Q2 2023 Globant SA Earnings Call

Our speakers today I went to <unk> co founder and Chief Executive Officer Hunter, Gary Chief Financial Officer, Patricia Pommies, Chief operating Officer, and Neil <unk>, Chief Technology Officer before we begin I would like to remind you that silver comments on our call today may be deemed forward looking statements. This includes our business and financial outlook and the answers to some of your quest.

Such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with SEC.

Please note that we follow <unk> accounting rules in our financial statements.

During our call today, we will report non <unk> or adjusted measures, which is how we track performance internally and the easiest which compared <unk> to our peers in the industry you will find a reconciliation of IRS and Noniron phrase measures at the end of the press release, we published on our Investor Relations website announcing this quarter's results I'd like now to turn the call over to Adam <unk> our CEO .

Thank you Arturo good afternoon, everyone I'm Martin Mccoy as digital twin the real Martijn Diego Patio and one will join you afterwards for the Q&A. We're speaking to you today from Sydney, where we have come to connect with our local team as we continue our expansion in new markets as well as to meet.

And partners at the FIFA Women's World Cup of which globally is a proud global sponsor.

For transparency, there will be a notice at the bottom of the screen every time, we appear or use any AI engine.

We are happy to be with you again to discuss another great quarter with our strong fundamentals expanding array of solutions and platforms and greater leverage of our global delivery network. We aim to continue to outpace our industry. In Q2 total revenue was $497.5 million. It is the <unk>.

Highest quarterly revenue in our history, representing 15.9% year over year growth and five 3% quarter over quarter growth. This has been made possible by the comprehensive relevance scope and depth of our offering combined with the expertise creativity and dedication of our globus.

We're seeing strong sequential growth into the second half of the year, providing us with encouraging signs as we start thinking about 2024. We are also optimistic about the growth of our addressable market estimated to reach up to 8.9 trillion dollars by 2030. According to the report digital transformation market forecasts.

<unk> 2023, 2030 released by Fortune business insights this year.

At Globe and our vision is to provide the best AI and digital transformations in the world and we want to do it through reinventing our technology professional services industry, we work everyday to ensure our clients stay relevant with the latest technologies constantly innovating the way we provide these solutions, while being kind to our planet.

Our peers to humanity and to ourselves clients that choose globally are not only picking in AI and digital partner to fulfill their dreams, but innovation itself, a new way to create and build technology with transparency and absence of nonsense and at the same time, maintaining our commitment to the environment.

And society, it's a unique culture.

Let me explain to you some of the innovations that separate globally from our competitors.

First our inverted organizational chart and the autonomy of our agile pods each with its own name charter mission and proud identity as a team it's the job of our whole management to support them in their success.

Second our studios these deep pockets of expertise have been central to our value offering on the latest technologies and their applications to particular industries. Our array of studios has grown over time as we widen the scope of our services to improve the synergy we have now organize them into four studio networks did.

It'll reinvention enterprise and create doing so will foster better collaboration among our studios as we continue to scale.

Third the company wide use of AI, both for our internal processes and in the solutions, we create and finally, our platforms AI powered software products that solve through challenges of our industry in.

In the AI space, we continue to leverage our expertise to expand services in order to meet the increasing demand.

Late last year with the widespread interest in generative AI caused by new tools, such as chat GPT, we started to engage with our clients to help them embrace this technology quickly. Our teams work closely with many of them to create a comprehensive map of initiatives to reinvent their businesses.

Then we translated these initiatives into proof of concepts that could be applied to achieve specific kpis and expand their businesses. Now. Many of these are becoming real life solutions that can be scaled globally and implemented companywide in particular, we see two types of solutions first is what we call augmented knowledge the capability too.

Interact with unstructured data in a conversational way skilled professionals such as those in la or in finance will be able to access large amounts of data and quickly interpreted so that they can make better more informed decisions and second is a field, we called converse AI, which allows an end user to.

With the transactional system in a conversational way.

There are many relevant applications that can speed up the way, we connect with our favorite consumer brands. For example, when booking a cruise you may be able to organize itineraries with the help of an AI that intuitively offers and even schedule services that matter to you while also handling queries for changes or refunds.

I'm happy to see that our expertise in the field is also being recognized worldwide.

In early June IDC named globally as a leader in AI in the IDC market scape for worldwide artificial intelligence services 2023, affirming our commitment to value driven services through our comprehensive AI journey.

We will continue to expand and share our offering on AI applied to industries and different use cases in our portfolio called mines I invite all of you to learn more about it by visiting <unk> Dot global Dot com.

Now some news about our studio networks.

I'll begin with our enterprise studio network. It has been exciting to see how our digitally native approach makes a difference in how our clients embrace large platform providers like Salesforce, SAP Oracle and even the hyper scaler.

All of them have been moving at a rapid pace to embrace new technologies.

Our combined expertise in these core technologies with our understanding of emerging ones has allowed us to be the partner of choice for our clients as they incorporate new multi technology solutions.

Along this line after announcing Google cloud studio on last earnings call. We have just publicly shared the creation of two new studios Amazon Web services and Microsoft.

Industry analysts see a potential growth up to over one six trillion dollars by 2030 and cloud computing. So with these two new studios, we will be complementing our offering to better serve organizations worldwide Diego will expand on this topic later in the call.

Im also glad to see how global create consolidates as another of our studio networks in recent months, we brought our capabilities in digital marketing sales branding and performance into this creative powerhouse that leverages AI to improve how organizations can engage with audiences grew.

Growing our offering here has been instrumental in widening our relationships with our clients as we offer them even more services global create got its first spotlight recently, when we presented it at the Cannes Lions International Festival of creativity.

It was a unique opportunity to introduce our new studio and at the same time celebrate globals first silver Lion, one by our commercial 1000 and slides if you haven't seen it yet I encourage you to watch it on our Youtube channel and now to our platforms.

I'm enthusiastic to see that the portfolio of global X continues to grow accelerated by AI and blockchain. We have now evolved each product from a standalone specific technology into more integral solutions.

Our portfolio includes platforms like Auger Star map Magnify sport in the evolution of La Liga Tech and Genex's, Let me share some exciting updates about this last one.

What was once a low code development platform has now grown into a suite of AI development tools.

<unk> now applies AI not only to support development maintenance and evolution of any given solution, but it also enhances the user experience of the solutions delivered by incorporating this innovative array of tools companies can swiftly integrate AI to their systems operations processes and workflows agnostic to any.

Programming language Genex's can now deliver AI assistance that can leverage clients dataset and business processes to Kraft exceptional customer experiences. Additionally, it enables company leaders to effortlessly sift through intricate data to make faster more informed decisions. The use cases are endless.

The vision of <unk> is to simplify and future proof software development. That's why we now ensure that every application delivered by Genex's can seamlessly integrate with L. L. EMS in a monitored and cost effective manner.

Year after year, we continue to live up to our foundational vision of expanding all over the world.

Doing so has been an engine for growth with our clients.

As we expand both our delivery and client networks globally, we can draw on these capabilities to give each particular client a customized delivery network that best caters to and surpasses their transformational goals.

Globally now has offices in 70 cities in 30 countries, including eight new markets that opened in the past 12 months.

Related to this expansion, we have recently announced a significant investment in our five year strategic growth plan for Latin America. The region, where we were born in a main focus of our delivery model.

This investment will be dedicated to three main verticals.

AI development product offering and the expansion of our local teams. We are opening a new center of innovation in Sao Paulo, Brazil from their global subject matter experts Wil research AI and other top technologies like quantum computing to create practical applications to support our clients. This center we.

