Q4 2022 Grid Dynamics Holdings Inc Earnings Call

Operations is our recent acquisition.

Speaker 1: According to our India operations is our recent acquisition of Texas-based Mutual Mobile.

Speaker 1: which has Indian operation also centered around Hydrobed. Mutual Mobile has over 175 employees and we're in the process of integrating the offices. We continue to ramp up hiring over engineering downs in New York.

Speaker 1: Over the last 12 months, our headcount in Poland, Serbia, and Armenia has almost tripled. Similar to our other locations, we expect our relationship with universities and hired interns across these regions. In the quarter, there were several trends, and I want to share with you some of the notable ones.

Speaker 1: The main trend. In the fourth quarter, similar to the third quarter, we witnessed continued budget scrutiny and demand softness across some of our clients. Even at some point of our larger clients, we also seen some slowdown.

Speaker 1: That said, from our perspective, there have been no significant changes in Green Dynamics viewpoint since October on how clients are reacting to the current situation. As you may recall, we are very vocal in our commentary around the demand environment. We are announcing our third quarter results in November .

Speaker 1: It was also reflected in our cautious fourth quarter guidance in which we highlighted softness in demand. Additionally, in the fourth quarter, our new logos contributed meaningfully and offset some of the softness in existing business.

Speaker 1: Coming to some additional force quarter segment commentary. Our technologies segment was the largest during the quarter. The growth in the quarter was driven by a combination of large technology customers which are growing as well as new logo revenue contribution.

Speaker 1: Our retail business was slightly upfront last quarter and performed again better than our expectations. In the quarter we also benefited from strong performance from a large global footwear company that businesses would have recently won. And finally, our finance segment grew as we continued to make inroads from fellow wealth management applications at our largest banking client. Log a momentum. We closed the fourth quarter

Speaker 1: with the highest number of new logos in a company's history. During the quarter, we added 13 new enterprise customers with our organic business. Some of the more notable ones to mention include two top tier global Fortune 30 companies, as well as one of the Canada's largest food and pharmacy chain. We're very proud of our achievements in the current environment, and this is a testament of great dynamics differentiation and value we bring to our customers. Delivery location support. Another important point worth highlighting is related to our delivery operation and how supportive our customers have been in the transitional process.

Speaker 1: 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 concern around our delivery locations and our abilities to meet project deadlines. Our new business development efforts are robust as indicated by record year of new logos in 2022. Bottom line, while the challenges were immense, we are not distracted on our business with existing new clients. As we look at 2023, we believe these trends will continue to persist and continue to be pushed on our prospects with new.

Speaker 1: customers. European business. During the quarter, we made good progress without European clients. As I highlighted earlier, at a global foodware company that we signed recently with in a strong REM and 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 part-manifitation based out of Germany. At our largest European account that sells essential household goods, an industry that has been traditionally recession-proof, we grew substantially in the fourth quarter, and we are working on this three-year roadmap to move from monolith to composable architecture.

Speaker 1: European business. During the quarter we made good progress with our European clients. As I highlighted earlier at a global foodware company that we signed recently with a strong ramp in the fourth quarter is on the track of becoming one of our largest European customers in 2023. During the fourth quarter we also added one of the largest automotive part manufacturing based out of Germany. At our largest European account that sells essential household goods, an industry that has been traditionally recession-proof, we grew substantially in the fourth quarter and we are working on this three-year roadmap to move from monolith to composable architecture. Partnership

Speaker 1: 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 1 partnership players with more competitiveness and certifications. With Amazon AWS, we are now their advanced consulting partner and on track of becoming a premier partner later this year. Additionally, we achieved the service delivery designation for Amazon EKS and AWS Cloud migration. With Google, we are one of the very few premier partners with a 7th specialization and 40 plus expertise related to Google Cloud. We continue to be primary partner for experimentation of Discover Artificial Intelligence for Retail, Google's solution offering for product search and recommendations. With Microsoft Azure, we launched new starter kits to accelerate enterprise migration. And finally, at Commerce Tools, our premier partnership continues to grow around composable commerce solutions that enable global brands to engage with their customers. Mergers and acquisitions. On the M&A front, as you all know, on December 23, 2022, we announced the acquisition of Mutual Mobile based out of Austin, Texas with delivery operations out of India. Mutual Mobile is a design and digital platform engineering service company specializing in mobile, user experience, product design, and augmented as well as virtual reality capabilities. The company has focused on healthcare, automotive, and financial services industry. It has also added 175,000 people to the company.

