Good day, and welcome to Globant's Fourth Quarter 2022 Earnings Conference Call. I am Arturo Langa, Investor Relations Officer at Globant. All participants on this call will be on listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded and streamed live on YouTube. By now, you should have received a copy of our earnings release. If you have not, a copy is available on our website, investors.globant.com. Our speakers today are Martin Migoya, Co-Founder and Chief Executive Officer; Juan Urthiague, Chief Financial Officer; Patricia Pomies, Chief Operating Officer; and Diego Tartara, Global Chief Technology Officer. Before we begin, I would like to remind you that some of our 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 Martin Migoya, our CEO.

Thank you, Arturo, and good afternoon, everyone. I'm happy to be with you again to share our Q4 2022 and full year results. This was Globant's strongest year ever in sales geographic presence and brand worldwide. In 2023, we see the AI revolution accelerating and shaping organizations as they adapt to new landscapes. With the recent expansion of foundation models, and generative AI, it has become clear that we have a massive new opportunity for us and for our clients. Although, AI is finally going mainstream, this isn't new for Globant. We have been investing in developing our AI capabilities and expertise for more than six years now. I will share more with you later. In the meantime, I invite you to see how AI can impact our daily lives by listening to part of my speech read by a tech-speech AI engine that emulates my voice. There will be a notice at the bottom of the screen when this happens. In any case, see you all after these remarks. In Q4, our revenue was $490.7 million, representing 29.2 year-over-year growth. For the full year of 2022, total revenue was $1.8 billion, our best year ever. This represents 37.3% year-over-year growth, one of the highest annual growth in our history as a public company. Throughout the year, we continue to deliver quarterly growth rates above industry benchmarks. In 2022, we made a big move in our global expansion by setting up a new business region in Asia-Pacific. We now have presence in Australia, Hong Kong, Singapore and the Philippines. We believe there is a huge potential in this region. So we expect to continue expanding our business throughout the year. A month ago, we announced our arrival in Denmark with the acquisition of Vertic. They are a creative consultancy in…

Thanks, Martin, and hello, everyone. It's good to be back. I'm eager to share with you some important updates regarding our Studios, interesting new projects with clients and our plans to leverage AI and other relevant trends. I'll begin with a focus on AI introduced by Martin. At Globant, AI has been a main part of our services to clients as well as our own internal processes for almost a decade. That's why we see the recent accelerated adoption of AI tools by the general public as an opportunity. To respond, we are driving home our offering of AI applications to our community. The Globant proposal is focused on three main areas in this space: first, driving better outcomes. We are using AI to unlock the power of information analysis and big data so that our clients can make informed and agile business decisions ahead of their competition; second, elevating the customer experience by personalizing smart interactions through AI. Globant has experience in boosting customer loyalty and satisfaction in this space. And finally, accelerating performance. We harness the power of AI to automate processes, increase efficiency of complex creative work through generative AI that frees up valuable time and resources for teams. Our Globant X products, Augoor, GeneXus and MagnifAI are key accelerators for this. As a people-based organization, we're going to double down on our AI expertise by providing an additional company-wide training to ensure that every Glober becomes an AI adviser. Upon completing the training, each one of our agile pots will have an AI expert who will consistently ensure that our solutions include the latest AI technology. In the AI space, GeneXus has proven to be a great partner to invigorate our offering. Upon the acquisition, we were able to quickly integrate our companies to create better…