We'll also be responsible for building new AI applications to improve sales force projects one of our biggest strengths in the Brazilian market.

We will continue investing in the development of our own products such as Al Gore Magnify Star Me up sporty and Nginx is our focus is to keep leveraging AI to accelerate software development and improved digital experiences increasing our go to market strategy and providing better outcomes for our clients loss.

Lee, we will keep expanding our regional teams by adding 20000 professionals in the region. During the next five years, our strong presence in more than 10, Latin American countries will continue to be a focus of our talent growth.

In parallel we are proud to say we have commenced operations in Portugal, we see great potential in that country to become a new talent hub for global to support our European expansion.

We also look at Portugal, as an interesting geography for business development with several companies looking to transform their organizations and capitalize the country's solid economic growth during the last years.

I am pleased to announce that on July 20th we completed the incorporation of penta log to the global family with this we welcomed 1300, new globals in France, Romania, Moldova, Mexico, Vietnam, and the U S. This expansion strengthens our presence in Europe home to 80% of Penta logs revenue outgrowth.

<unk> footprint there is a particular interest as many of our global clients have growth projects in these markets.

This week, we held our global Tech summit here in Sydney as.

As we are currently sponsoring the FIFA Women's World Cup. This was a great opportunity to meet with partners future clients and to showcase the work we are doing in sports.

I am very enthusiastic about our future currently global has a very healthy pipeline the largest in our history and I look forward to sharing with you more stories on our execution.

The non stop innovation of our over 27000 Globus continues to inspire me.

Year over year, we are all able to prove that global is on the cutting edge of global technology and expands its total addressable market with a growing expertise in constant curiosity.

I will now turn it over to the digital twin of Diego thorough our global CTO.

Thank you Martine I'm very excited to be back with you to discuss our growing array of solutions and offerings as Martine mentioned AI is transforming the way, we do business provide services and organize our teams.

Many of you remember years ago, how globally was very vocal on the coming wave of artificial intelligence long before the widespread adoption we see today.

We are only experiencing the beginning of the full potential that AI will bring into everyday life.

We've recently published two new reports on how AI will impact industries, and how organizations can harness its power to improve the quality efficiency and velocity of their operations.

I invite you all to take a look at how AI is changing the narrative on media and entertainment and game changers on the future of sports at reports Dot Global Dot com.

Now as we look out over the next few years, we see how quantum computing has a similar potential to be an exponential accelerator of computer processes, providing meaningful change that will separate the early adopters from their competitors.

The shift from traditional computing to quantum can provide advantages in optimization machine learning scenario simulation and cryptography, we can already see possible benefits in manufacturing the life Sciences, AI finance energy and other fields Quantum's massive computing power when combined with machine learning.

<unk> and AI will play a crucial role in accelerating innovation.

Although it is still in its early stages, we recognize the need for quantum readiness for organizations. So that they can seamlessly integrate this technology they will need a proficient partner in order to ensure they reap the benefits given global signature blend between our rising industry knowledge and our longstanding tech expertise.

We believe we can be that proficient partner for current and future clients.

Now some additional color on enterprise studio network Martine mentioned that we have created the new studios of Amazon Web services and Microsoft in order to leverage our decades of expertise and track record in each space, Let me share more context global expertise covers almost all AWS technologies.

From traditional infrastructure as a service to platforms as a service data AI and analytics consulting Amazon kinesis delivery and Dev ops migration security and government migration.

Driven by our industry specific knowledge this new AWS studio will help our top stakeholders and our clients to create a comprehensive and scalable cloud platform that can tackle all of the new technology challenges like AI and spatial computing.

We combine our global presence strategic partnership with Amazon Web services, and deep understanding of cloud technology and business strategy to deliver innovative solutions that help our clients succeed.

Our Microsoft studio aims to enable organizations to obtain maximum value from their investments within the Microsoft AI cloud data and analytics capabilities.

It supports clients full adoption of our cloud strategy, taking the best out of Azure data and AI implementing migration and modernization processes and leveraging the suite of Microsoft intelligent business applications, such as dynamics 365 and power platform. This studio is also a partner for companies.

That need to take their it operations and responsibilities to Azure certified subject matter experts that will monitor manage and maintain clients our it infrastructure and systems.

In this space, we are proud to say that together with sport in the evolution of La Liga Tech and Microsoft We have launched a pilot of generative AI applications to reinvent sports tactics and broadcasting using Microsoft as your open AI service. This joint effort will improve available sports data and enhance the experience for millions of fab.

Fans all over the world among.

Among other features this collaboration facilitates the creation of multilingual subtitles adapted in near real time for all live sports matches and improves metrics availability and data visualization for each team's head coach and their assistance. This offering started for football, but will expand to other sports, including basketball rugby antennas.

Now let me talk about how we are enhancing our clients' operations by improving our product offering Martine shared news about genex's I will dive deeper into other products.

First wahabi this wallet as a service has evolved and is now capable of offering organizations a fast track into the digital payment space. The platform's architecture based on API sets up a payment aggregation in a digital wallet business in the white label format. It enables organizations to quickly <unk>.

Enter the fintech space without having to develop their own backend from scratch.

<unk> is currently undergoing its first major launch with the Ecuadorian Bank product Banco our solution is the first embedded finance platform in Ecuador, and produce banko has become the depositary bank and a reseller of wahabi offering it to its corporate clients, who want their own solution for digital payments and collections. This.

<unk> is particularly special to global because through it together with protocol Banco we demonstrated the power of Fintech in Ecuador, and its potential to advance financial inclusion for the whole country.

Next I'd like to announce the relaunch of our platform Meda and AI assistant for it service management as we listen to the challenges of our clients, we find that many of them, particularly larger organizations struggle with overwhelming and cumbersome ticketing systems as an AI assistant Meda Optimizes and accelerates.

It services by applying AI to streamline ticket management and simultaneously conduct process mining to find bottlenecks.

This platform was born out of our work with one of the largest companies in the life Sciences sector. This organization was experiencing a major challenge to map their priorities and procedures through their internal ticketing tool receiving over 100000 priority tickets per month.

Our AI assistant anticipates ticket variations and connects them to the appropriate service management team. This resulted in 25% more efficiency and problem solving three times faster ticket resolution and a two day reduction in ticket management.

Now some more news on our continuing work with our clients over the past year, we began working as the technology partner for your barrier Spain's biggest airline as they undergo their own digital transformation strategy. The goal is to reinvent the technology area with a three year project, which aims to ensure the future value of the <unk>.

You're nearing functions, enabling business resilience and rapid transformations.

In addition to providing technology services, we have partnered to create the future talent program centered around developing the young talent in the region through this project, we are sharing with the barrier of the globe and way of doing things, including our agile culture, our growth strategy, our industry specialized capabilities to improve.

Product performance and our delivery models.

The pharmaceutical industry has been steadily moving towards transforming traditional face to face interactions into digital experiences as new products are launched into the market.

We are working with one of the largest players in the sector on an approach to fully transform their go to market strategy.

Following proven data driven strategies, the new model relies on innovative digital experiences for health care professionals to boost their engagement with the company.

These new touch points will enable capturing data that will result in simpler more intuitive and personalized experiences fostering stronger connections with this specific community while driving the success of their products you.

You may remember that last quarter, we consolidated our Google cloud expertise into its own studio part of the enterprise network.

This quarter, we have major developments from the studio with a leading toy company. After building a track record with them for quality of delivery through our work over the past two years, they approached us with a more urgent need to reconcile marketing and commerce analytics data for three product brands.