Speaker 1: highly skilled talent to our operations. We're already working on the cross-selling opportunities and expect to leverage each other's customer base. Beyond mutual mobile, our pipeline for M&A opportunities is robust, and we are actively exploring multiple opportunities. More importantly, recent changes in the micro-environment have led to more attractive pricing on M&A front, and we look forward to sharing more updates in 2023. As we highlighted in the past, our M&A strategy focuses on capabilities, key customers, and delivery locations. Now about Project GigaCube. Coming to our billion dollar revenue strategic initiative, which we termed as the Green Dynamics GigaCube initiative. As the name implies, there are three dimensions to the plan, and with each dimension, there are three focus areas. Number 1, three industry expansion. Within the industry verticals, our focus will be to expand in three areas, life science and pharma,

Speaker 1: 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, we are developing industry-specific solutions based on our robust consulting and co-innovation approach. These solutions are spearheaded by the subject matter experts, which we hire both from the industry and consulting worlds. Our expansion in the 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-time geographies.

Speaker 1: Customers are increasingly seeking partners that can match the pace of their business, running 24 hours a day. This means building presence across the globe. Will enable organizations to realize their need with distributed yet integrated teams across three major geographies. We will significantly accelerate time to market with our clients.

Speaker 1: Our onshore and nearshore presence in Americas and Central Europe is complemented by India-based delivery. As you may recall from our last quarterly commentary, we continue to make investments in Mexico, Poland, and India. Number three, business technology and data intersect. Business enterprises differentiate themselves by innovating the intersection of business technology and data. Greek Dynamics is poised to be a preferred partner for such enterprises because we possess the critical capabilities required for such innovations.

Speaker 1: Increasingly, our customers are turning to grid dynamics to assist with co-innovation at the business level. We are bolstering our consulting capabilities through hiring subject matter experts in selected industries. These investments are helping us to improve the positioning with existing customers and shorten the sales cycle with the new ones by offering starter kits and accelerators. Our investment in end-to-end digital commerce has rewarded us with deep meaningful relationships with key customers across industries.

Speaker 1: cycle and technological promise will continue to be relevant to the clients themselves. Infrastructure prices decline while wedges continue to climb. With the help of our cloud native partners and our modern application development practice, we are uniquely positioned

Speaker 1: to enable our customers to do more with less investments. The wave of digital transformation brought us a flood of data. Best performing businesses are data driven. However, this requires effectively processing data and incorporating it in a decision making process. While fully automated decision making process is still in the future.

Speaker 1: Artificial intelligent knowledge agents are invaluable to make sense of the data, and they augment the traditional data organization practices by servicing the relevant information to the consumers in their preferred modality. AI assisted product design, driven by generative AI models, is already successfully used by some of our customers. In the B2B business, we continue to incorporate AI capabilities into our manufacturing service offerings, including visual controls and predictive maintenance. We'll continue to enable our customers to face whatever shifts the future may bring with confidence, as well as prepare for them to grow. During the quarter, Great Dynamics delivered some notable projects. For a global technology company,

Speaker 1: We built a flexible data collection platform to acquire aggregated or raw unserialized data and images from the supply chain for the data visualization and analysis. This platform allowed our client to connect around 60 suppliers and more than 150 varieties of the products to control production quality as well as equipment condition.

