Good day and welcome to Globant's Fourth Quarter 2020 Earnings Conference Call. I'm Amit Singh, Head of Finance and Investor Relations for the U.S. All participants on this call will be on listen-only mode. After today's presentation, there will be an opportunity to ask question. Please note this event is being recorded and streamed live on YouTube. By now you should have received a copy of the earnings release. If you have not, a copy is available on our website, investors.globant.com. Our speakers today are Martín Migoya, Co-Founder and Chief Executive Officer; Juan Urthiague, Chief Financial Officer; and Patricia Pomies, Chief Delivery and People Officer. Before we begin I would like to remind you that some of the 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 questions. Such statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Please note that we follow IFRS accounting rules in our financial statements. During our call today, we will report non-IFRS or adjusted measures, which is how we track performance internally and the easiest way to compare Globant to our peers in the industry. You will find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published on our Investor Relations website announcing this quarter's results. I’d now like to turn the call over to Martín Migoya, our CEO. Martín Migoya: Thanks, Amit, and hello, everyone. As I join you today, we look back on quarter four, but I'd like also to reflect on the full year of 2020. We all faced unprecedented change from the major events of the year and saw an accelerated digitalization, both in business and…

Thanks, Martin and hi everyone. It's a pleasure to be here again with you to discuss these ideas. Within our Be Kind concept, the Women that Build award has been the biggest thing we have done so far. The response was phenomenal. We received over 10,000 nominations from 15 countries. Within each region, nominees will present it to a panel of judges of diverse fields. In all, we had 60 leaders participating on our judging panels throughout the world. The best part about Women that Build is that allow us not only to recognize these fantastic women, but to bring attention to their efforts and the issue of gender equality in our technology sector. We share their stories in our podcast and on social media and engage with the many stakeholders from academia, civil society, government, and the private sector all over the world. I invite you all to check out the result and the awesome stories of these women at womenawards.globant.com. We have already grown stronger and benefited from this better outreach with our community and we will continue promoting diversity as one of our key values. This month, I am pleased to announce that Globant will join the Board of the National Action Council for Minorities in Engineering. NACME is the largest provider of college scholarships for underrepresented minorities, pursuing degrees at the schools of engineering. We look forward to this collaboration and also to hire more minorities to join our team at Globant. In December, we also launched a new education initiative. Globant has teamed up with tech power house, Mercado Libre on our joint program, known as Certified Tech Developer. This is a training program designed to achieve the rapid job placement of thousands of young people from Latin America in the technology industry. To cast…

Thanks, Martin and good afternoon, everyone. I hope you are all doing well and staying safe. Let me start by summarizing the results of our fourth quarter and full year 2020. I will then discuss our guidance for the first quarter and the full year 2021. We are very pleased to announce another quarter of record revenues and strong financial performance. Our revenues for Q4 amounted to $232.6 million, representing a solid 26.2% year-over-year growth. On a sequential basis, our revenues for Q4 increased 12.3%, showing a healthy trend. Q4 revenue growth was 26.6% year-over-year in constant currency. In line with our expectations, the overall demand environment largely stabilized in the second half of the second quarter, and we have witnessed an improvement in the end markets since then, which is reflected in our strong sequential revenue growth both in Q3 and Q4. While the COVID-19 pandemic is still ongoing, it did not have any incremental impact on our Q4 results. That said, we do still remain cautious about any impact to our end market due to the potentially new waves of lockdowns like the ones we are currently witnessing in some parts of Europe, LatAm and the US. However, we remain very bullish about the demand environment post the COVID-19 crisis and are encouraged by the ongoing positive trend in our bookings. As discussed in our previous earnings call, we always prioritize the health and safety of our employees and almost all of our employees continue to work from home, while maintaining seamless delivery of services to our customers. Our delivery and people teams continue to develop and execute strong and innovative initiatives to keep employees' productivity and morale very high. Disney was our largest customer for the quarter, growing strongly at 14.8% year-over-year and 10.4% quarter-over-quarter. We continue…

Thank you, Juan. Thank you, Martin. And thank you, Pato. So as we go to the question-and-answer section of this call, I will announce your name. At that point, you’ll be ask to unmute your and turn on your camera, and you’ll be able to ask your questions. Please mute your line after your question is done. We also ask you to please limit your time to one question and one follow-up. Thank you. So the first question today comes from the line of Tien-Tsin Huang from JPMorgan. Please go ahead.