Thank you, Diego, and hello, everyone. I'm happy to be with you again to discuss the transformation work we are doing for our clients and the evolving value proposition we offer to global talent. Let's kick off with our clients. Our largest account, the World Disney Company grew by 26.6% year-over-year and 8.5% quarter-over-quarter. The rest of our accounts collectively grew by 29.5% year-over-year and 6.8% quarter-over-quarter. Our 100 square strategy continued to show results. We now have 13 accounts bringing in more than $20 million in revenue. In addition, we have 259 clients that provide more than $1 million of annual revenue compared to $185,000 one-year ago. Regarding geographical distribution of our revenue in Q4, 61.7% of our revenue came from North America, 22.7% from Latin America, 11.9% from EMEA, and 3.7% from Asia and Oceania. While all regions of revenue growth, we are seeing more geographic diversification of our revenue sources. For Q4, revenue in EMEA and APAC regions grew 43.8% and 110.5%, respectively, year-over-year. We have a stronger emphasis on growing in markets that are relatively new to Globant such as Asia-Pacific. Our strong organic growth, coupled with our strategic execution of M&A, were key to driving these positive results. North America, the source of 62% of our revenue grew by 24.8% year-over-year and 2% quarter-over-quarter. We continue to focus on the Net Promoter Score to ensure that our clients are both satisfied with our services and promoting us within their networks. As of Q4, the Net Promoter Score reached 79, up from 76 Q4 of last year. This remained high above the technology industry benchmark range that goes between 40 and 61. Through this exercise, we estimate that 81% of our clients are recommending us to their community. Now regarding our people. We are now a…

Thank you, and good afternoon, everyone. It's great to be here again. We're extremely proud of the solid results we delivered today. We ended 2022 on a high note with 37.3% year-over-year growth, the second highest annual growth rate in revenues since becoming a publicly listed company while delivering another strong year of profitability and cash generation. Testament of that was the consistent above-industry growth positive throughout the year with average quarter-over-quarter growth rates above 6.6% throughout 2022. As a digital transformation service company, we understand that the current macroeconomic environment may be causing some of our clients to moderate their demand for our services and delaying the closing of new deals. We strongly believe that the mid- and long-term demand for digital transformation remains intact. Our pipeline remains very solid, and it is the highest in the company's history. We have seen no change in the discussion regarding the long-term strategy of our clients. Technology continues to be at the front and center. Additionally, talent remains scarce and companies continue to face challenges to find their technology ranks. According to leading service data from leading financial institutions and industry research firms, digital transformation investments are expected to be a top priority across companies in 2023. We will keep optimizing our talent pool utilization and cost structure and adapt our service offering to meet the changing demands of our clients. Let's now review our solid Q4 and 2022 results. We are very proud of the positive top line growth we were able to deliver. 2022 revenues ended at $1.780 billion, up 37.3% year-over-year. This strong growth was mainly driven by approximately 32% organic growth despite having a 2 percentage point FX headwind. Our revenues for Q4 were also very strong at $490.7 million, representing a 29.2% year-over-year growth. On a…

Thank you, Juan. Hi, everyone. It's good to see you. So as we go through the question-and-answer section of this call, I will call your name. And at this point, please unmute your line and ask your questions. Please meet your line after your question is done. And we would also ask you to limit yourself to one question and one follow-up. So with that in mind, our first question comes from the line of Tien-Tsin Huang from JPMorgan. Tien-Tsin, please go ahead. Your line is open.

Thanks, Arturo. I appreciate the time as always. So again, a lot of good detail about the outlook and everything here. So I figured I'd ask on the top account, Disney looked like a pretty strong fourth quarter. I heard the restructuring and some things changing that might create a slow start to the year. So can you just comment on visibility for the top account and maybe the top 10 in general and what you've seen there for the first quarter as well as for the full year, a little bit more detail. Thanks.

Sure. I will take the first portion of the question. Thank you, Tien-Tsin, for the question. And I take the first portion and then we'll let Juan to complement. I think that the relationship with Disney is extremely healthy. We have had 2022 with a very healthy growth of about 35%, right, year-over-year. So we have had like a growth with this account for many, many years. I think that the -- all the announcements is still very soon to understand what's going on in the winners of these announcements. We expect to have some hit during Q1, but then coming back again during the rest of the year. So this is kind of what we know right now. I understand that the account is still very healthy. We believe that this relationship we have with Disney is very profound, and we can help them to make many of the savings they have in mind. And I think that's pretty much the picture. But I don't know, Juan, if you want to complement.