Their own ecosystem was fragmented and not helping the organization achieve their kpis, thanks to our partnership with Google and our expertise on the Google cloud platform and data and AI studio, we reconciled the data on each analytics platform, enabling the company to calculate business Kpis from a single source.

In Latin America, we are working with our region's largest bank it out when you ankle through Genex's, we're helping them released the first banking Super App in the region. Our global team provided the platform technology and services to convert their current mobile application into a super App integrating several partner services into the solution but.

<unk> user engagement and facilitating customer access to services and product payments without leaving the application. Thank you everyone for your time and attention I'll now hand, it over to Paul.

Thank you Diego and good afternoon, everyone. It's great to be back, let's kickoff with our clients as you know our major growth objective for globe has been our 100 squared strategy aimed at generating new clients and also expanding the array of our relationships with our current ones to serve new geographies and even more so.

Services as we grow our collaboration overtime.

It continues to advance and show results as this quarter, we were able to deliver our highest quarterly revenue ever but with greater diversity in our top revenue sources.

We now have 16 clients, bringing in more than $20 million in annual revenue. We have 283 clients that provide more than $1 million of annual revenue 21, 5% more than one year ago, our largest account the Walt Disney company declined by two 4% year over year.

And one 1% quarter over quarter showing signs of stabilization.

The rest of our accounts collectively grew by 18, 1% year over year and 6% quarter over quarter.

<unk> also widening its revenue sources geographically as well in Q2, 66% of our revenue came from North America, 22% from Latin America, 14, 1% from EMEA and three 3% from Asia and Oceania.

100 squared strategy is based on widening our services to our current clients. We remain laser focused on our net promoter score as a quantifiable assessment of our client satisfaction with globe and and their likelihood of referring us within their organization and their networks in Q2.

We achieved an NPS of 83, our best ever our average NPS for the trailing 12 months has now increased from 79 to 81.

As of June 30th we were 25947, Globus of which 93, 1% were it professionals with the full incorporation of Penta logging July global is now a team of more than 27000 creative mind.

Our annual attrition rate is currently 11, 6% the lowest in our history and the attrition over Q2 was two 5% we are committed to keep delivering the best experience to globus and to enhance global its identity as an accelerator with exposure to projects with beloved global brand.

It's in multiple geographies regions and industries combined with a culture of diversity and innovation.

We also aim to drive efficient utilization to manage proper head count hiring and attrition effectively as of <unk> 23, our utilization rate stood at 81% at current levels and with the labor market stabilizing we are confident in our ability to have a healthy flow of talent moving forward.

Third we are already starting to see positive indications of better hiring trends on an organic basis and we anticipate these trends to continue into H two.

Under the same objective and to strengthen our agility, we launched a new AI based staffing assistant that runs on slack <unk> preferred internal communication channel and helps project leaders to build the best teams in seconds. This new assistant seamlessly works with Globus performance and careers systems.

Proposal to each leader suitable candidates within the talent pool that best match each job request with all pertinent information in a fully conversational node global leaders can now use this assistant to create high performance teams with specific skills and even setup. The interviews this will speed up even more.

<unk> maximizing the value of our talent pool, and ensuring quality of the delivery.

To keep ensuring a vibrant career path at Globe, Inc, and accelerate global exposure to new challenges, we developed a data driven tool concept known as readiness model. It provides a holistic view to assess the readiness level of global for growth and promotion by encompassing and interconnecting all of the.

Core aspects of talent development performance assessments leaders feedback and technical skills among others will.

We are using this tool so that we can reward globus, who have gone the extra mile to upscale or reskill themselves and have taken the driver's seat of their own career by offering them new challenges with more agility. It also fosters transparency and helps mitigate bias by clearly outlining the.

Criteria utilized to assess and comprehend the readiness level of Globus as a guide for leaders in doing so we are being true to globus entrepreneurial culture at all levels and areas of the organization. We launched this tool via our proprietary platform of stymie up this quarter for Glo.

<unk> that want to take their career development, even further into their own hands are open career platform continues to provide globus with a promotional opportunity right here at Globus and serves as our in house tool to offer a new career path team and perspective.

More than 500, Globus entered new fields within globin in Q2 alone in the past year more than 2000 global have been able to find new challenges this way.

We are also enthusiastic about the increase in the utilization of our own learning and development hub my growth their <unk> and their career mentors can track progress in specific skills relative to the expected proficiency at each seniority level powered.

Powered with artificial intelligence. The tool provides a range of learning missions that enabled globus to expand their skills and reach new levels of knowledge in each working ecosystem more than 15000 globals are regularly active on this platform and nearly 4000 have increased their standing.

Binding the use of my growth with the continuous evolution and expansion of global University. The total global learning hours increased more than 30% year over year last but not least our be kind initiative keeps driving impact on a greater community and broader company stakeholders.

Holders.

In 2020, we committed to offer 15000 scholarships globally two people from different backgrounds to study technology by 2025, we have had particular focus on under represented profiles, including women and socioeconomic minorities in developing countries.

Through our code your future initiative, we have already offered a series of training opportunities to more than 10000 people and this last quarter, we announced 500, new scholarships in Malaga, Spain.

Within this program the <unk> initiative in Colombia makes me, especially proud last year I shared with you all that globally launched a special scholarship program for individuals affected by the internal conflict in Colombia, who are transitioning towards peace.

The program provides access to alternative forms of education, including boot camps technical workshops, and soft skill lessons to improve their employability in the technology industry. We have expanded this program to four cities and are currently training more than 120, new.

<unk>.

And finally I'm happy to announce updates on the fourth edition of the women that build awards with the support of global partners like the NYSE Salesforce women corporate directors you to me and coach hub. This year's nomination stage concluded with our largest response ever for the awards receiving <unk>.

<unk> 3100 nominees and 123000 votes.

We look forward to sharing the stories of the winners so that we can promote more diversity and inclusion in our industry through their inspiring stories.

With that I'll hand, it over to Glenn to discuss our financials.

Greetings, everyone. It's good to be back here with you. This afternoon. We are excited about the outcomes, we achieved today and we extend our gratitude to all our globus and clients for their support and dedication in making it happen we.

We are pleased to report that in Q2 of 2023, we achieved our highest quarterly revenue figure representing a solid year over year revenue increase of 15, 9% totaling 497 $5 million our performance in the current environment is a testament to our commitment to delivering <unk>.

<unk> results are.

Our adjusted operating profit margin met guidance expectations, and we skillfully executed M&A initiatives to broaden our presence in Europe as we previously indicated in our last earnings call. We are confident in achieving sequential strong revenue growth in two age 2023.

Our company continues to expand while client discussions about long term strategies remained consistent in the second quarter, our pipeline increased again and conversations with customers remains strong. Additionally.

Additionally, we continue to see some improvement in the closing of new bookings and the creation of new backlogs to fulfill short term revenues are.

Our bookings in the first half of 2023 are over 40% larger than those in the second half of 2022, our revenues of 497 $5 million represented a solid five 3% sequential growth with North America growing three 9% quarter on quarter EMEA at 10 point to pursue.

Sent the term six 7% and new markets at one 8%, bringing us to $970 million of revenue year to date at 16, 8% year on year growth also our Q2 2023 revenues are already above the Q4 2022 level as previously forecasted in our last.

Two earnings calls, we witnessed improving spending patterns across our top 20 accounts regarding our top account Disney second quarter performance showed signs of stabilization with revenues flat sequentially for Q3, we now expect sequential growth similar to the company average in light of improving demand trends.