Speaker 1: This is a side-agnostic solution which provides strategic value to the client. At a global CPG company, we implemented controls, procedures, and automation which enabled this customer to restrict access to personally identifiable informational data, which still providing their engineering team's autonomy to deploy changes at will. Our solution allowed the customer to onboard one of the geographies to the global e-commerce platform, reducing costs of maintenance and bringing their business capabilities to the global standard. For a global multi-brand restaurant company, GreenDynamics helped to build a brand-agnostic unified data platform.

Speaker 1: that services various needs of data analysis. Our solution improves their time to market by reorganizing their PODs, improving DevOps processes and various facets of engineering discipline. We help the client to optimize their workload and switch to more automated cluster usage to save approximately $500,000 per year spendings on data ingestion platform.

Speaker 1: 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 and 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. registered.

Speaker 2: Let me turn the call to Anil who will discuss Q4 results in more detail. Anil. Thanks Leonard. Good afternoon everyone. Our fourth quarter revenue of $80.6 million exceeded our guidance range of $77 million to $78 million and was down by 0.7% 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 0.8% and a growth of 23.6% respectively. The 248-Bibs headwind to revenue growth on a year-over-year basis was

Speaker 2: grew 1.6% on a sequential basis and 17.4% on a year-over-year basis.

Speaker 2: The sequential increase was driven by revenue contributions from some of our recent logos. Within this vertical, we continue to see customers being cautious in spending with the ongoing macro concerns. Here are the details of the revenue mix of 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 3.4% on a year-over-year basis.

Speaker 2: The decline on a sequential basis came from our large customers as they readjusted their spending levels to the current macro environment. Finance represented 7.7% of revenue and increased 2.8% on a sequential basis and was up 30.6% on a year-over-year basis. The growth in the quarter came from our banking customers where we continued to grow with their programs tied to wealth management. And finally, the other segment represented 9.3% of our fourth quarter revenue and was down 0.2% on a sequential basis.

Speaker 2: We exited the fourth quarter with a total headcount of 3,798, up from 3,746 employees in the third quarter of 2022, and up from 3,274 in the fourth quarter of 2021. The sequential increase of 52 employees, or 1.4%, was largely due to increase from our acquisition of Mutual Mobile that contributed over 175 employees in the quarter. The increase from 2021 was largely due to a combination of improving demand, resulting in headcount increase, combined with our acquisition of Mutual Mobile. At the end of the fourth quarter of 2022, our total US headcount was 338, or 9%, of the company's total headcount. This was similar to the 9% in the third quarter and was down from 9.9% in the year-ago quarter.

Speaker 2: The ear over ear decline as a percentage of the total head count was largely driven by greater mix of non-US head count. The non-US head count, which we sometimes refer to as offshore located in central, eastern Europe , UK, 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 60.4% respectively versus 44.5% and 61.1% in the third quarter. During the same period at earable, our top five and top 10 customer concentration was 42%, and 57.7% respectively. The increase in concentration across.

Speaker 2: Our top five and top 10 on an era of your basis was largely driven by increase in concentration from our top customers, primarily the technology vertical. During the fourth quarter, we had a total of 218 customers up from 200 and the third quarter and 221 customers in the year ago quarter. Fourth quarter customers included 16 coming from our recent acquisition of mutual mobile. 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 gap growth profit during the quarter was 32.3 million or 40.1% versus 32.7 million or 40.3% in the third quarter of 2022. And up from the 27.3 million or 41.1% in the year ago quarter. On a non-gap basis, our growth margin was 32.7 million or 40.6% versus 33 million or 40.7% in the third quarter of 2022. And up from 27.6 million or 41.4% in the year ago quarter. On a year of your basis, the decrease in growth margin as a percentage is a percentage was largely due to higher levels of bench. Non-gap EBITDA during the fourth quarter that excluded stock-based compensation, depreciation and amortization, expenses related to geographic reorganization, transaction as well related costs was 16.5 million.

