Q4 2022 Grid Dynamics Holdings Inc Earnings Call
Some more notable wants to mention include two top tier global fortune.
30 companies.
As well as one of Canada's largest food and pharmacy chain.
We're very proud of our achievements in the current environment. This is a testament of Greek dynamics differentiation and value, we bring to our customers.
Delivery location support.
Another important point worth highlighting is related to our deliver operation and how supportive of our customers have been in the transitional process.
Over the past 12 months, we executed flawlessly in transitioning a significant portion of the workforce, while continuing to deliver projects in a timely manner.
More importantly.
Our customers have not shifted existing programs to our competitors, nor terminated business with us due to concerns around our delivery locations and our abilities to meet project deadlines.
Our new business development efforts are robust as indicated by a record year of new logos in 2022.
Bottom line.
While the challenge is more a men's we're not distracted in our business with existing and new clients as we look at 'twenty to 'twenty. Three we believe these trends will continue to persist and continue to be bullish on our prospects with new customers.
The European business.
During the quarter, we made good progress with our European clients as I highlighted earlier at a global footwear company that we signed recently witnessed strong ramp in the fourth quarter is on a track of becoming one of our largest European customers in 2023.
During the fourth quarter. We also added one of the largest automotive pod manufacturing based out of Germany.
And our largest European account that sells essential household goods.
An industry that has been traditionally a recession proof.
We grew substantially.
In the fourth quarter and we are working on this three year roadmap to move from monoliths to composer both architecture.
Partnership.
Partnerships continue to be an important part of our growth and has become a significant contributor to lead generation.
During the quarter, we made progress with our tier one partnership players with more competitiveness and certifications with Amazon AWS, where now the advanced consulting partner and on track of becoming a premier partner later this year.
Additionally, we achieved this service delivery designation for Amazon Etfs, and AWS cloud migration.
With Google.
We're one of the very few Premier partners with a seven specialization and 40 plus expertise related to Google cloud.
We continue to be primary partner for implementation of discover artificial intelligence for retail new Google solution offering.
Product search and recommendations.
With Microsoft Azure will launch new starter kits to accelerate enterprise migration.
And finally at.
At Commerce tools, our Premier partnership continues to grow around come possible commerce solutions that enable global brands to engage with their customers.
Mergers and acquisitions on the M&A front as you all know on the December 2000 through 2022, we announced the acquisition of mutual mobile based out of Austin, Texas with delivery operations out of India Mitch.
<unk> mobile is a design and digital platform Engineering service company specializing in mobile user experience.
<unk> design.
And augmented as well as virtual reality capabilities.
The company has focused on the healthcare automotive and financial services industry.
Also added 175 pilot.
<unk> skilled talent to our operations.
We're already working on the cross selling opportunities and expect to leverage each other customer base. The unusual mobile our pipeline for M&A opportunities is robust.
And we are actively exploring multiple opportunities.
More importantly, recent gains changes in a micro environment have led to more attractive pricing on M&A front, and we look forward to sharing more updates in 'twenty two 'twenty three as.
As we highlighted in the past.
Our M&A strategy focuses on capabilities key customers and delivery locations.
Now about project <unk>.
Coming job billion dollar revenue strategic initiatives.
We termed as the Green denim is Giga Cube initiative.
As the name implies there are three dimensions to the plan and with each dimension there are three focus areas.
Number one.
Three industry and expansion within the industry verticals, our focus will be to expand in three areas life Sciences, and pharma financial services and insurance and industrial and manufacturing.
While we have clients in each of these industry verticals for the company to scale to $1 billion in revenue will require greater focus on building practices around each of these areas.
To enable this vision well.
<unk> industry specific solutions based on our robust consulting and co innovation approach. This solutions are spearheaded by the subset of subject matter experts, which were higher both from the industry and consulting world.
Our expansion in our three core industries. In addition to serving a broad technology audience will allow us to smoothen. The typical volatility in the industry wide innovation and technology adoption cycles.
Number two.
Three times Europe geographies.
Customers are increasingly seeking partners then can match the pace of their business.
Running 24 hours a day.
This means building presence across the globe will enable organizations.