Sure. Hi, Tien-Tsin. So in addition to that, what we are seeing is a very strong travel and services sector. A very strong or a recovery in -- on a very strong sorry, health care sector. When we are looking into the Q1 number, as Martin said, it implies a decrease in the case of our top account driven by all the changes that were discussed. Also, there is some impact coming from tech companies that as we all know, they have been delaying projects and even laying off a large number of people. And then there is a little bit on the backlog and the size of the backlog. But we are already seeing a good recovery heading into Q2, close deals that will translate into a good recovery into Q2 numbers. And I think it's going to be driven again by travel and hospitality by healthcare, a recovery on BFSI, a recovery on professional services. We will still have some hits coming from technology.

All right. Great. And then just as my quick follow-up, just to build on what you just said, I think to get back to sequential growth in the second quarter, it sounds like you've seen some positive changes recently. You mentioned a very strong pipeline. I think you also mentioned some potential closing of some larger deals as well. So can you tell us a little bit more in mid-February now. So it sounds like you're seeing real activity and change to the positive side at this point in the quarter?

Yeah. It's difficult to answer that question. We are seeing some signals of recovery -- that's for sure. We are seeing some early -- very early, I would say, large contracts that are coming into the pipeline and also some large contracts that we are closing. So for the first time, we are seeing like a recovery in many of the news that we have had during the last, I would say, nine months. So we are seeing some kind of turning point. Look, this is a very early signal, that doesn't mean that it will represent what's going to happen during the rest of the year, but we got like kind of very happy when we start seeing that recovery happening, right and I don’t know.

Because the backlog continues to build and that kind of gives us comfort on the second quarter numbers. And then, of course, for the rest of the year, the assumption that we have is that things will continue in the same way that we are seeing now. We are not assuming a big recovery of the economy. We are not assuming a meaningful crisis where it's just a continuation of the change in the trend that we have seen over the last three, four weeks in terms of bookings, in terms of closing of deals and new deals coming into the pipe.

Very good. Thank you.

Very welcome. Thank you, Tien-Tsin.

Thank you, Tien-Tsin. So the next question comes from the line of Ashwin Shirvaikar from Citi. Ashwin, please go ahead. Your line is open.

Thank you and appreciate the opportunity. Martin, you started obviously speaking about AI. So let me direct my first question there. And you cast this as an opportunity, which I can see in many different ways for content creation and other factors as well. But as a company, you do have over 80% time and material and very people dependent. So how do you think of that in the long run, obviously, at the end of the day, AI doesn't kind of go implement itself and do things in a generative AI. But how do you think of that? And are there other opportunities along the way as I look at, say, for example, corporate or enterprise level data sets, many of them are not at the start where they ought to be. So maybe that's also an opportunity. Can you talk about that whole thing?

Yeah, absolutely. Look, I could be talking about this for the next 24 hours. So I would try to be very, very short, but listen, this change on the AI tools is not something new that we are seeing. I mean we have been experimenting with tools, which are pretty similar to what's going on right now with ChatGPT, which is the most relevant thing that happened in the last 1.5 months for some time now. And we have always seen this kind of -- at the end of the day, a change on the tools or an evolution on the tools that we are using to develop software or to create experiences or to create content should happen, and it happened. And now we are seeing that, of course, humans will keep on being extremely needed like before, but now they will have tools to be more efficient. But at the same time, a new set of new applications based on AI. Basically, what happened with CCP was like a massive marketing campaign, pushing like a new way of creating applications like a new way of understanding how to interact with consumers with interfaces in general, and that will yield like a massive set of new applications based on AI, based on large language models that can learn about your company that can learn about your transactions that can start answering questions on those transactions, answering questions that before were extremely difficult to get. And all those trends only accelerate the need of what we do and only accelerate the need of creating new studios like creating, I would say, AI-specific models to answer in a certified way because right now, the models are answering like in a generic way, answer in a certified way specific knowledge in certain domain areas of expertise. And I believe, there's a change in the tools. Before we were making breaches with the regular calculator -- I don't know how to say that in English, sorry.