We experienced sequential growth in our two to 10 and 11% to 20 client buckets of one 5% and six 8% quarter over quarter, respectively. Additionally, inorganic contributions accounted for approximately six percentage points year over year growth in Q2 further improving our overall performance.

From a vertical standpoint, we posted notable sequential growth in most industries are media and entertainment Division experienced a five 5% growth rate driven by a positive performance not only in our sports and entertainment segment, but also in a handful of large media companies.

As expected technology, and telecommunications saw a slight decrease of minus <unk>, 5.0%, indicating a more moderated spending patterns still present across many of our high tech clients. However, we are seeing signs of stabilization across this vertical looking into the second half of the year.

Positive growth was seen in travel and hospitality at seven 1% and consumer retail and manufacturing at seven 8% with a flattish performance in professional services at minus 0.2%.

Our banks financial services and insurance vertical outperformed with an eight 4% quarter on quarter growth. We note our exposure to large global financial institutions across many business units and geographies.

Health care demonstrated an exceptional growth rate of 18, 8% helped by our recent acquisition of experience I T.

Our other verticals category grew by two 3% all in this drove a solid company wide quarter over quarter growth rate of five 3% we.

We delivered another strong quarter of profitability and net income generation.

In Q2 2023, our adjusted gross profit margin reached 38, 3% up 10 basis points quarter on quarter with adjusted gross profit increasing to $196 million, a 13, 5% year on year growth.

We are experiencing some marginal cost headwinds driven by FX appreciation in most of the term countries.

Our adjusted operating margin for the quarter was 15% within the guidance range, we provided in May.

Regarding adjusted SG&A. This stood at 17, 9% of sales down 90 basis points compared to last year's quarter.

As for below the line items are ifr's effective tax rate for the quarter was 21, 1% slightly below our guidance as taxes came in lower than our initial expectation in specific geographies or adjusted net income in Q2 reached $58 $9 million with an 11, 8% adjusted net income.

Margin up 10 basis points quarter over quarter adjusted diluted EPS for the quarter was $1 36 three.

<unk> above our guidance, representing an 11, 5% year over year increase based on $43 4 million average diluted shares.

Regarding balance sheet management as of Q2, 2023, our cash and cash equivalents and short term investments amounted to $278 million.

During the quarter, we expanded our revolving credit facility to $725 million from $350 million and it remained fully undrawn by the end of the quarter, providing us ample liquidity and resources to continue to execute our capital allocation and M&A strategy year to date in 2023.

We have produced approximately seven $1 million of free cash flow a significant improvement from the $28 $1 million used in the same period last year, owing to improvements in our working capital and tax management.

Moving forward, let's discuss our outlook for the third quarter and the full year 2023.

Our third quarter and full year outlook incorporate the most recent trends in the business and the contribution from <unk> acquisition, which finally closed by the end of July .

I would first of all like to provide you with positive news.

Our increased guidance for the year implies strong sequential growth in Q3 and in Q4, both in terms of total growth and on a like for like basis markedly higher than the rest of the industry. This positive trend in our revenues coupled with a more constructive market gives us confidence to start thinking about 2024.

We anticipate Q3 revenues of at least $545 million, reflecting approximately 18, 8% year over year growth and a nine 5% sequential increase.

As we called out during the last quarter, we continue to perceive a positive evolution of our underlying revenue indicators and an encouraging pace of bookings and backlog formation throughout the first half of 2023 compared to the final months of 2022.

Excluding the inorganic contribution from Penta log, we expect over a 6% quarter on quarter revenue growth in the third quarter.

The implied sequential growth, we expect for the fourth quarter is projected at approximately similar levels. The company's second half run rate projections are aligned with our long term goals.

In terms of the full year guidance, we now expect our full year 2023 revenue to be at least $2 billion and $94 million, a solid 17, 6% year over year growth and above our previous guidance figure. This guidance figure considers about 100 8200 basis points of top line growth from.

Penta log.

From a profitability perspective, we now expect our adjusted operating income margin in the 15 to 16, 5% range for the third quarter of 2023.

For the full year, we now expect our adjusted operating margin in the 15% to 16, 5% range.

<unk> is effective income tax rate is expected to be in the 21.5 to 23, 5% range for both Q3 2023 and the full year 2023.

Our adjusted EPS for Q3 is expected to be at least $1.46, assuming $43 5 million average diluted shares outstanding for the quarter.

Finally, our adjusted diluted EPS for 2023 is expected to be $5.72, assuming $43 4 million average diluted shares for the year.

Thanks, everyone for participating in the call and for your coverage and support.

Yes.

Okay.

That's it.

Thank you, Ron and hi, everyone. So as we go through the question and answer session of the call I will first announce your name and at this point. Please on mute your line and ask your questions. Then please mute your line. After your question has been done.

We also ask to please limit your time to one question and one follow up.

So thank you very much and with this in mind, we will take the first question from Tien Tsin Huang from Jpmorgan. Please.

Please go ahead your line is open.

Thank you Andrew.

Yes, good results in.

The sequential growth outlook is encouraging as I'll ask on that it sounds like organic sequential you're expecting a similar outcome as we saw here.

In the second quarter. So I just wanted to make sure we got that correctly and then I'm curious with this theme of.

Short cycle projects are discretionary work being under pressure, but large deals coming through.

What are you seeing maybe that's different than the rest of the group.

Love to hear your.

On that margin.

Alright.

Thank you for the question. So yeah, I think that the numbers are and like very good growth, especially compared to the rest of the industry.

The number for Q2 in terms of sequential growth organic was about four 3% that is increasing naturally a little bit into Q3, which is going to be around 6% organic sequential growth and.

Then when we look at the implied numbers for four for the fourth quarter. It's about 500 half almost sales one so the sequential growth is clearly improving I think its a consequence of.

The level of bookings and the level of deals that we have been signing.

The beginning of the year and that that trend that we started to talk about back in February stays the same and it's actually getting slightly better we started to see again some deals getting closed we started to see this in our largest customer Disney.

Now getting better as well so all in all as you pointed out you know we are once again in the 4% to 6% sequential organic growth quarter over quarter, which is a positive indicator getting into into next year.

Yeah and.

On the on the second part of the question to Jim. Thank you very much for joining today.

We're seeing pipeline, which is historically the highest.

And.

And the pipeline is not composed by small projects, but composed by.

Pretty much larger deals.

Then before longer term deals.

So we're extremely happy to see that.

In a wide range of customers.

From the top five.

11 to 20, sorry top five top 10, and 11 to 20 in both segments we are seeing.

Very positive pipeline.

Again.

The change on the trend is pretty is pretty good right now I mean, it's much better than on the first quarter than when we announced our first quarter results.

So I am positive for the rest of the year and it looks like.

The Sun is writing a little bit I mean.

<unk>.

This is writing a little bit.

Got it yes.

And in Australia, So that's probably the case real quick.

Yeah.

Real quick on head count and I'll cede the floor.

Exactly right.

Well, it's really early here, but.

But we are carefully here you guys are always working hard I can actually segways well with my question I guess, maybe on utilization and head count can we expect head count to grow here as we move through the balance of year or is there room on the utilization side maybe two.

To balance demand that you're seeing I'm just curious what the plans are between headcount growth utilization, that's all I had thanks.

Hey, Thank you for your question well head count in the first half of the year has been and it was down that now the second half as appeared like we're going to keep growing.

Utilization has been we have been working a lot on that in terms of keeping a tab and in the last in the last couple of months. So I think that what we're going to expect for the next half.