To realize there are need was distributed yet integrated teams across three major geographies, we will significantly accelerate time to market with our clients on our onshore and nearshore present in Americas.
And central Europe .
Is complemented by India based delivery as.
As you May recall from our last quarterly commentary will continue to make investments in Mexico, Poland and India.
Number three.
Business technology and data intersect.
Leading enterprises differentiate themselves, but innovating the intersection of business technology and data.
Great dynamics is poised to be preferred partner for such enterprises.
Because we possess the critical capabilities required for such innovations.
Increasingly our customers are turning to greet dynamics.
This was co innovation at the business level.
We are bolstering our consulting capabilities through hiring subject matter expert in selected industries.
These investments are helping us to improve the positioning with existing customers and shorten that.
Sales cycle with the new ones, but offering starter kits and accelerators.
Our investment in the end to end digital commerce have rewarded us with deep meaningful relationships with key customers across industries. We're looking forward to introducing more domain specific frameworks that are similar in scope.
From day one.
<unk> has always been known as a technology company, which helped enterprises to realize the promise of cloud computing.
The race to out innovate the competition through technology continues our.
Our customers are navigating the change of the economic cycle and technological prowess, we will continue to be relevant to the clients themselves in.
Infrastructure prices decline, while wedges continue to climb.
With the help of our cloud native partners and our modern application development practice, we're uniquely positioned to enable our customers to do more with less investments.
The wave of digital transformation brought us a flood of data.
<unk> performing businesses are data driven however.
However, this requires effectively processing data and incorporating it in the decision making process was fully automated decision, making process is still in the future artificial intelligence knowledge agents are invaluable to make sense of the data.
They augment the traditional data organization practices by servicing the relevant information to the consumers and their preferred modality.
AI assistant product design, driven by generating AI models is already successfully used by some of our customers.
And the B to B business, we continue to incorporate AI capabilities into our manufacturing and service offerings, including visual controls and predictive maintenance, we will continue to enable our customers to phase whatever shifts the future may bring with confidence as well as prepare for them to grow.
During the quarter.
<unk> delivered some notable projects.
We are a global technology company, we build a flexible data collection platform to acquire aggregated or raw <unk> data and images from the supply chain and further data visualization and analysis. This platform a lot of our clients to connect around 60 suppliers.
More than 150 varieties of their products to control production worthy as well as equipment condition.
This is the site agnostic solution, which provides strategic value to decline.
At a global CPG company, we implemented controls procedures and automation, which enabled this customer to restrict access to personally identifiable information or data.
Which still providing their engineering teams autonomy to deploy changes at will.
Our solution allows the customer to onboard one of the geographies to the global ecommerce platform, reducing cost of maintenance and bringing their business capabilities as the global standard.
For our global multi brand restaurant company Green dynamics helped to build our brand agnostic unified data platform that services various needs of data analysis, our solutions improve their time to market by reorganizing <unk> improving.
Dev ops processes.
And various facets of engineering discipline.
We help the client to optimize their work flow and switched to more automated cluster usage to save approximately $500000 per year Spendings on data ingestion platform.
As a leading membership only big box retailer, we assisted the company to improve their mobile application architecture.
This application is designed to help onboard new lines of business easily.
Add warehouse functions.
Onto a single application.
We expect this solution will lead to major improvements in customer satisfaction, along with providing a single interface to all that this brand offers.
And now let me turn the call to our new who will discuss Q4 results in more details.
No.
Thanks, Lynn good afternoon, everyone, our fourth quarter revenue of $86 million exceeded our guidance range of 77 million to 70.
$8 million and was down by 7% on a sequential basis and up 21, 1% on a year over year basis.
On a constant currency basis, our revenue growth on a sequential and year over year basis was.
A decline of 8% and a growth of 23, 6% respectively.
The 248 bps headwind to revenue growth on a year over year basis was due to the strengthening of the dollar relative to the euro and British pound, while on a sequential basis the stronger euro resulted in a 10 bps tailwind.
Actively.
The better than expected revenue in the quarter was driven by growth at some of our large customers combined with contributions from new logos.
TMT, our largest vertical represented 33, 7% of our fourth quarter revenues and grew three 1% on a sequential basis and 38, 8% on a year over year basis.