Hey, guys. Good to see to all virtually. Can you hear me, okay? Perfect. So I wanted to obviously, impressive double-digit growth sequentially and it looks like you're expecting that again in the first quarter. Disney was double-digit as well in the fourth quarter. So my question for you Martin and Juan is just thinking about your outlook and how you put it together this year versus last year what would be different in your mind? I'm very curious, obviously, I always ask about visibility, but I'm curious. Is it more broad-based? Is it a lot more focused on some key accounts in terms of the potential to drive some of this continuation of growth? I'm just curious how your -- you view this outlook differently from what you did a year ago. Martín Migoya: Sure. How are you really Tien-Tsin? Really nice to have in this new format.

Yes. I like it. Martín Migoya: Look we see demand coming from pretty much every industry in every sector in every company. And it's not that we are seeing, I mean, Disney growing and others not growing. Or as I said this new reality like triggered and turned on the demand and turned on the desire of the companies -- of every company to go digital and that's kind of pushing and helping us to be -- to have that thing across the board -- to have that demand across the board. So it's not a specific sector. I could not mention one because when you see them all separated you see demand on the automation sector, on the finance sector, on the ad tech sector, on the even in the entertainment sector. We need to see -- still need to see the recovery from the airline sector, and I would say hospitality sector in general. But I would say that all the other sectors are still very, very fast. And as I said before, on my past earnings call, companies like LatAm are doubling down saying, okay. This is our moment to remend the way we operate and we are helping them with those kind of things. So even in those sectors that are not blooming or not growing now, we see investments happening and taking advantage of this moment to make the digital transformation.

Yes. So thinking about the moment as my follow-up and a similar question around acquisitions, do you see the potential to do more in the way of acquisitions to sort of satisfy some of this growth you're seeing from the client base? Or is this potentially more of a year for you to focus internally and focus organically, et cetera? Martín Migoya: Organic growth has been like the main thing this year. We did a couple of very interesting acquisitions like the one we did with Bluecap in Barcelona. They have an amazing team and is pushing -- they're pushing us into new landscape that we never saw before, which is pretty interesting. So we'll continue doing things that make sense for us. That generates like a new tool for our business development guys to have in front of their customers, and I'm obsession with that. And the fact that every day we're competing against all our really great competitors we have out there. And we need to have the tools to win the game. It's something that keeps me up at night and this is -- if you need to see how we will keep on growing through the inorganic space, you need to see how Globant will keep on adding tools into that portfolio to become more effective each time we are in front of a customer. But organic growth has been great, is being great. And the outlook for this year as I said is really a pretty good, pretty good, pretty unheard of.

Yes, maybe Tien-Tsin just to add on top of that. The organic growth that we continue to see the recovery after Q2 is amazing. And the expectation for next year the embedded organic growth in that number is already approximately 20% organic. And we are just starting the year, right? Of course, we're guiding -- taking a prudent approach, because COVID is still around. But we still think that organic growth is going to keep on improving as it has been the case throughout the year since the pandemic.

Yes. No, Its impressive guys. Well-done and thank you. Martín Migoya: Thank you so very much, Tien-Tsin.

The next question is going to come on the line of Bryan Bergin from Cowen. Bryan, please go ahead.

Hi, Guys. Good evening and good afternoon. I wanted to ask on the workforce here. So, even if we take out Bluecap it looks like you're still up 12% or 13% sequentially, on the billable base. Can you comment on the key regions, where you're adding that headcount? And also how are you thinking about, how the kind of the evolution of how work gets delivered? Are you adding headcount on - in regions under the assumption they're going to be in centers or more of a virtual model?