Half of the year is that we are going to rise the head count we have very strong pipeline pipeline as Martin was mentioned in the partnership that we are achieving with our main customers are longer.

So I think that we can be confident that we're going to keep their the attrition is the lowest in the history and Robin. So I think that that is also another very good indicator that we are go into the correct path for their for the second half.

Thank you. Thank you Tien tsin. Thank you.

The next question comes from Ashwin <unk> Shericka from Citi. Please.

Please go ahead your line is open.

Thank you and.

Yes, good morning.

Yes, yes.

I wanted to ask about.

Obviously.

Good results and good use of balance sheet as well.

Could you help separate out.

Organic versus inorganic sort of the contribution that that.

That you expect from from Pent alone and just beyond also the numerical.

Contribution if you could talk a little bit about the specialty capabilities that you can.

Layer on because of <unk>, maybe just to get a little bit deeper into that as well remind us.

Okay. Thank you.

Yes for the year.

The new guidance is 17, 6%.

Year over year growth, which is again extremely strong when you're looking through it our peers you know most of our peers were from minus 12 to about 4% positive. So we're talking a significant.

Higher growth for global if we want to recompose that.

Where estimated organic growth, it's about 11, 11 theatre and 4% for the year and the rest comes from from the acquisitions that we did.

Earlier, this year and late last year.

And then specifically talking about <unk>.

We're estimating the full year impact of stand alone are about 180 basis points of growth year over year.

What is about you know.

<unk> 334 $45 million.

Of revenues at this point in time.

So that's what we are including for for the rest of the year and.

And regarding the second part of the question.

We're seeing pent alone.

In two different dimensions. The first one is geography and.

We're expanding into.

Much bigger operations now in France.

In Germany, and also expanding into other delivery locations like we didn't have before.

Or we have it smaller like Poland and now we have.

About.

Sorry, Romania like we have now more than 1000 people in Romania, we are expanding now into Vietnam.

Into moral core into other destinations we were not there and I will let diego to explain the technological things that penta.

<unk> are bringing to the table.

So penta look actually in terms of their delivery I think the key aspect they have and they bring to the table for global and it has to do with the use of their talent they have a they have.

Tooling and an approach to the delivery model that is super interesting and very innovative data. We're working together now to incorporate a full scale in global in terms of capabilities I think the most important aspect like Martin said is reaching out to their client base and opening.

New regions not only in terms of delivery, but in terms of clients to bring our expertise and that's already happening.

Got it.

Sorry go ahead.

And I have been really really really great with ventana them was rude as mode and so we have been able to start working with their client and cross selling there or the capabilities of the Golan has so I think that is a really important thing about this acquisition. This was really smooth and was fast. So we can see the results very very shallow shortly.

Understood understood and the second question is on margins.

And I think through the first half one you had mentioned that margins should improve.

Improved through the course of the year.

Margin range.

Still sort of the kind of at the top end is a little bit lower.

And then before could you talk a little bit about the specific investments that you are having to make in the current environment.

And is this for the purpose of supporting the significantly higher growth rate or.

Is there a pricing component.

What's exactly going on.

If it hasn't been for the recent changes in the FX market, we would have seen.

You know a nice improve I would tell you what our half two.

Around one and a half percentage points of improvement.

But if you look at what is happening in Latin America, especially Colombia, Brazil, Chile, Peru.

The appreciation of the U S dollar hasn't gone anywhere between 5% to 15% in just two months and that has a direct impact on our cost base in U S dollars and therefore, it has an implication on the margins. So yes. As you said you know the first half of the year, we were expecting actually that we were doing little things, but and we're expecting a meaningful improvement.

For the second half of the year that now has come down a little bit that expectation because of their very recent appreciation of the U S. Owner, Yes. We are as always you know we keep on investing in growth, we keep on investing in expansion and actually the growth levers that we're putting out a very good indication of that.

Strategy.

Were level with the rest of the industry, but as you pointed out you all on the margin front, we are seeing some headwinds coming from some FX in Latin America.

Understood. Thank you.

Thank you.

Thank you Ashwin. Our next question comes from <unk> Tandon from Needham Your line is open.

Oh, great. Thank you so much our journal well first congrats on the quarter and very impressive relative to your peers. So I wanted to ask you in terms of 2020 for I think one you said you're already thinking about 24, so given the exit rate of the fourth quarter, when we do the math and the easy comps.

Is it reasonable to expect maybe a return of 20% growth by 2024.

Yes Luke.

That's where the mass the mass Hussain of course, it's still early and we will provide really providing formal guidance at the beginning of 2024 in February .

But clearly one thing is to get into next year, we are seeing sequential growth on a very different thing is when youre seeing decreases.

So we are optimistic about next year, we are optimistic about how these are shaping up are getting closed.

But it's I think it's still early to say, okay. It's going to be doing is gonna be 15 at 152022 right. When you look at the market and our peers.

Seem to be all in the in their you know single digit numbers I believe that double digit is okay. Maybe you know we need to get closer into the end of the year.

To see if you know what we're seeing right now is validated in the second half or if there is any change, but so far it's looking good.

Got it and then just.

As a quick follow up in terms of Disney what's changing every item when we look at news wise. It's bad so could you just give us some color in terms of what's changing at Disney for you and should we expect flat trends from here or do you expect actual improvement in terms of sequential growth as we move through the second half of 2024. Thank you.

Well I would take that one.

Thank you for the question Disney.

<unk> gone through a really deep process of optimization of.

Their operations and it is interesting to see how that evolves.

During the first quarter this year.

A large portion of our second quarter of this year. They have been you know moving things around going up and down and it was public announcements about you know.

Many people that they let go.

But the scope of what they needed to lose it and change.

And that steel get every day more and more challenged.

They are everyday.

In the in a bigger need of changing and evolving their technological solutions. So Disney historically has invested a lot on technology and we are very good partners to them and we have been.

In the <unk> in the last few months in Lake.

Some traction again.

On our services and what we do for them.

On the parks.

Side also on the on.

On the in the direct to consumer.

Right on the on the DC Plaza, one support side. So in both places demand is work.

So overall, we are very happy for that and I think that trend will continue go in that way hopefully, let's see we never know.

Thank you.

You really see Ya.

Thank you, Mike and thanks, Chris.

Comes from Maggie Nolan from William Blair. Your line is open. Please go ahead.

Thank you.

Hello, Mike Magee.

I wanted to follow up on that question, but asked about clients option.

Kind of what about Hudson checks there within that why do you think it takes to bring that back up to the company average growth.

Yeah.

There's a combination of customers right.

Specifically in the two to 10, there is just one customer.

Nonperforming loans with a company growth and kind of took a little bit the numbers down.

On average.

But you know again.

<unk> has a very strong portfolio of.

What we call 100 square accounts, you know accounts that have the potential to do a $100 million overtime.

Sometimes you know like in this quarter, you know Disney was flat sequentially and we still were able to do four 3% sequential organic growth five 3% total growth.

Alright, so sometimes you know, it's one customer sometimes a loop of customers, sometimes all the company, but I think that the interesting part here is that we have an amazing portfolio of high potential accounts in every single industry. So that's another positive right. I mean, we don't have a specific concentration in one single industry.

Hence you know we tend to be quite diversified on.

Sometimes you might come from travel and sometimes it might come from.

Yes.

This quarter it was good.

Sometimes it may be from financials, which this quarter was flattish. So all in all we have a very diversified portfolio of the most successful companies in its industry and that is what drives the growth in EMEA of long term short term you may heard one customer up or down, but I think that.