Speaker 2: or 20.4% down from 17.1 million or 21.1% in the third quarter and up from 11.6 million or 17.4% in the year of the 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. For a GAFF net loss in the fourth quarter total, a loss of 6.7 million or a loss of $0.09 based on a share count of 74 million shares compared to the third quarter loss of 6.7 million or a loss of $0.10 per share based on 68.6 million shares and a loss of $3.7 million or $0.05.

Speaker 2: per share based on 65.7 million shares in the year-ago quarter. The year-over-year increase in gap 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-gap basis, in the fourth quarter, our non-gap net income was 10.5 million, or 14 cents per share based on 76.5 million diluted shares, compared to the third quarter non-gap net income of 11 million, or 15 cents per diluted share based on 71.9 million diluted shares, and $7.1 million, or 10 cents per diluted share based on 71.7 million diluted shares in the year-ago quarter. The increase in non-gap net income in comparison to the year-ago quarter was largely driven from higher levels of revenue, partially offset by higher operating expenses. On December 31, 2022, our cash and cash equivalents totaled $256.7 million, up from $255.2 million in the third quarter of 2022, and up from $144.4 million on December 31, 2021.

Speaker 2: The key reason for the increase on a sequential basis was operating cash flows, offset by a recent acquisition of Mutual Mobile, which closed on December 23, 2022. The 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 Mutual Mobile. According to the first-quarter guidance, we expect revenues to be in the range of $78 million to $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 our diluted share count to be in the $77 to $78 million range. That concludes my prepared remarks. Binh, we are now ready to take questions.

Speaker 3: Thank you, Anil. As we go through the Q&A session, at this moment, I will announce your name first. Please unmute yourself and turn on your camera. Our first question comes from the line of Josh Stigler from Cantor Fitzgerald. Please go ahead, Josh.

Speaker 4: Yes, hi, thanks for taking my question today. Congratulations on the strong execution this quarter. You know, 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 into 2023. Thank you, Josh. Well, it didn't happen overnight.

Speaker 1: We've been basically given the guidance during the throughout 2022 that despite all the challenges relate to the war and other impacts, we continue to deploy more focused offerings to the clients and we diversify the broader base of our clients. When we announced right now our, you know, Breathe Dynamics, Vega-Q, our billion dollar 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 when the key core, you know, potential clients were focusing on the budgets for 2023 were able to secure the positions. Understood. I appreciate the color there. And then, Anil, how are you thinking about your capital allocation strategy as you progress into 2023? The company is sitting on a significant amount of cash. So would you consider increasing the pace of M&A in the future, perhaps faster than what we saw in 2022? Well, I think it's a good question.

Speaker 2: Josh, you saw late December we had one announcement, right? Which added certain capabilities and certain delivery. Leonard in his prepared remarks and his press release clearly highlighted that M&A is an important area. And, you know, the pipeline is robust. Some of these, you know, prices are coming to a little bit more reasonable level. So we're absolutely going to be very focused. Also, you know, the key point here is that we've got some initiative of growing our company to a billion dollars, right? So we are going to be prioritizing our focus on growth and that's going to be another aspect. I think between these two, that'll keep us pretty busy in 2023 and beyond. Understood. Thank you. And congratulations again. Thank you, Josh. Thank you, Josh.

Speaker 1: Our next question comes from Ryan Potter from Citi. Please go ahead. Hey, thanks for taking my question and congrats on the good quarter. I'd like to start off with the macro. Regarding the macro, how have client conversations kind of evolved over the last few months? Given them five kind of sequential decline in revenue in Outlook, are you seeing any ground delays in decision making right now that way so your peers are called out? And also any kind of color you can give on trends you've seen for the first few weeks of one year? Yep. Well, there are a number of the questions, Ryan, one question, right? So as we mentioned in the Q3 earnings call, we foresaw some of the weakness coming from the market. We did a little bit, maybe to caution, but we hit the timing right. So starting December , and as a company and pretty much in a consumer related business specifically, they started planning their budgets for 2023.