Calculus.

Calculus. And now we are using calculators and we are using computers to accelerate that design. Well, the same thing happened now. We have some tools to develop software with Augoor, with GeneXus, with all the things connected with MagnifAI, we accelerated the way of developing software, came ChatGPT copilot came into the game. We accelerated again. And I believe that those things will keep on trending up, but the people using those tools are still in charge of making things happen. And I believe that this trend will keep on going and keep on growing and the need of new applications paid on new paradigms that we just learned a month ago, not Globant. We have been playing with this a long time ago, but the public in general has learned new things and new ways to interact with computers and consumers who start requesting that from the companies that we serve. So I see like a massive trend going up on that side, too. I hope that answers your question, but -- it's a question of $1 million basically.

Absolutely. I guess the next question is, if you can talk about M&A impact and FX impact for 1Q and full year, what should we put in, what should we assume? [Multiple Speakers]

Sure. I'll take it. So on the first quarter, we guided 17.1% growth, of which around 5 percentage points are coming from the recent acquisitions that we did or the positions that we did during 2022. For the full year, out of the 16% that we guided, about 4 percentage points come from the deals that we closed in 2022. And for the time being, we're assuming a neutral FX scenario. So we are not assuming any gain or any loss coming from FX.

Understood. Thank you, all.

You are welcome.

Thank you, Ashwin. The next question comes from the line of Bryan Bergin from Cowen. Bryan, please go ahead. Your line is open.

Hi, everybody. Good to see you. First question I have is, are there certain types of projects and programs that you've seen delayed and reassessed -- or was it broadly slower across the portfolio and client decision-making? And if it was certain types of engagements that were commonly pushed, can you just talk about how that's affected your workforce planning for 2023?

Yeah. I would say the slowdown in decisions happened pretty much across many different industries. Of course, accentuated on high tech, I would say. And then the projects, I think you asked about the type of projects or?

Yes.

Right? And the type of projects, look, they come in very different flavors as we always said, the projects that we do are always connected to connecting with consumers, accelerating that process. Now we are heading into the digital marketing side. We're heading to the back office and I would say, all the ERP/CRM implementation, which is the back end of the company's. Those projects will keep on going. The three types: the digital marketing, the, I would say, digital transformation, connecting with consumers type and, of course, the back-end projects. The three of them has been continuing. What I would say is like the slowdown does not connect with the type of project. It connects more with the general uncertainty that we are living in the market rather than the type of projects. So there's no correlation there that I see specifically to your question.

Okay. And then just shifting over to margins. So can you just -- Juan, can you talk about the biggest factors in that 15% to 17% range as you think about utilization as you go through '23? And anything on the pricing and just curious how you get to the lower end versus the higher end of that range?

Yeah. Clearly, the -- whatever we are seeing for Q1 in terms of revenues and in terms of margins, we mentioned 15% to 16% because as we have a slight decrease in revenues, we have like negative operating leverage and that is having an impact on the full year number. We are seeing also a recovery in terms of margins as the year goes by and the revenues start to grow again. We are assuming basically that costs and pricing will offset each other, and they should both be somewhere in the low to mid-single-digit number in dollar terms. Utilization, we think we should be able to maintain it at similar levels on the one that we have right now, which is around 81%, 82%, that's the target that we are targeting for next year. And I think that's basically what we are including in that assumption of 15% to 17% range for operating income next year or actually this year 2023.

Yeah. Okay. Thank you very much.

Thank you.

Thank you, Bryan. Our next question comes from Arvind Ramnani from Piper Sandler. Arvind, please go ahead. Your line is open.