And regarding the pipeline Maggie.

We see we see the pipeline growing.

Pretty much across the across the board.

But.

The tests are very clear accident on the on the top clients on those clients that you mentioned.

So yes.

Yes.

I think that one of the other thing that is important that we have been working a lot at this last year is in the global accounts, we have put in a strategy in order to cover global accounts. I mean, you know that we have this regional approach in terms that we have Latam, we have Europe , new market and we have U S.

And but then now we have another strategy that is the 100 square strategy that goes around all of those regions and then we have the other one that is global accounts and those are a specific team that are covering accounts all around the world like for example, I dunno Sandra knows when Glenn if they travel account that is in Europe and Latam in Mexico.

I mean, we have it in different.

Phases, and we have on a specific team go in and keeping girl keeping that accounts and growth right. Now we have named 10 global accounts, probably we're going to have 15 or 20 by the end of the year with Baghdad. So I think that is another way of approaching how we are growing the account England.

Thank you.

And then when you think about.

The announcement that you put out there about the large investment in Latin America, including the hiring efforts can you help me understand what strategically is different for you going forward, what you're most excited about how youre going to approach it maybe differently.

You know what you've been doing to expand in the region in last several years.

Yeah sure.

We have been expanding as you as you have seen operations all around the world.

In Europe .

APAC.

The heavy presence now in middle East.

And we.

We think it's time to hold back.

Given the strategic importance and relevance Atlanta America.

Gain after certain events international events.

We believe it's time to double down on Latin America and that's.

That's the simplest way of explaining that know the specifics of that is growing.

Our Brazil operation.

And our delivery centers in the many many different countries in which we operate.

Pretty much in all of them.

So that that Maggie is how you need to think about this as a long term investment.

Probably 567 years in terms of developing talent developing AI and expanding into the Latin American market.

Thank you all nicely done.

Thank you very much thank you Maggie.

Thank you Mary our next question comes from Bryan Bergin from physical Brian . Your line is open. Please go ahead.

Yes.

Hi, Alex Garcia.

Let's start on program types. So.

If you can talk about the nature of client conversations now related to the theme of cost efficiency programs versus more of a.

Focus certainly hear a more constructive tone from your ear I'm curious have you seen a notable pickup as it relates to inquiries around growth oriented projects or if it's still a little early for that.

Yeah sure Brian . Thank you so much for the question.

We are seeing.

And evolution that is happening in terms of.

The quality of our projects before they were more oriented.

There still are but more oriented on the.

Cost savings side.

And now we're seeing that picking up a lot on the digital space on the agreed in the globe and create space in which we are providing AI projects connected to everything that you know is happening in the market.

We're seeing an evolution a lot in terms of how to integrate the offering of create with digital marketing digital sales digital branding pro four months into.

Our main.

Practices.

So we are happy to see that evolution because for for a long time, you know I would say during the last five six waters.

The predominant kind of projects where projects based on on on trying to become more efficient and now the focus.

Is that but the addition of AI and everything that is happening.

With AI and as we said in in past quarters.

This AI demand will still be picking up slowly corporations are slower than individuals to adopt technology given the whole restraints.

Much larger systems that they have so these things will pick up and we will see more of those interest in digital projects moving forward.

But still the.

Cost saving kind of projects are there and I think they will be there for them for some time.

Okay understood.

Just to add a little bit of color on that I think.

We're kind of in an intersection.

Cost saving and operational efficiency. It is still in the conversation, but the approach to it yes. It has changed dramatically like just as an example within health care, we're talking about telemedicine, which reduces the cost brings better experience, but from a different perspective is studying new technology slowing that long.

The relevant so that is slowly starting to happen and I think that's the change we've been seen during Q2.

Okay. That's helpful. Thanks Diego.

My follow ups on the on the enterprise platform studio so.

Okay can you give us a sense of how big this studio has got pretty it seems to be quite successful and and just separately as you lean into this area. Further does it change anything around how youre sourcing challenge versus your your heritage Seo Basin custom software development is there a different way of acquiring talent. So this particular.

Sure.

The second part of a question to be answered like Battle I will answer the first one.

There's a specific need on the enterprise side, and we're talking about the enterprises like the Bakken of companies going from S. A b to cloud migration to a sales force too.

But in terms of how they take care of their own customers, so their own processes and so on and so forth, there's a pretty clear need.

Do those things in a different way.

In that space and bring the way of working from the digital space.

Into this.

Area and people kind of their tire about the old practices and the old way of doing things in that specific space. So now they are betting for players like loan for global because we're bringing that fresh approach to that to those to those same problems.

Something remarkable is how we're seeing the demand of the migration from our three two S. Four.

As for Hana in SAP for example.

Ample.

But cloud migration is also in general very.

Very accentuated our sale force is picking up.

Very good.

And we are seeing a strong demand there.

But in essence, what our customers are buying from us.

Which cannot get from others is this way of understanding.

How to create technology, how to implement technology in a tota in a totally different muhtar reinventing that space too and that's one of our largest.

Our competitive advantage is how we do things.

And and that's why that enterprise network of studios.

We'd like to call it is growing very fast.

In terms of talent I will let Pat the tool of compliment. Thank you.

Well, what we are doing is as candidate mostly the same as we had been doing the only thing that is probably what we are doing more specific things in terms of this specific skills and the partnership that we have with a sales force and go on to all the underwriting and help us and in order to achieve those selling them.

And prepare that that that that that number will decline Africa's but as Martin was mentioning the way. We are hiring I mean is not changing because of that and we always hire at the same pace. We are we keep expanding our operation in terms of looking for the best talent in the world around the World, where Albany, and often says that some of them are espeseth.

Going into this specific technology and it is a specific a studio that is different that is not defend that when we launch. It. They gave me in a studio or is no different as we along with other studios I mean, we treat this as part of that 360 offer that have o'glove and when we approach a client that wants this kind of technology in this kind of partnership is in.

Not because they want just the talent is because they want the talent and all that comes with that the experience of gold love and the culture of club and they approach you have in terms of solution and not only that the specific topic also the consultancy the marketing and the all the studios that David was mentioning that we create in this last couple of months. So I think.

You can go into your question about the talent, we keep growing the talent, we keep having the talent to grow inside the company. We have been put in place. Many initiative that has to do we keep training upskilling and Reskilling and we have the apply artificial intelligence in our glove and University in terms of doing the talent match. So.

And we keep doing what we were most lab to do risk is taken care of or Clovers and have the best version of themselves right. If I may to me with a with a small comment.

I think your yours.

You're spot on with regards to there is definitely a difference.

In fact within the enterprise studio most of their career path and the talent is candidly very soon certifications and this is required by the partnerships and this is a big change, but the good thing about that about the differences.

Is data, we remember that at the core we are organizing studios and they are actually taking care of that the full pipeline from attracting the talent to their library. So this this is actually for Glo and is our bread and butter is how we do things.

Okay great.

One last comment on that.

Sorry.

You hit a very specific 0.1 more comment on that is that people that joins globus.

They are not joining in enterprise the studio.

They are joining.

To read part of our story of reinvention of the industry and this is what people likes to do people likes too little and too belonged to teams that are thinking very big that are trying to do something really different for the whole market.

This is the case of global and this is why many of the people are joining US sorry go ahead with your question.

No no no I was I was thanking you for all the detail.

Thank you all.

Thank you see you bye bye.

Thank you Brian Our next question comes from Surinder <unk> from Jefferies surrender. Please go ahead.