Maybe Martin, I can take the first part. And then, if you want to comment on that. So thank you for the question, Bryan. Yes, one of the key decisions back in Q2 was to keep our people in the company, to keep the brand that we have been building in the shop market very strong. And to be ready once the demand would recover to ramp up our revenues and of course to ramp up on our engineers and designers. And what we have seen, as we discussed, over the last few calls, is a continuous improvement in terms of demand and we ended the year very, very strong. We had a record December in all our history, in terms of hiring. We're hiring -- we are growing quite a lot in India. We are seeing very good traction there. The operation in Brazil and Mexico keeps also improving. Brazil was a challenge for a while and we were able to make it happen. And we keep on growing there and Mexico as well right? Then all the other countries more or less stayed the same. All of them grew in absolute numbers. Argentina decreased a little bit, as a percentage of the total headcount but also grew in an absolute number. And we're a global company. We're becoming more global, as we speak. When you look at our revenue breakdown for this year you see a much more balanced portfolio with the US still leading but also with very good traction in Latin America very good traction in EMEA. And of course, our customers the deals that we are going after are more global, right? And when you have a global customers and global deals you start getting request for operations in other regions in a larger scale. So you should expect more growth coming from India more growth coming from Eastern Europe also Continental Europe and the US and pretty much everywhere. I mean not much difference there. I don't know, Martin if you want to -- or Pato, if you want to... Martín Migoya: No. I think after listening, the question, I forgot the second question.

Yes. Sorry. Martín Migoya: Now, listening the answer sorry.

Yes, as far as the workers go you're hiring under the assumption they're going to go back to delivery centers. Are you doing this more of a hybrid and remote model for the future as you're adding headcount globally? Martín Migoya: Do you want to take it, Pato?

Yes, I can take this. I mean, well as you know today we are still working from home. I mean our offices and -- of course they are prepared to start whenever, we need or if there is any client that, have any specific needs there. But of course, we are putting our Globers first and we are taking care of that. So our working from home framework is working great. I mean we have a problem that the productivity is still I mean higher than ever and we are still growing there. So also I mean the quality of the delivery, I mean, is on top of our line these days. I mean, our clients we have been able to partner with our clients in this pandemic times. So I think it is a really strong year that demonstrated we are prepared to keep on working from home. Of course, if there is any special need of course we have any clients that need something on the office I mean we have the specific COVID protocol to take care of all them.

Okay. And just a quick follow-up here, as you're adding headcount we've noticed you've got a lot in the last two years, and as we look at the numbers per capita revenue that has come down. So I'm just trying to think about as you're adding so much how are you considering worker productivity? And how should billable per employee metrics trend as you kind of walk through 2021 and into 2022?

Yes. Thank you Bryan, I'll take that one. So there's a combination of factors impacting the revenue per head number. On the one side, if you look at, Globant back in 2017 compared to now, the on-site teams were about 11% at that time. Now they are between 5% and 6%. That was pretty much driven a lot by our customers. They basically were getting a very good value and they were getting very good projects delivered from near shore locations. Keep in mind that, we are very close to -- we have the same time zones than our customers in most cases, right? So in a way we were getting that type of demand that typically comes at a slightly lower rate. Second thing is that we are investing heavily as Martin discussed before on some internal projects like augmented coding and that takes people that could be billed. But we believe it's a game changer, so we definitely prefer to invest some of that money on that front. And finally again as we keep on seeing this huge -- or this large demand and need and that also strengthened after COVID right? We don't want to stop bringing people training people and having them ready. Keep in mind that we managed our gross margin in the 39% more or less 38% to 40% range. It was 39.1% this quarter -- 39.6% sorry this quarter. So even with that -- with a slightly lower revenue per share we were able to keep our margins in the gross margin number. And what we do see now going forward is an improvement. We are now -- when we look at the projections for Q1 and for the rest of the year, we are definitely starting to see some of that revenue…

Okay. Thank you very much Bryan. Next question. Next question Maggie Nolan from William Blair. Maggie, please go ahead.

Hi, thank you. Juan you mentioned positive trends in bookings a couple of different times. Is there any additional detail you can share on that?

