowledge in the verticals, we enhanced and we're expanding in cyber.
Cyber security of supply chain, and our life science, we're going into areas, where you don't build.
Acumen overnight.
So when we look at that area, that's a kind of a primary focus in M&A. The other one is again part of the regional strategy Chicken Dumb question, where you want to be on the growth and I think the.
That message is very clear.
We want to make sure it's also financially.
Efficient I'm very irresponsible for the shareholders, but overall, it's one of the key priorities.
We will continue to grow not from the operational health, but from the operational growth.
Okay I appreciate the detail thanks of.
Of course, thanks, Brian .
Yeah.
Thanks, Brian .
That question comes up from Ryan Potter from Citibank. Please go ahead.
Hey, guys. Thanks for taking my question and congrats on a great quarter.
I want to start off on the delivery side.
Within our diversification across India.
Patients are you seeing some kind of a new skill sets.
As much exposure to come into the mix.
Are you also see some clients recently come to you to give more time for spine.
We're also interested in that.
So liberty locations.
No I'm sorry, let me repeat the question there was a little bit of a variance of the voice. So you were talking about the where the Indian brings new capabilities.
This new skill sets and also our new clients understood because we have a presence.
The first one today is.
I would say less critical I think what do we do we actually bring some confusion from Europe to India to make sure that we have a good blend obviously, we'll continue to see the new new skilled talent.
<unk>.
We have some work to do before that.
In terms of the clients are absolutely right. So there are certain segments, which are very strong and part of our expansion capabilities.
Something we've been intending for awhile relates to where some of the clients. The notable U S.
Clients.
They prefer India as a center of excellence.
And then just India center of excellence, but our specific locations, where we are we're kind of in the cradle of the value add.
Innovation Park remainder, notably right now in 100 event would be somewhere else as well and that's kind of drives this almost like Indian business development relationship, which we already building today. So the first answer not much yet the second one very much so.
Got it and then so at the same certainly I'm not the retail vertical.
There has been pretty strong in the past few quarters. So I guess first of all how much of this is inorganic growth so what's the organic growth in retail.
Some color on what's driving that demand that you're seeing in retail.
Still kind of a pandemic catch ups or are you seeing some growth with existing clients, even something we hear a lot of its coming.
Okay. So the first part you are asking whether we have organic and nonorganic growth.
I don't know what is nonorganic.
Yes, so Brian as you know we had one month of revenue, which was organic so there was roughly call it.
$4 million.
Last year, we acquired towards the end of May So we had the month of June .
So when you are.
Uh huh extract that out we still grow north of 50% year over year.
And it was it was driven so the blood organic Barclays there and of course, we added.
Couple of months of testing.
So let me come back to the second but the growth is.
So that.
I don't know the catch up is the right word I think.
Green dynamics made such a incredible turnaround the V shaped return in 2020, there. We're just going to strongly after very broad base of the clients.
If you look again from with annual positioned on the statistics.
To hold very strong.
I would say good healthy concentration on some of our clients and the very diverse verticals of course the concentration in specific lines.
Getting to reduce as we grow more.
Broader base of clients.
But most of them, adding business because of their needs and because of their competitive environment on the business side not because of the catch up on the defensive side. So so I've seen some activities after COVID-19 hit more on the defensive side now where the economic turmoil. We may shoot next subsequent quarters little bit of remedy.
To which we are prepared but right now people will continue to execute on our plans and of course take some cautionary story, how much budget to permitting for that.
That's the best to describe the environment of the groups.
Thanks, and congrats again.
Thank you Ryan.
Thanks Ryan.
Next question comes from Charles Taylor from Cantor Fitzgerald. Please go ahead Sir.
Yes, Hi, Leonard Danielle Thanks for taking my question really nice to see such strong execution. This quarter I'd like to start by diving a little deeper into the current wage environment. Specifically are you finding the wage dynamics in recent geographies you've answered can be similar to your pre existing geographies.
Well I.
I think we're starting with a question and the first part with Premier.
The wage is.
Of course.
It's geographically Varian right.
But it's also tied to various currencies tied to various customary tax environment cost of living et cetera.
So from the locations, where Milan it goes both ways.
I think.
I think.
Overall.
Everybody is talking about really cost pressure wage pressure I think for us we're still grow very much into the young innovative world. So some of the impact on a.
More senior wage pressure, we're adding more talent Intel it is not like we're taking advantage of the case. Its just the younger they are eager to learn and we create the environment for them to become more you know contributing specialists.
It's not one to one the wage versus price increases and as not every territory. We watch very carefully but there's one thing for sure no matter, where you go once you scale.
You're much more efficient when you when you and that's where IMAX with careful with geographies, you've noticed I'm not talking about doubling countries and to schedule lower it happens naturally theres more places we go with the concentration of tailwind the scalability, the relation with universities and hiring machine and reputation of the brands.
That's ultimately your wage control.
And this is what we are poised to accomplish.
Alright, Thank you for the color Lennar.
Last quarter, we talked about the ongoing investments you've been making in our technology organization and how that has helped drive new logo growth and bath for client engagement. So all right.
Wondering if you could give us an update on this initiative does it continue to act in a tailwind to the business and do you believe there is additional abram for reinvestment often missed the sales force over the next couple of quarters.
Yeah, So technology for agreed dynamics actually really moves to technology.
We we have like three prong technology investment and I'll add the fourth one which was more recent.
So the number one.
Understanding the vertical in depth, so we need to have the matter expertise in the where we are the second one is more horizontal work accelerators with modern technologies Ward.
Elements of the integration part.
Third one which is quite important is where the.
The open source implementation.
Kind of brands with a software integration. This is something we've been going for a while.
That's now becoming more and more prudent.
Our partnership with the us not only with the Hyperscale is the partnership with a broader number of the software developers.
Various relevant products.
Especially with the cloud.
Florida vacation automation data data analytics.
The scalability of the.
Elements of machine learning et cetera bridges, the gap between open sourcing in those technologies on the product side, which gives the customer much better value on the return. So that's the third one so those kind of three areas, where we continue to innovate. The first one started as you probably noticed the tiny little screwed that we invested a little bit of money on that.
One of the technology company, we believe some of the notable small technology companies deserve a little bit more closer relationship because that gives us more access to the cradle and we'll continue that path again, it's small now but thats the four swing, but the first three is the continuous expansion of agreement IMAX technology capabilities.
Yeah.
Great. Thank you very much of course.
Thank you Josh.
At this point, we have no further questions, ladies and gentlemen that would be all for the Q&A session today.
I will now pass the call back to <unk> for the closing remarks.
Okay.
Thank you everybody for joining us on the call today.
Our second quarter results and our third quarter guidance. Once again highlighted three dynamics ability to deliver to the stated goals and our commitment to the business grew.
<unk> employees have shown exceptional teamwork and had been working relentlessly and ensuring our business. This continues uninterrupted and I of course would like to thank each and every one of them for their tremendous effort. Once again I look forward, giving you a business update in three months. Thank you very much.
This call close today's conference call. Thank.
Thank you for participating.
You may now disconnect.