Speaker 1: they took a very precautionary defense standing. So we've seen those declines, like I said, we were prepared to most of them and you go through a bit of a downturn with one clients by addressing more priorities to the other growing clients. But overall, the situation of December definitely expanded into January and February . I can't say we're already like the bottom of that event situation or not, but most of the budgets are pretty clear. I believe that, actually the guidance tells you that even though there's a little bit of an organic sequential decline, it's not a very unexpected at all. And if you add some of the new potential with new clients, we're actually looking bullish for the year, but for the quarter, we do see a little bit of a softness with the several of the clients.

Speaker 1: Thanks for following all the color and commentary on the data here in the initiative. I'm the vertical expansion and the increase of the focus I can salty in a particular how much of the subject matter expertise would you say you already have in house first you need to sort of go out and hire and also three verticals you want to expand into what will expose your do you already have to those verticals. So if you look at the results of 2022 from the cost perspective and even Q4 for the matter the largest growth of the spending happened in a city office. In that area of you know building more artifacts and solutions are on accelerating of the some of the project with the clients specifically new areas. But all of the things that I'm going to do is to make sure that you have the right time to go out and have a look at the results of the data. So, I'm also attracting a number of specialized subject matter experts.

Speaker 1: SMEs come from various forms and shapes. The best way to do is to actually get them engaged with the clients and building this kind of consultive report which results in the growth of the business based on a defined roadmaps. And that's where we're doing. I couldn't say that we're completing with Fulfill. I think it will be a continuous expansion, but this is the progress there already resulted in capturing some of the new clients in the life space, specifically in pharma. I was very glad to see that. As far as financial services, right now it's more FinTech. It's a very notable FinTech payment system clients, which is again, it's a great space for us, because a lot of foundation horizontal expertise are there. We just need to turn more into the application for the specific vertical depth. In the area industrial and manufacturing, I've been always my.

Speaker 1: kind of area of my personal knowledge, but also kind of distilled to the company capabilities of managing ever changing and now ever streamlining with the grossly distributed supply chain. So supply chain on the top of 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 focus is there and the SMEs investment is particularly those verticals. Got it, thanks again. Of course. Thank you, Ryan. All right, thanks, Brian . Next question comes from the line, Pimi Jain from Chiefy Morgan, the line is open. Hey, thanks for taking my question and a nice quarter. Is much of like the employee relocation behind you and more importantly, are your client facing and client delivery teams in a steady state right now? Okay, well, it's never over till it's over, right? We are definitely done with Russia for a long time. The situation with Ukraine is more fluid. I mean, we've done quite a bit of work in Q4. As you know, it was a little bit of a scare from the global information about Russian attack against Ukraine infrastructure. We've been preparing for potential of that issue because we are kind of from that region. So we build a lot of capacity on generators, Skylinks and other equipment necessary to operate. But fundamentally, the contribution of the total headcount from Ukraine continues to decline because we've spent other areas. Saying that all the people knock on wood operating in a full operational environment and the safety of various distributed look.

Speaker 1: business for the big enterprises, we're kind of switching. It's not really something in the script today, but you ask a very valuable question. So driving the team into the new formula is what is more like five, 10, 20. I'm not talking squares or any other multiples. It's just basically the new clients need to get to 5 million instead of 2 million because they're very.

Speaker 1: keyword. The other one is, as I mentioned, one of the earlier questions, there was a good prep work done. Now, I hate infant mortality. This is just one of those, the biggest disappointment, you put a lot of, you know, effort and then something happened. I can't say it will never happen but I think we're much more optimistic with the approach we're taking now than ever. And also the machine, the marking machine. The marking machine started working because it's not anymore just work of mouth or all the stuff. There's some of the approaches we have accepting, now major potential accepting our methodology, especially with consultancy and reach out to us. So the bottom line, I can't say the date but I definitely see this, keep in your mind this 5, 10, 20 and when the time comes, you can actually poke my eye and say, are you there? Thank you. Thanks. Our next question comes from the line of Maggie Nolan from Will and Blair. Please go ahead. Hi. Thanks. Congrats guys.