We continue to witness growth at some of our large technology customers New logos also contributed during the quarter.
During the fourth quarter retail our second largest vertical represented 31, 8% of our revenues.
Grew one 6% on a sequential basis and 17, 4% on a year over year basis.
The sequential increase was driven by revenue contributions from some of our recent logos within this vertical we continued to see customers being cautious and spending with the ongoing macro concerns.
Here are the details of the revenue mix some other verticals, our CPG and manufacturing represented 17, 5% of our revenue in the fourth quarter and decreased by 12, 3% on a sequential basis and grew three point.
4% on a year over year basis.
The decline on a sequential basis came from our large customers as they readjust to the spending levels to the current macro environment.
Finance represented seven 7% of revenue and increased two 8% on a sequential basis and was up 36% on a year over year basis.
The growth in the quarter came from our banking customers, where we continue to grow their programs tied to wealth management.
And finally, the other segment represented nine 3% of our fourth quarter revenue and was down.
2% on a sequential basis.
We exited the fourth quarter with a total headcount of 3798 up from 3746 employees in the third quarter of 2022.
And up from 3002 <unk>.
We earned 74 in the fourth quarter of 2021, the sequential increase of 52 employees or one 4% was largely due to increased from our acquisition of neutral model that contributed over 175 employees in the quarter. The increase from 2021 was largely due to a combination of it.
Demand, resulting in head count increase combined with our acquisition of emission model.
At the end of the fourth quarter of 2022, our total U S head count was 338 or 9% of the company's total head count. This was similar to the 9% in the third quarter and was down from nine 9% in the year ago quarter.
The year over year decline as a percentage of the total head count was largely driven by greater mix of non U S head count.
Non U S headcount, which we sometimes refer to as offshore located in central and Eastern Europe , UK, and the Netherlands, Mexico and other locations was 3460 or 91, 1%.
In the fourth quarter revenues from our top five and top 10 customers were 43, 2% and 64% respectively versus 44, 5% and 61, 1% in the third quarter.
During the same period, a year ago, our top five and top 10 customer concentration was 42% and 57, 7% respectively.
The increase in concentration across our top five and top 10 on a year over year basis was largely driven by an increase in concentration for mark.
Have customers primarily in the technology vertical.
During the fourth quarter, we had a total of 218 customers up from 200 in the third quarter and 221 customers in the year ago quarter.
Fourth quarter customers included 16th.
Coming from our recent acquisition of mutual model as a reminder, we only count the revenue generating customers in the quarter and did not include customers were enacted during the quarter.
Moving to the income statement, our GAAP gross profit during the quarter was $32 3 million or 41% versus $32 7 million or 43% in the third quarter of 2022 and up from $27 3 million or 41, 1% in the year ago quarter.
On a non-GAAP basis, our gross margin was $32 7 million or 46%.
Versus $33 million or 47% in the third quarter of 2022 and up from $27 6 million or 41, 4% in the year ago quarter.
On a year over year basis, the decrease in gross margin as a percentage was largely due to higher levels of bench.
non-GAAP EBITDA.
During the fourth quarter that excluded stock based compensation depreciation and amortization expenses related to geographic reorganization.
<unk> and Internet related costs was $16 5 million.
24% down from $17 1 million or 21, 1% in the third quarter and up from $11 6 million or 17, 4% in the year ago quarter.
The year over year increase in EBITDA, both in terms of dollars and percentage of revenue was largely due to a combination of higher levels of revenue flattish operating expenses and favorable FX trends.
Our GAAP net loss in the fourth quarter totaled a loss of $6 7 million or a loss of nine.
Based on a share count of 74 million shares compared to the third quarter loss of $6 7 million or a loss of <unk> 10 per share based on 68 6 million shares and a loss of $3 7 million or <unk>.
Per share based on $65 7 million shares in the year ago quarter.
The year over year increase in GAAP net loss was largely due to higher levels of stock based compensation and geographic reorganization costs offset by higher levels of revenue.
On a non-GAAP basis in the fourth quarter. Our non-GAAP net income was $10 5 million or <unk> 14 per share based on $76 5 million diluted shares compared to the third quarter non-GAAP net income of $11 million.