Yes. Sure. So this is something that we've been mentioning over the last three calls with this one. The year basically behaved with a very strong Q1 or end of 2019. We saw the impact of the COVID-19 pandemic during Q2. Then we saw a stabilization towards the end of Q2. And then since Q3 and onwards we continue to see increasing level of bookings increasing demand customers that maybe at some point were hesitant about restarting investments. Now that they see some light at the end of the tunnel in terms of the pandemic and they can make sure they can size the impact of the pandemic. They realized that they can do all these investments and that they actually need to do them sooner rather than later. So what you're seeing is that situation where the travel sector still has been impacted and is being impacted, but all the other industries keep on showing strong momentum strong bookings. And they want to make sure that they are ready once we get out of this and that creates a lot of opportunity. So as Martin discussed at the beginning it's coming from multiple industries. Very good momentum in healthcare, very good momentum with financials, insurance payment companies, a very good momentum with anything related to e-commerce kind of retail these companies that are getting ready to be able to engage 100% digitally with consumers. So we are seeing kind of a situation where a lot of demand is coming. We still need to see the recovery in travel and keep in mind that travel was a big sector for us right? So hopefully at some point that will become a tailwind for us. But that's basically Maggie. It's a strong momentum of course. Even though we are very optimistic we also need to put some -- to be a little bit prudent as again some countries are more complicated than others. We don't know how fast the vaccine is going to be distributed and so on and so forth.

Also to add there Maggie probably I mean -- and Juan I mean, I want to mention that also I mean on the gaming industry I mean we have been having a strong pipeline there and a strong relationship with our partners on the game sector. Also with media and entertainment I mean. And so when those industries were ready to start playing, I mean we were ready also because as Martin mentioned before, we have been training our Globers with different kind of initiatives like the Globant University as we mentioned last quarter. I mean that is -- that has -- those are the kind of initiatives that are really prepare our talent. So wherever the client needs us we are ready to keep the demand on.

All right. Maggie, you are muted, sorry. Okay. Thank you very much. The next question comes from the line of Surinder Thind from Jefferies. Surinder, please go ahead.

Thanks, guys. So a two-part question. One just following up on the idea of just kind of global expansion in new locations for delivery centers and the idea of balancing that model of delivery centers versus work-from-home. Can you talk a little bit about the decision to maybe set up office in certain countries from location? And is there a minimum level of scale that you're trying to anticipate there? Or is there the potential to truly change the delivery model in the sense that you can have a much, much more distributed workforce? Or do you still need to have for every location pick a number 200 people in an office or something or some sort of headcount number in a given location? Martín Migoya: I can take that one and then Pato can complement maybe. Thank you, Suri for the question. And the -- this new reality means that we are also rethinking the office space and that means also that we won't have any more one seat per each of our Globers. Well, if they want, yes. But in general we will work much more balanced between work-from-home and work from the office. So that means that gives us a lot of more flexibility. I mean, the new offices we are putting together are totally different from the past offices we are putting together. They have much more space for meetings. They have much more space for having lunch or dinner or meetings and be like a huge place to get together with people. And this is like the new reality. This is what's happening. So the message behind it is that it's allowing us too to start a much more global recruiting, which we are already doing much more global recruiting. Now it is necessary that even if we are going global to recruit to many more places, those guys will be connected to some country or to some cities and specific city. And we will need to have some specific presence in those places where -- so we can gather with them and we can get them together. So although, this will happen we'll keep on having the need of having a specific presence, but now with a totally different dynamics and metrics in terms of how much office space we need to open up a new city. Now we can open up a new city with a very small effort that before was a totally different game. So I think that answers your question regarding how you will scale-up. Okay, now the scale-up looks much different than before and I'm truly excited about this new reality because we were dreaming about this for many, many years. And now it looks like its happening.

Got it. That's helpful. And then just a question about the guidance here. When I look the past couple of quarters obviously things have come in above expectations just based on arguably what's been a faster than expected improvement in the economy and stuff. But when I kind of look forward and I think about the guide that you've provided it also sounded from some of the commentary that there's still some conservatism in the guide because you guys talked about lockdowns and COVID and stuff. How -- is there, can you quantify the conservatism in this guide versus how maybe you've guided in the past when we warrant in this environment?