Speaker 1: Anil and Leonard, can you talk a little bit about the cadence of the year and anything we should keep in mind for seasonality or year-over-year comparisons or just in general like first half versus second half expectations? Sure. Anil told me very clearly, do not get through the script. Basically, everything we do is a bottom-up analysis and analytics. Just because we are analytical and we think through the process in advance doesn't mean it guarantees that whatever we think 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 am not an economist and I am not a hockey player, so hockey stick is not my favorite approach. I think what is the transparency of the customer relationship on the budgets gives us some understanding where we are in the first half of the year. It is a tough period of time, but as we grow a number of customers and we also get some of the already budget reverted to us. Some of the few customers, which I did not mention before, they came as a result of switching some of the work to grid dynamics, which is especially amazing during the time when people are tidying the budgets. We do see some progress there. I think we are going to fight to…

Speaker 1: dynamics training process so you kind of balance some of this most increases with the homegrown teams. Now we moved to some of the more expensive locations from let's say from Eastern Europe to Central Europe so yes there's a certain impact in you know working with the clients we need to prove and we are proving that the value we're bringing is exponential so more work results.

Speaker 1: organization just judging whether what interns were taken from the schools. So again there is a little bit of reactionary from the MOS when it comes to your need as a good even achieve and we are just working through the value of our organizations globally. On the pricing side I'm sure you some of you guys will torture Anil 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 micro economics is related to the growth of relationship.

Speaker 2: the key industries in that one queue outlook, particularly the tech clients just want to get a sense of current contracting dynamics there and just your visibility into their spending plans. I need to have that answer to good questions. I'll give you a few seconds. I'll jump in. Okay. All right. Well, you see, if you look at our Q1 guidance, right? Headliner pointed out we have.

Speaker 2: you know, some contribution from the acquisition and for modeling purposes, you know, you can have, you know, it's an insignificant contribution, less than two and a half percent somewhere in that range in Q1. So if you look at, you know, as we go into Q1 now, going from Q4 to Q1, there's some, you know, seasonal aspects of the business. So I'll just put that aside. But beyond that, what we are seeing is a couple of movements. You know, we have our new logos, right? So that's actually contributing and that's providing us a little bit of a cushion. And the new logos is spread across, you know, across the, you know, the landscape. When you look at the more consumer-centric businesses, right? I mean, you're seeing a little bit of a flattening to some extent, but.

Speaker 2: you know, there is a certain amount of, you know, conservateness, caution, whatever it is in some of the things. When you look at some of our, you know, tech guys, you know, as the prepared commentary pointed out, you know, we're moving in the right direction. We're getting more and more. And again, within that also, we've got some new clients too. So I think, you know, the team out there is, we continue to be a little bit more, you know, cautious on some of the consumer-centric businesses. We have some new local contributions. And our tech guys are kind of moving along. So I'll just add a color, as I promised, Brian . So I even, when I've been asked this question when I was in Bloomberg Radio, what's going on with your friends from Silicon Valley? They're firing left and right, right? And the comment is, well, nobody really knows what's going on in the individual minds of leaders. And I'm humbled to even make a comment publicly about what I think about it. But there was a little bit of an overextension, right? Grit and Emmich is a very conservative company.

Speaker 1: And when we approach our clients, we don't think only what is happening now, but what type of work will carry us through the good and bad times, right? And there are certain risks, there are always risks. But what we see with the selection of work with the same notable clients, I'm not talking just the number one, the most conservative premier client, but other tech clients, they suddenly see a bit of void because they rush to hire, now they 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 kind of, let's say, a rundown of the work which was noticeable with the retail kind of clients. So we're overall, I would say, detecting the front line of all the big news.

Speaker 1: For our position is more controllable than for the overall industry, I would say. That's my clear, so 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 are evolving, if at all, as you add more scaled new regions? So I'm curious if the pod model that you have, that structure has evolved a bit as you bring in these new regions on stream and how you're bringing the teams together. Right, right, so I would say European countries, it's a negligible disruption. But frankly, if you look, Brian , in terms of whether it's Poland, Romania, Serbia, or Armenia, first of all, it's mixed with employees which we're...