<unk> 15 per diluted share based on $71 9 million diluted shares and $7 $1 million or <unk> 10 cents per diluted share based on 71 7 million diluted shares in the year ago quarter. The increase in non-GAAP net income in comparison to the year ago quarter was largely driven from higher levels of revenue partially.
Offset by our operating expenses.
On December 31, 2022, our cash and cash equivalents totaled $236 $7 million.
Up from $255 2 million in the third quarter of 2022 and up from $144 4 million on December 31 2021.
A key reason for the increase on a sequential basis was operating cash flows offset by our recent acquisition of mutual mobile which closed on December 23rd 2022 the.
A key reason for the increase on a year over year basis was primarily our share offering and raised $150 million of which $109 5 million was received by the company and that was partially offset by the acquisition of New T mobile.
Coming to the first quarter guidance, we expect revenues to be in the range of $78 million to <unk>.
$80 million.
We expect non-GAAP EBITDA.
In the first quarter to be in the range of 10 million to $11 million.
For the first quarter, we expect our basic share count to be in the 74 to 75 million range and a diluted share count to me in the 77% to 78 million range.
That concludes my prepared remarks.
We are now ready to take questions.
Yeah.
[music].
Okay.
Thank you Neil.
As we go to the Q&A session at this moment I will announce your name first please Atlanta yourself at Teledyne camera.
Our first question comes from the line of Josh Shanker from Cantor Fitzgerald. Please go ahead.
Yes, hi, Thanks for taking my question today and congratulations on strong execution this quarter.
This quarter you added the most new logos you've ever achieved in a single quarter. So I was wondering if you could provide some additional color on how you've been able to achieve such a significant new logo growth and how your current pipeline looks like enter 2023.
Thank you Josh.
It just didn't happen overnight.
We've been basically given the guidance June throughout 2022 that despite all the challenges related to the war and other impacts we've continued to deploy.
More focused offerings to their clients and we diversified the broader base of our clients.
When we announced right now or.
<unk> <unk> $1 billion plan, it's basically a beginning of the.
Kind of rationalizing the value of the company, which is driven by more depth of the specific knowledge related to the verticals and the clients and it kind of comes down to we're not in the Q4.
Our potential clients, who are focusing on our budgets for 2023 were able to secure their positions.
Understood appreciate the color there and then Neil how are you thinking about your capital allocation strategy as we progress into 2023.
The company is sitting on a significant amount of cash so when you consider increasing the pace of M&A in the future, perhaps faster than what we saw in 'twenty two.
Well yeah.
Josh you saw mid December we had one announcement, right, which added certain capabilities and certain delivery.
Leonard in his prepared remarks, and as press release clearly highlighted.
M&A is an important area.
And you know the.
Is robust.
Some of these.
Prices are coming to a little bit more reasonable levels. So we're absolutely going to be very focused.
Also the key point here is that we've got some initiative of growing our company to $1 billion right. So we are going to be prioritizing our focus on growth.
And that's going to be another aspect.
Between these two that'll keep us pretty busy in 2023 and beyond.
Understood. Thank you and congratulations again thank.
Thank you Josh.
Thank you Josh.
Our next question question comes from Ryan Potter from Citi. Please go ahead.
Hey, Thanks for taking my question and congrats on a good quarter I want to start off with the macro.
And the macro how long.
Conversations kind of.
Over the last few months are going to imply kind of a sequential decline in revenue in the outlook.
Are you seeing anything around delays in decision, making or some.
One of your peers have called out.
Also any kind of color on trends is pursuing some mark here.
Yep.
Alright.
Well under the.
The number of the questions around more and of course right. So.
As we mentioned in our Q3.
Earnings call, we force so some of the weakness coming from the market.
I mean, the two courses, but we hit the timing right Sue.
Starting December .
Is it companies.
Pretty much.
Consumer related business specific really to start blending their budgets for 2023.
They took a very a precautionary defense routes.
Standing Sue.
We've seen those declines.
Hmm.
I guess, who are prepared to most of them and.
Hum do go through a bit of a downturn with one client by addressing more priority as to the other growing clients, but overall the situation of December definitely extended into January and February .
I can say, we already like the bottom of that event.
Actuation or not but most of the budgets are pretty clear.
Believe that.