Yes. I'll take that one Martin, if you want to. Surinder, we always historically have been guiding based on what we -- where we feel very comfortable about meeting the numbers. This has been the history for the last -- since we're a public company right -- since 2014. Today we are very comfortable with guiding Q1 very high confidence level as always. But when we need to look into the rest of the year, I think that there is still macro uncertainty. There is still some countries where we are delivering services, where we are selling services that they still have some issues. Some of the industries that have grown a lot with Globant like travel it is still impacted and it's not exactly clear when it's going to come back. So what we try to do is reinstate the full year let's be prudent. And then as the year progresses and we see more light at the end of the tunnel, which clearly seems to be the case right we are optimistic about what's happening. We will update the guidance, but there is no point in taking unnecessary risks when the COVID is still around, right? 100% all of us are now doing this call from home. And in some countries the numbers are still very, very bad. So we feel that taking a prudent approach being -- going step-by-step and reinstating the full year guidance is the right approach at this point. And we will update as the year progresses.

Thank you. That’s very helpful.

Thank you very much, Surinder. And Surinder is also one of the newest analyst covering our names. Welcome to the family.

Thanks.

Next question comes from the line of Diego Aragao from Goldman Sachs. Diego, please go ahead.

Hi. Yes. Hello everybody. Very good to see all. Thank you for taking my question. So, look, first maybe just a follow-up question regarding the revenue outlook, because I just want to make sure that I got the right messaging here. What's the revenue contribution by region that you want to take into consideration for your full year guidance for 2021, especially because I want to understand whether or not, we should be considering FX as part of the growth equation here? Thank you.

No. Look first thing is that we are seeing Latin America and Europe growing. You saw the last quarter, right, growing a little bit faster than the U.S. because the U.S. had a bigger share of the travel and hospitality sector. So depending on the recovery of travel and hospitality, we may have all the regions growing at a similar pace. If that's not the case, you would probably see more EMEA and Latin America growing faster. Now when you talk about FX for next year, right, actually most of our revenue about 86% of the revenue is denominated in U.S. dollars, so there is only a smaller share of that in currencies other than the dollar. If what we are seeing from macro reports and all that is that the dollar might be a little bit weaker. So if anything it might be positive for the revenue, the impact on the revenue side. But again at this point, we prefer -- and we set all the targets for our teams in dollars, so we just focus on the dollar number. We don't pay the FX game. We need to deliver the dollars that we want to bring.

Diego you are muted if you have a follow-up. Thank you very much…

Sorry Amit. I was trying to unmute here. So sorry for that. So look no just -- it's just a second question if I may, which is related to the number of clients. I mean, we can see that this number -- the number of clients coming down slightly year-on-year, which makes sense if we will take into consideration your strategy to increase the scope of projects within your existing clients instead of growing significantly with the new clients right? But that being said, I just want to understand what should we be considering going forward, especially to understand whether or not there is like the right balance between clients and existing clients. Thank you.

Yes. Thank you, Diego. I'll take that question. So it's much more important for you to focus on the number of accounts over $1 million over $5 million as opposed to focusing on the total number of customers. Every time we do a deal, sometimes they come with some very, very small customers that over -- that maybe have a smaller potential and eventually, they don't grow that much. And we basically end up focusing on selling more to the high potential lows, right? We have the 100-Squared strategy in place, which is the evolution of the 50-Square, so we want to focus on these very large global companies that are going to make Globant significantly larger in the future. So I think that as opposed to looking at the total number, which is fine if it goes down we will be fine it's still very high right 800 customers. But I would put a lot more emphasis on the above $1 million, above $5 million and how we are performing in those sectors.

Thank you.

Thank you very much, Diego. Our next question comes from the line of Cesar Medina from Morgan Stanley. Cesar, please.