Speaker 1: adding big contingency from Europe , Asia, in particular India. I was involved with a 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 the rotational very significant assignments. So they actually work with the team with the projects and with the also capabilities of adjust the hiring, recruiting and delivery process. We were able to grasp, attract a very high level talent with the key delivery leadership in India are coming with a global experience in US, Canada, Singapore, Australia. So far we haven't seen glitches. The speed of work we can do better but with the quality of work I have not seen issues till now.

Speaker 1: Okay, I appreciate all the color. Thank you. Thanks, Frank. Thank you, Frank. Next question comes from my ink companion from Needham. Please go ahead. Great, thanks for the congrats on the quarter. Thanks for squeezing me in at the end. But just very quickly, I just wanted to ask in terms of your revenue growth, so even though you're not giving guidance and Leonard talked about the pricing environment, how do you think about utilization and headcount growth organically? Is that 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 kind of giving me a little bit broader question because there's a big difference between the utilization and headcount growth.

Speaker 1: Utilization-wise, we're always focused on the maximization of utilization. Our engineering capabilities when they're managed, whether it's a direct involvement in the T&M work or the more complex project is one of the key factor for the delivery. So I'm pretty bullish on utilization. The second factor though has 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 some of the work in the last months or two because of their very strong knowledge and their strong capability and we redeployed them on some of the specialized work related to creating accelerators and some core work. I call it basically an internal acquire of talent.

Speaker 1: And that work has been in the planning prior to obviously the time when the economic micro-impact started having issues with the industry. So when we talked about it in Q3, we were already in the very well planning. So we basically addressed the team. So I would say that on the total organic, not even organic account growth, I don't necessarily see a huge drive in early of 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 utilization and engineering, that's a key metrics with the clients we're holding in. So it's kind of three aspects, dry powder, utilization, and top talent to build their more vertical capabilities for our new initiative. Got it. That's very helpful. And then just maybe a quick word, Leonard, or Anil, on the supply side, how is the environment today? I would imagine it's a little bit easier to find quality people given the skill set requirements.

Speaker 1: And then any comments on attrition levels that you've seen recently, just give us some context around that. Thank you. So on the nutrition side, you don't need to be a wizard. It's lower. When the time stops, people don't run away. But for green dynamic, it's not as dramatic. And remember, even in very good times, we didn't have major spikes on volunteer attrition. There was a spike of involuntary attrition with the transition out of Russia. But on volunteer attrition, we're more or less balanced. So we see some drop. But it's also important to understand what type of talent we retain and grow.

Speaker 1: We embarked in late 2021 on heavy internship programs. That's our main feeding line for the young talent. Senior people, they are growing from within and retraining. And most of the attention to the market is twofold, either kind of mid-level people who need to be deployed for the special skills or those very specialized architects, architects and subject matter experts for the new industries or new verticals. So that kind of talent we acquire. I think the last one become way more easier, right? Because there is a great talent of people think through all review employment from those big tech specifically, but everything else is more or less balanced. So I don't think it's a...

Speaker 1: huge drop or huge increase right now. I think we're just in a model of operating and perhaps the pressure, the financial pressure is a little bit less rather than talk about the number of capable candidates. Thank you so much. Thank you. Thank you Mike. Thank you Mike. Ladies and gentlemen, that would be all of the Q&A session today.

Speaker 1: I will now pass the call back to Leonard for the closing comments. Thank you everybody for joining us on the call today. We exit 2022 with many accomplishments and while we start the year with some macro-related uncertainty, I am confident that our strong technological foundation and value will be

Speaker 1: that we bring to our clients will position Green Dynamics stronger. Green Dynamics has been a net beneficiary for economic down-cycles and based on our pipeline of the new client engagements and discussions we are having with our existing clients on the large and complex platforms.

Speaker 5: I'm optimistic of all prospects. I 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.