Actually the guidance tells you that.
Even though there is a little bit of a getting sequential decline is not a very.
<unk>.
And if you add some of the new potential new clients, whereas fluids and bullish for the year, but for the quarter reduce it a little bit of a softness with some of their clients.
Got it.
Thanks for providing all the color and commentary on it.
Your initiatives.
I'm not a vertical expansion and the increased focus on consulting and in particular, how much of the subject matter expertise would you say you already have in house versus you need to still go out and hire and also three verticals you wanted to expand into little exposure DRAM, but that's where it goes.
Okay.
So.
If you look at.
As a result of 'twenty to 'twenty, two or from the cost perspective in <unk>.
Q4 for that matter.
The largest growth of the spending has been in a secure office.
And then sort of area of <unk>.
Building more artefacts and solutions around accelerating of the some of the project with the clients specifically in new areas, but also attracting a number of the.
Our specialized subject matter experts assume it's come from.
Various forms of shapes, the best way to do is to actually get them engage with their clients and building. The this kind of consultant report, which results from the growth of the business based on a defined roadmaps and that's where we're doing.
Wouldn't say that we're completely will fulfill that things will be continuous.
Pension.
This is the brokers they're already resulted in capturing.
Some of the new clients at a lesser space specifically in pharma was very glad.
Glad to see that.
As far as.
Financial services right now is where fintech and some very notable fintech payment system clients, which is again is a great space for us.
Because a lot of foundation of horizontal expertise are there, we just need to turn more into the application for the specific vertical depth in the area of industrial our industrial and manufacturing had been always my kind of area of my personal knowledge, but also kind of distillate to the company capabilities.
Managing ever changing and now ever streamlining.
Grossly distributed supply chain, so supply chain on the double the data knowledge data management and getting more and more into the AI capabilities related to industrialization helps us to grow those space too. So all the new stuff, we're talking about is already.
Present, but our focus is there and the Smes investment is particularly in those verticals.
Got it thanks again.
Of course, thank you Ryan.
Alright, Thanks, Brian .
Next question comes from the line of <unk> particular again the line is open.
Hey, Thanks for taking my question and nice quarter.
Not just like the employee relocation.
Hi, <unk> and more importantly, either blind faith.
And client delivery teams in a steady state right now.
Okay.
Okay.
It's never.
Over until it's over right.
We are definitely done with Russia for a long time.
The the situation with Ukraine is more fluid I mean, we've done quite a bit of work in Q4.
As you know there was a little bit of a scare from the global information about Russia, and Turkey against Ukraine infrastructure.
We've been preparing for the potential of that issue because we were kind of from that region. So we build a lot of.
Capacity on our generators.
<unk> Sky links and other equipment necessary to operate but fundamentally the contribution of the total headcount from Ukraine continues to decline because were extent other areas, saying that all of the pupil not clean would've operating.
Operational environment and the safety of various distributed locations.
We are going to be a one year anniversary.
Of the.
We started the war so if you'll look back.
It's an incredible transformation, but we are not looking to be a victim. The winners are not victim winners are people, who put their effort and succeed.
Both in the <unk>.
War environment and the company itself, so we listen to their clients, where external location, India has been our growth.
Growth area of Mexico has been a growth area, but in the European priorities in the Central Europe continued to expand as well. So I would not say we ended already with the older locations, but we're certainly in a much more controllable way than perhaps other companies and we don't see that as a detriment to full fuel oil.
Client obligations.
Alright.
And then the new logos that you won recently 13, new clients added in <unk> and expansion at existing customers.
How should we think about around those accounts like the add on or additional work you might get.
And.
And those new.
Business can that drive sequential growth starting from Tokyo.
Very good so.
I would.
I would probably start from the end just because theres a little poison pill about Q2.
I can say Q2, or Q3, or maybe even Q1 for some of them because you'll see there is a little variance on the guidance for Q1, but the fundamentally what's what's very important and I think that this is Keith.
As we grow as we expand and mature you've been with us for a while I've been always talking about <unk> strategy 2 million 5 million $10 million over to the customer positioning.
We are maturing in the business for the Big enterprises, where it kind of switching it's not really it's something in the script today, but if you ask a very valuable question some driving the team into the new Formula which is more like 510 20.