Thank you.

So for my first question just.

Going back to the question with the studios here it.

It seems like every quarter you got the new studio.

Launch at what point does that structure potentially become a bit unwieldy and then what happens to studios, maybe you launched two years ago.

Steve you're aware.

I assume uptake probably isn't that strong.

So I'll.

I'll I'll take it so.

Actually one of the things, where we're launching studios.

There's a process of maturity and evolution that makes us launch two years.

And but we are also Ah.

Combining studios whenever it makes sense just as an example.

What we now call digital experiences encompasses lots of studios or the word there before like a UI development mobile etcetera, etcetera that now can be handle within.

One portion of their vehicle system. The second one is we're constantly challenging the structure and how that structure is maintaining in fact, we're actually doing changes as we speak that will.

Announcer shortly there have to do on how we manage them you know the ecosystems. So one of the things is data we created we reorganized the studio team for networks.

And they will be managed and in a way that.

They will become much closer to the business not only to the Italian so so.

I think our I think the number of studios that we have and how we manage them.

As always we never choo more than or buy more than what we can too.

We know where we're doing what we're developing what the market is requiring requiring and what the talent is recorded in there as well So club with all of that combined is that we are making the announcements and launching the new studios.

Yeah, and the the new students, but into four different groups. You mentioned do you want to go through the different four packs yeah definitely.

We have the reinvention of the studios that you're all aware that have to do with reinventing industries.

We have the digital studios that are around technologies and solution types.

They we have created which were recently launches was announced.

On our on our last quarter and last we have.

Enterprise the end up so if we are we were talking about that before the enterprise studio which encompasses.

All the solution they have all the solutions that have to do with enterprise in their operations.

And the way they want to thank all of them is.

You go the full lifecycle of the product or a company.

And you start with.

The consultancy part, which is the reinvention studios.

And if you want you go to the Enterprise Studios, where you.

Good work with the backend.

Then you go to the digital studios, who create your digital experience and AI, so on and so forth and then you go with.

The create studio that is about.

Making it a very level for people, making it known by people is digital marketing digital SAIS performance advertising. So on so forth, though that for that full cycle is what we strive and we tackle that cycle with these for a studio networks is that clear.

That's helpful.

Then in terms of as a follow up here.

In terms of where we started the conversation with coach was around right. There is the initial conversations that you're having with clients.

You've kind of started doing some proof of concept projects for them.

What really comes next at this point right.

Think about it.

The client adoption curve here is in the time frames that are maybe involved.

When you think about it from a client perspective, yes.

Yeah still the projects are exploratory and now a little bit deeper, but its still exploratory I believe that it will take couple of more quarters to see that in full action.

And let's see how customers use it.

There are hundreds of use cases that are extremely useful.

Still need to prove that the quality of the answers.

And what they are getting from that US is really you know.

It's really to the level that they need.

So I expect that given the corporation's move much slower it will take a little bit more time to see that evolution.

Yes, I think.

As of today.

Things are we've seen a lot of activity with the what we call knowledge augmented knowledge, which is managing large amount of information that the organization produces internal structure way and making it a very level.

To the organization under a different type of context, we've done a lot on that front, we've done a lot.

As winning in something that's called Comverse, AI, which is making all your business processes accessible to one single console conversational interface, which is which makes it super easy for anyone working at the company be the during the ramp up purchases or everyday type of.

<unk> work those typically in terms of project size are not huge they are very good they have very good impact, but the thing is.

The landscape within a year is changing a lot new play a year's new capabilities, Microsoft just announced a bunch of new capabilities being exposed through our.

Sure we know that Google.

Follows immediately etcetera etcetera, but the good thing is we are all.

Coming to this idea of what will be the EIA application architecture in the future and what will be achievable and we're talking about Asians, we're talking about plug ins a much richer type of architecture, where you can control of which data you're based basing your response, where you cannot.

Truly interact with <unk>.

Different systems within the company and make all data for a seamless part of that conversation with a lush languished model all of that together.

It's like the large type of projects transformational where you actually changed completely as an example, the way.

Marketplace.

Interacts with its clients or an O T. S. As an example, those are the projects that are to come and this is what Marty was saying it will take a couple of quarters for us who started seeing that.

Thank you.

Thank you. Thank you.

So our next question comes from Thomas <unk> from Keybanc. Your line is open. Please go ahead.

Thanks, guys. Congratulations on the resolve a lot of my questions have been answered so maybe some follow ups here on me on the enterprise studio.

Sure.

Like this is definitely accelerating here in the near term I just want to just double click on that in terms of sort of asked about share gain with an $8 nine trillion dollar Tam you identified marketing but.

Is there something going on is there a dynamic that you guys are.

Relatively known for the front end.

Design ideation.

It seems like Youre being capped a little harder on this kind of multi cloud possible strategy here on the backend.

A question there on the AI I'm sorry in his comment.

Questions you.

Given some comments before about.

Percentages of revenue one maybe wed love to hear any updates there on where you were to think about maybe looking out into 'twenty four.

In terms of a net increase maybe a percentage of revenue coming from that those technologies. Thank you.

Thank you Thomas.

The first part of the question.

Customers are tired about nonsense.

On the enterprise side.

Their tire about lack of transparency.

And we are bring in absence of Nelson.

We're bringing transparency to those projects, which is what we normally do on the digital space.

So.

That cultural transformation of those kind of project is whats driving our demand.

Into into this space.

And I see that evolving and growing quite heavily moving forward.

The fact that that.

Like the most is our studio.

Mobile our ports that are on the top of the organization being absolutely autonomous taken decisions much faster than our competitors.

Being able to have an identity really perform in a totally different manner.

The idea that we are using AI to discover for example, bottlenecks on an SAP implementation and how you operate Asap and we are bringing those things very fast into the market and we are being extremely successful with all of those things.

So I'm very happy with the performance of the enterprise citizen as they've all said we're launching.

The Microsoft studio the AWS studio.

We already have a sale force studio.

The Google Cloud implementations. So we have now the full set of the big vendors in that specific space.

Working with us in helping with us and they see the same thing that I'm describing.

They see that we are delivering these projects.

It totally fresh and different approach with a totally different amortization come room from a different world.

And that's very attractive and that's part of the innovation, we're bringing to the industry or no. One if you want to take the second yeah, but so.

This is a.

Let's say an area that is.

I mean, its recent for low end you know we've been therefore.

Few years.

So, yes, it's going to get some market share from the total.

Revenues next year it is growing.

Probably slightly above the rest of the industry right now the rest of the of the company right now in the industry and the industry as well.

And that's but that's mainly because the total whereas small player and it's a small part of <unk>, so far but definitely it's an area, where we're seeing a lot of potential of growth. So it's going to grow probably a little bit faster than the rest of the company year in its smaller size as well.

Thank you.

Okay. Thank you.

Thank you Tom Our next question comes from Arvin Romani from Piper Sandler.

Your line is open.

Thanks, Thanks for taking my question I, just want to comment really good results across a really nice para shows are off you'll have.

Thank you.

Finally at San Juan said something really important.

Yeah.

Yes.

So look I mean, it's clear that they are.

In our briefing.

Growth versus your peers.

How much of that you attribute to the specific work in offering you'll have versus like kind of a client or industry exposure.

There are a number of things that explain this significant higher growth than our peers.

And I would say that we are all the same market. So they have to be company specific drivers right. It has to be on how we are structured it has to be in terms of studios. It has to be with you know how growth is part of our culture and everything that we do is always thinking about you know.

What to do next which market to attack next.