Hello. Sorry for the delay. I was wondering, if you can give us a comment regarding your -- the plans that you have for Bluecap and what type of client engagement could that bring to Europe? Martín Migoya: Sure. Thank you Cesar for joining and thank you for the question. The knowhow that Bluecap is bringing to the table is like a very deep knowledge of analytics and data analytics on the risk side. So basically these guys are able to -- this team is able to provide predictions about the performance of the different types of assets that the banks have the different types of clients and group of clients and cohorts of clients that the banks have and predictions on different types of productivity or the amount of money that they would lose with each of those profiles of customers. So that capability that of course we will keep on using for new projects. And, of course, those predictions and that data analytic needs to then connect with technology and with products that can putting access what these guys are able to predict. So the idea of getting together when we were talking with Maite, and the whole team were -- the idea was, okay, let's do the analysis, let's do the data prediction that use artificial intelligence to understand what's going on inside those portfolios, and then let's develop the technology that will allow the banks and the financial service companies to be more efficient. Now this is the initial, I would say, like number one step of doing things together. Number two step is to bring that same knowledge to many other sectors. The same thing happens in -- on cars. It happens when you're selling a car or it happens when you're selling flights or tickets or when you're selling any kind of online asset. So, we plan to first -- in the first moment to keep on developing things together for the financial sector, and then go to expand to other sectors to be able to develop these -- that same knowledge, that same ability to predict to other industries, which excites me a lot. So this is pretty much the rationale behind it.

Got it. Thank you so much, and congratulations on the great quarter.

Thank you. Stay safe. Martín Migoya: Thank you. Stay safe.

Stay safe.

Good to see you, Amit.

Thank you very much. Stay safe. So the final question for today comes from the line of Steven Enders from KeyBanc. Steve, please go ahead.

Okay, great. Thanks for taking the question. I guess I just want to touch a little bit on how you're thinking about the expectations around your software investments, and what you're doing with your augmented coding as well as the new chat solution. I guess what is kind of the go-to-market look like with that, and how you're thinking about monetizing that down the line? Martín Migoya: Sure. That investment for us is critical. I mean we are being able to differentiate our offering when we are in front of the customers, and that's the first way to monetize that. When we sit down at the table, and we say, okay, instead of doing the things the old way, we're doing the things in a new way. And this reinvention, for me, is extremely important when competing, as I said, every day in front of our customers and competing with our amazing competition we have. So that's one thing -- that's one way to monetize it that we're already doing it now. Now, what happens if these guys want to use it for them or want to use it for other engineers that they have in the same project or other projects? We will be very happy to use it and to expand it and we'll be charging some money for that independently on our services. And it will be a fee that will be connected with a certain amount of money per month, per user that is using this platform. We will start trying that model during 2021, as the product evolves, as the product improves. And those are the two main ideas we have. We could have many more ideas and many more things that we are thinking. But I think those two are very clear, very easy to understand and really doable. Now, let's see how it works. You never know. But the very beginning of the battle is being won, because we are in front of customers being able to show something that nobody else has.

Thank you, Steve. Actually we have request for one final question, so if it's okay with you. Martín Migoya: Sure. Just go ahead.

We'll go ahead then. Arturo Langa from Itaú. Arturo, please go ahead.

Hi. Thank you for taking my question. Just a really quick one. But, in the past, you have stated that you had interest in payments in exploring that area. I'm just wondering where that stands and then if there has been any news on that -- on those initiatives. Martín Migoya: Well, they are progressing well. We have some good progress in terms of implementing some of those payment systems in some -- with some -- together with some banks. And we have no news yet, no new developments on the -- yes, the product is progressing. Each day is better, but we have nothing new to be released right now. But I'm quite bullish on the future of that specific segment, and that's on the approach we are developing and we are trying to push. Then we are developing a lot of things for many of our customers, that is really exciting. And this is growing very, very fast. As you may imagine digital payments are growing everywhere, so we are not outside that growth loop. So this is the update, I can give you now.

Thank you, Martín. Thank you, Amit. Martín Migoya: Yes. Thank you so much.

Thank you very much. So that will be all for the Q&A section today. Thank you all for joining. Thank you all to the analysts for asking intelligent smart questions. I will now ask Martin to please provide the closing comments. Martin, please go ahead. Martín Migoya: Thank you very much, Amit. Well thank you very much everyone for joining number one. Number two, I hope this new format is something that you like. We will try to keep on improving it, and making it better each time. So thank you very much. And again, thank you very much for your coverage and support. Looking forward to see you in the next quarter. Bye-bye.