And Thats, Oregon square or any other multiples. It just basically the new clients need to get to $5 million instead of $2 million, because theyre very substantial clients and by doing this actually there are several folds one of them is our increased ever relationship on the partnerships both with the Hyperscale and so on.
Notable software integrators, which kind of gets us in the midst of their client cure. The other one is as I mentioned one of the earlier questions.
There was a good prep work not Nirvana.
In infant Martell. It. This is just one of those the biggest disappointed when you've got a lot of.
You know our effort and then something happened I can say it will never happen, but I think we are much more optimistic with the approach we're taking now than ever and also the machine the marketing machine. The marketing machine started working because it's not anymore just word of mouth or all the stuff. There is some of the approaches we have accepting.
Now major potential growth accepting or methodologies, especially with consultancy and reach out to us. So the bottom line I can save the date, but I definitely see this.
Keeping in mind. This 510 20 and when it's done comps you can actually put my ISI are you there.
Thank you.
Thank you.
Thanks.
Our next question comes from the line of Maggie Nolan from William Blair. Please go ahead.
Hi, Thanks, Congrats guys.
And now Atlanta can you talk a little bit about the cadence of the year anything we should keep in mind for.
Seasonality, our European year comparison arms or just in general like first half or second half expectations.
Sure well.
And you told me very clearly.
Good to move through the script so.
Basically.
And obviously, we do everything we do.
The bottom up.
Analysis and analytics and <unk>.
Just because we are analytical and were seeing through the process and advance doesn't mean that guarantees that border roofing is going to happen everybody talks about the second half of the year will be significantly more cadence than first half of the year to me I'm not an economist.
And I am not a hockey player. So hockey stick is not my favorite approach.
Thing, what's transparency of the customer relationship on the <unk> budgets give us some understanding where we are first half of the year.
A tough period of time, but as we grow number of customers and we hope.
To give some of the already budgeted reverted to us some of the few customers, which I didn't mentioned before that came as a result of switching some of the work <unk> done.
Which is expressed on the amazing during the time when people tightening their budgets. So we do see some progress there I think we're going to we're going to fight tooth and nail for the Q1 Q2 and also as Aneel mentioned, there would be some good notable acquisitions coming in but.
Approach, we've taken with this Greek yogurt.
The plan is we are diversifying more and more from not just.
<unk> focused business, but from B to C. P E b to B and globalization of our approaches with our clients and.
And bush and bullish for the year and if you my.
My statement.
The press release I thought through that and.
People are getting tougher through the years and I believe our customers getting more and more respect who we are and with good then it makes it so yes, that's probably the best guidance I can give you at this point.
Thanks, Manav and then what about just the pricing environment and your expectations for 2023.
Well as any impact from the changes in your deliberate subprime impressions last year.
So.
It's always the toughest question Brian Mcgee.
You know historically, we always assume that there are two extremes come in right Theres always wage inflation.
We mitigated wage inflation by building stronger and stronger internal.
Program on the agreed dynamics endurance shoes with universities agreed dynamics training process. So you kind of balance some of this.
Cost increases with a homegrown teams no we moved to some of the.
More expensive locations from let's say from eastern Europe to Central Europe . So yes, there is certainly impact in working with our clients we need to prove and we are growing the value. We're bringing is exponential so more and more results instead of GNL working into fixed projects and.
Pods relationship. So it's really not about the cost per engineer, but ROI on a project basis. The other challenge were taken from this year going forward to prove that our Indian operation is a state of the art.
Capability organization, just judging whether what insurers were due from the schools. So again theres a limit a reactionary from vehicles when it comes to or you're in India. So you got to be really cheap and we're just working through the value of our organizations globally on there on the pricing side.
I'm sure you know some of you guys.
Torture aneel after the postmortem so what's going on so I'll tell you right away.
We are very strategic in terms of how we approach the pricing. Yes. There are a few contracts where we are we're just on the cost to become a premier supplier, which reflects to the building a significantly larger opportunity for years to come and obviously the pricing is different for different revenue ranges.
So that's not related to the microeconomics is related to the growth of relationship, but there was some project with.
Very long and very loyal clients, where.