Also you know we started you know building strong marketing campaigns in the last two years, especially as you know for example, we were a sponsor of the men World Cup marketing Qatar last year now we are in Australia because of our sponsor's also of the women World Cup as well so we.

We are being very aggressive in putting the brand out there and making it known globally as Martin mentioned during the remarks.

We opened new new eight markets in the last 12 months.

Which is something you know that most of most companies. These days are not doing you know there are more like.

Looking into insight on how to to keep the lights on and keep things going on the obviously, we are heavily pushing too to expand on.

And I think that all those things are very relevant to understand why we have been performing better than the market.

Finally on the M&A front, you know we have been active looking into new technologies that we want to bring into the into the equation looking into new markets. Both for revenues and also for talent. We have now presence for example in Vietnam in the Philippines.

Which we didn't have in the past we.

We have a stronger presence in France for revenue in Germany in Australia in Denmark. So I think that that's kind of the drivers of why we are somehow performing very very different from all the rest of the industry. As you may see our issues are not the main difference right.

[laughter] view on myself rewarded to a handful of former president of Quanta.

Yes.

We're not expecting anything different from the sample right.

Uh huh.

Thank you.

Yeah, what was in the same shop.

Yes.

Yes.

We're not looking at growth outside the top 10 is very healthy at 22% growth.

Hey, Richard a very impressive so when I look at it.

That's outside of it is is a growth bigger Ed and some of the larger accounts that are tucked into 'twenty or is it more like broad based across everyone.

Typically you're not alone.

I would say top 50 accounts are the ones that do.

Drive the company right.

50.

Probably 40 of those are 100 square account mhm.

Like I think at the end of the day, what makes us grow with this focus on these very large global companies that are leaders in their own industries that are spending or investing you know millions or billions, sometimes of dollars and technology and we have been able in some cases.

To become a strategic partner and we're working very hard for the other cases to also get there because that's when you know companies go from one to 3 million to 15 2058 to 100 million. So that's the.

We've been doing over 50 square for a long time, then it became 100 square and you know but it.

It talks about okay. What are we trying to achieve which are the customers that can get us there.

And I think that that very clear mindset and focus has been a very relevant to grow you know across the board and yes, I mean, I will say at the beginning you know I would look more into it like top 50, because sometimes is that the warrants and does the doctor and Sundance as they learn to join them and sometimes it's you know 20 to 50, but overall I would say that.

95% of the growth has always driven by the top 50 accounts.

Yes, I'd add to that.

And the way we organize.

Our sales force has to do with that right has the ability how to cover how to partner with them main account as.

One was telling is not the only the 10 account or twenties more like this vision of the 100 and square is how we're going to be the best partner in those accounts that global account that we want to achieve so when we are thinking about how to structure new teams, how well how will open a new market as was APAC and Europe .

We're asking about Sydney and we're at what we're doing here. So it has to do with that it has to do how we our expanded global around the globe and there is a very famous video about how it had been growing the last couple of years and opening offices in and we have been covering all the glove right. Now so we have like APAC, we have Europe , we have that.

We have U S and that is that is our vision that you have in order to what we want to achieve that is why we are growing itself I mean faster than the rest of their of their competitors and probably it has to do also with the mindset that we want to have in order the talent in the company not only the leaders of the account all the parts in the company.

Has this growth mindset and they have their own autonomy in terms of how to how they want to deliver the best quality to that to our clients. So I think that is also another important thing that culture is really really very important in global and everybody is thinking about how to grow how to cross sell how to present, the new studio to a client how to.

Connected with the best partner, how to make the best partnership there, but with with the client that we have so within that that thing is something really important is not only the leaders of that count is the complete parts that are in front of the client that they're working in and they have many kpis. It has to do with that we are measuring all the parts in terms of their way.

Readiness in AI I mean, how how are they applying AI in their processes and that we are where we have kpis about how they're going about their assessment about the performance that they are doing I think <unk> kind of mindset has to do it.

We went to a cheap right we want all the time the challenge that's at the core and rather than keep growing and keep even the best of that that we can we don't we don't like to stay in the same line. We are always wanting for more at today. We present this for new and organization of the studios that is completely new and that has to do what.

We have been looking at their businesses is becton is expecting something new they don't want the same story all the time they want someone that can help them to reinvent their industry in the dark to connect better with our clients to achieve another goals. So we're there for them. So that that is something really really important that we have all across the company.

27000 employees would react today and I think that to date, we have been working all the time everyday on that kind of culture.

This is <unk>.

So for context, I think there's so much and looking forward to next earnings themselves. Thank Gary. Thank you so much bye bye.

Thank you Irvin. Our next question comes from Moshe <unk> from Wedbush Moshe. Your line is open. Please go ahead.

Really impressive numbers guys. Congrats I have two follow up questions. Here first you indicated that booking growth for the first half of the year compared to the second half of last year was up 40%.

Is there any way to kind of gauge how that how that how bookings were on a quarterly basis Q1 versus Q2 I E have we seen bookings accelerate from Q1 to Q2 in terms of growth rate and then in that context, maybe some color on where youre seeing some of that booking growth coming through in terms of maybe a region.

And verticals that's my first.

Thank you for the question. So I think what is important there is that.

We have started to build backlog again, if you remember back when we guide that when we reported Q1, who are saying you know.

In the second half of last year, we had consumed a big part of the backlog. So we need more bookings we need more deals to start building backlog again. So this 40% increase in bookings in the first part of the year relative to the year before.

It shows that you know because of all these deals that were being able to close the backlog for has started to pick up our game which to.

To grow you need both things right you need flow a unit stock so having the about how having or starting to build backlog and felt when we look at Q1 and Q2.

What is already part of Q3, I think that we have seen kind of a steady slow but steady improvement in every month and that continues we have not seen any changes.

I mean of course, we are not in the 'twenty to 'twenty, one leverage second part of 2020, but definitely you know when you look at you start if you were to draw a line starting in July 2022, all the way to August 2023, you could definitely see how you know there was a big change towards the end of the year and sequential increase is pretty much in every.

Month, which industries or which regions.

I think that we use is that the U S.

It has weakened.

Again, you know we start we're starting to see now a lot of those leads that we're getting delayed now closing Europe has held up well during the whole process I mean, it never really went down that much and never really went was impacted in March on Latam is was always also kind of stable. So I would say that.

The main changes in the U S being a little bit more active on and that's what has been driving big part of that increase in bookings mushy.

Okay. That's really helpful. And then if I'm looking at some of the trends during the quarter or we've seen grew.

Growth moderate in North America, and Latin America on a year over year basis versus last quarter, we've seen a nice pickup in Europe .

Sorry, we've seen yeah, we've seen a nice pickup in Europe , and APAC should we see.

Some of that reversing or maybe should we see improvements in North America, and Latin America in terms of growth rates in the second half based on the bookings that you're talking about in.

In Europe would be a little lower keep in mind that Q3 is typically.

So in Europe , so it tends to be softer than this on this on a sequential.

Actual races, Youre going to see North America, and Latin America, a new markets also picking up.

Probably Europe is going to be softer in terms of sequential growth youre going into the second half.

Understood great. Thanks for the color. Thank you once again.

Thank you.

Thank you Moshe so without we will conclude the Q&A session for today. So thank you all for joining and for the time today I will now ask Cameron to provide some closing comments. Please go ahead.

Thank you very much everyone for participating for giving your coverage your support and looking forward to see you on our next earnings call. Thank you very much bye bye buys a year.

[music].

Alright.

Okay.

Yes.