Instead of them to basically freeze the some of the critical for their own business developments, we have stepped up and we do some co investments it happened in the best.
It happens only on the on the type of award we believe its very critical for both of US have declined. So this is a very has brought as I could say about both the cost base enterprise space.
Thank you.
Of course, thanks, Mike.
Thank you.
Next question comes from Bryan Bergin from Cowen.
Okay.
Hey, guys good to see it.
And I wanted to start on the outlook first so can you just talk about some of the underlying assumptions as it relates to the key industries in that <unk> outlook, particularly the tech clients just wanted to get a sense of current contracting dynamics, there and just your visibility into their spending plans.
I knew that answer a single question. So I'll give you a few seconds I'll jump in.
Right.
Well you see if you look at our Q1 guidance right.
<unk> pointed out we have.
Some.
Contribution from the acquisition and for modeling purposes.
You can have found him it's an insignificant contribution less in.
Two 5% somewhere in that range in Q1.
So if you look at.
As we go into Q1 now going from Q4 to Q1, there is some season.
Seasonal aspects of the business and so I'll just put that aside.
But beyond that.
What we are seeing is a couple of moments.
We have our new logos right. So that's actually contributing and thats, providing us a little bit of a cushion and the new logos is kind of spread across.
Across the.
Yes.
The landscape.
We when you look at the more consumer centric businesses right.
Youre seeing a little bit of a flattening to some extent, but there is a certain amount of time.
No.
Conservatives in aetna's caution whatever it is and some of the things.
When you look at some of our tech guys.
As he prepared commentary pointed out we're moving in the right direction.
I'm getting more and more and again within that also we've got some new clients too so I think.
The team out there is.
We continue to be a little bit more.
Cautious on some of the consumer centric businesses.
We have some new low contributions.
Hey, guys arent kind of moving along.
So I'll just add color as I promised Brian so.
I, even when I've been asked this question when I was on Bloomberg radio what's going on with your brands from Silicon Valley, they're firing left and right right and.
The governor as well nobody really knows what's going on in the individual.
Minds of leaders in.
I'm humbled to make a comment publicly about what I think about it but there was a little bit of a over extension rate.
The dynamics is a very conservative company.
And when we approach our clients.
Don't think only what is happening now, but what type of work where carrier through the good and bad times right and.
There are certain risks there are always risks, but what we see with the selection of who work with the same notable clients I'm not talking just the number one the most conservative premier airplanes, but other tech clients.
Suddenly see a bid award because they rush to hire another rush to let those people go and it doesn't mean, they're not.
Profitable and doesn't mean their budgets are less we're not directly tied to the AD.
Commercial revenue stream. So it means that our work is more distributed so I don't see that as kind of let's say ramp down of the work, which.
It was noticeable with the like of rebuild kind of clients.
Overall I.
I would say testing the frontline of all the big news for our position is more controllable than.
For the overall industry I would say.
That's my ethics.
I don't see that decline.
Okay. Okay I appreciate all that.
And then just from a delivery standpoint, so can you talk about how your delivery operations or a ball thing if at all as you add more scaled new region. So I'm curious if the pod structure pod model that you have that structure has evolved a bit as you bring in these new regions on stream and how youre, bringing the teams together.
Right right.
I would say European countries, it's been negligible disruption.
No.
Frankly, if you look Brian .
In terms of whether it's.
Poland, Romania, Serbia or Armenia first of all it's mix, whether you're pleased with which we relocated from raw.
Russia, and Ukraine, but also.
There is a there is a contingency of work we have been an area where I understand locations.
There is a well developed processes.
As you know Mexico has been with us for a while so.
Again, it's it's a more or less enrolled it's more connected to the near shoring approach.
<unk> between U S and Mexico more than just necessarily in Mexico, and Europe . When it comes to India that very logical questions. How are we dealing with India, especially in growing numbers and the answer is.
The same I've been doing this in the integrated businesses 30 years ago Windows driving my research labs.
In the Midwest, where they're adding big contingency from Europe Asia in particular, India was involved with the service business for 30 years and.
The number one solution is first of all very clear communication.
Second of all we moved some of the key people from Europe to India for a rotational very significant assignments. So their excellent work with the team.
The clicks.
Clicks and awards.
Also capabilities of.
Just the hiring recruiting and delivery process, we were able to arrest.
We attracted very high level talent over the delivery of leadership in India, We're coming with a global experience in U S, Canada, Singapore, Australia. So so far we haven't seen glitches the speed of work, we can do better but with the quality Award.
In issues till now.
Okay I appreciate all the color. Thank you.
Thanks Raffi.
Thank you Bryan.
Next question comes from Us.
<unk> Tandon from Needham. Please go ahead great.
Great. Thanks, a lot congrats on the quarter. Thanks for squeezing me in.
I can answer guys, but just very quickly I just wanted to ask in terms of.
Your revenue growth, so, even though you're not giving guidance.
Let me talk about the pricing environment, how do you think about utilization and head count growth organically and that's something you expect to drive at this point or is it maybe a little premature given some of the.
Visibility issues because of the macro.
So.
Thank you for giving me a little bit broader question because there is.
There's a big difference between the utilization and headcount growth.
Utilization wise, we're always focused on the maximization of utilization.
Our engineering.
Capabilities with their manage through whether it's a direct enrolment in the TNF work or the more complex project is one of the key.
OSA factor for the delivery so.
<unk> bullish on utilization the second factor, though is a little bit different connotation in the first half of the year.
I made an investment.
To retain some of the key.
Employees, which have been.
Potentially downsides from the some of the work in the last months or two because of their very strong knowledge of their historic capability and we redeploy them on some of the specialized work related to the <unk>.
Accelerators.
Some core work and.
I call it like.
Basically internal aqua hire of talent.
That work has been in the planning prior to obviously the time when the economic micro impacts are having issues with industry. So when we talked about it in Q3, we are already in there and now we're well planning. So we're basically address the team so I would say that on the <unk>.
Total organic not M&A organic account growth.
Don't necessarily see a huge drive an early.
For the year, because we do have a good.
Senior pipeline, we did not slow down the internships, we just be more selective on new hiring and of course with the utilization on the engineering, that's a key metrics with the plans we're holding them. So.
Three aspects dry powder utilization and top talent to build they're more vertical capabilities for our new initiatives.
Got it that's very helpful. And then just a quick word leonard or enel on the supply side.
How is the environment today, I would imagine, it's a little bit easier to find quality people given our skill set requirements and then any comments on attrition levels that you've seen.
Can you just give some context around that thank you.
Okay.
So on the attrition side.
You don't need to be a wizard right.
Lower right when the time does people don't run away right.
But.
For green dynamic its not as dramatic.
Remember even in a very good times, we didn't have a major spikes on a voluntary attrition.
This is there was a spike or involuntary attrition with the transition out of Russia, but.
Involuntary attrition, where more or less bill so we see some drop.
But it's.
It's also important to understand what type of talent, we retain and growth.
We embark in late 2021 on their heavy internship programs, that's our main feeding aligned for the young talent.
Senior people there are growing from within and retraining and most of the attention to the market is twofold, either a kind of a.
Mid level people, who need to be deployed for the special skills.
Those various specialized architects.
And our subject matter experts within new industries or verticals, so they're kind of telling you we acquire.
And the last one become way more easier right because there is a great talent of people thing to reduce deployment from those big Tech specifically, but everything else is more or less balanced. So I don't think its a huge drop or huge increase right. Now I think we're just in a model of.
Operating D and perhaps the pressure of the financial pressures a bit less rather than talk about the number of capable candidates.
Thank you so much.
Thank you thank you Mike.
They can lag.
Ladies and gentlemen that of what we had all of the Chinese session today.
I will now pass the call back to Larry to solve the closing comments.
Okay.
Okay.
Thank you everybody for joining us on our call today.
We exit 2022, with many accomplishments and while we started the year with some macro related uncertainty I am confident that our strong technological foundation and value that we bring to our clients will position great dynamics stronger brief.
<unk> dynamics has been a net beneficiary.
Economic down cycles, and based on our pipeline of the new client engagements and discussions we're having with our existing clients on the large and complex platforms.
Optimistic of our prospects and look forward to giving you a business update in may Thank you very much.
This concludes today's conference call. Thank you all for participating you may now disconnect.