Hi. Thanks for my – thanks for taking my question. I had a question on the -- just overall like bill rate increases that you've seen over the last couple of years, maybe it was 10%, 15%, you're saying it's maybe low to mid-single digits. And when I think of like late -- and M&A has like four components have driven overall growth. How do you say like volumes are trending? Like, if you have to take out FX, M&A and bill rates and like if you had volumes.

Sure. I'll take that question. So the assumption -- I mean, over the last two years, in 2021, we grew revenue per head close to 12%, 13%. 2022, it was around 8% to 9%. And given the current scenario that we are all living and until we see a stronger recovery, I think it's right to assume in our low to mid-single digit pricing for this year because there is still inflation though coming down around the world. So in terms of pricing, as I said, low to mid-single-digit expected for the year as of today, with the current information. In terms of FX, the assumption that we have for this year and that we're including our numbers, it's a stable FX scenario. We have seen the dollar appreciate a little bit over the last few weeks -- I'm sorry, depreciate over the last few weeks. But it's been going up and down depending on whatever happens with interest rates and inflation, news and all that. In terms of M&A, as I mentioned before, for the full year, the assumption that is embedded in our numbers is whatever we did up until now, which is about 4 percentage points. It doesn't include any other deal that we hopefully make close during the rest of the year. And so the rest is volume basically.

That's helpful. And just a quick follow-up. I mean this year, in many areas, it's a transition year or year of digestion, right? You had like abnormally high, like volume-based growth over the last couple of years. And this year is what it is, whether it's like 15%, 17%, 20%, it doesn't really matter, but like we always talked about a 20% like secular grower, right, over the next three years. Like, what gives you the confidence that you get back to that secular 20% growth? And I'm not looking for guidance for the next couple of years or anything. But just the more normalized growth -- like what's going to get us there from an underlying driver's perspective to get to the normalized growth?

Maybe let me just give like an overview of the last few years, and then I will maybe Martin or Diego talk a little bit of what we are seeing into -- or what are the needs that we are seeing from the market and that help us believe that we are leaving a secular trend in our business. Over the last few years, we did the IPO in 2014. If you look at the CAGR 2014 to 2020, it was around 27%. 2021, we grew 59%, amazing; 2022, a very strong growth, again, 37%. And we are starting this year with a 16% growth now that given the current market, I think it's a very good number as well. When we look into what's happening, I think the conversation with customers are not changing, Martin the needs that they have.

Yeah. I mean the trends about needing technology and to put the things, the back end, the front end digital marketing efforts, everything in order is something that we are very -- that we are seeing it very clear. Very basic projects. So for example, a big streaming platform that we have as a customer, we have a project in which they need to connect the different platforms that still have different user bases to connect into a single user base. Those are projects which are extremely needed and they won't go away, and they will keep on growing and growing. So that secular need of technology is still there. And I believe that as companies understand that there's new ways of interacting with technology and computers, they will -- their customers who are requesting those companies to behave like that. And that will trigger like a new wave of -- we have been talking about 3 massive trends like Web 3.0, AI and metaverse. Well, those three things will keep on going. And AI right now is in the center of the discussion because of things that are happening that will treat again, a new set of conversational interfaces. People would like to talk with smart companies. People don't like to talk with call centers that are automated that don't know what to answer. People like to talk with smart companies. And that's a massive trend, and that's something that will keep on going. So I don't know percentages, and I will never talk about percentages towards the future in this specific question that you made. But I believe that the trend of every year needing more and more technology more complex stuff to be done is there. So I don't know, Diego, if you want to complement on that?

Just to complement that. I think that every now and then given a new technology, a certain situation, we're being asked, like, is there a continuity to your business? And in all honesty, first of all, we continue to have very good conversations when it comes to revenue growth type of deals that were the ones that were kind of slowing down lately. But the most important thing is that even though there are certain technologies that made our lives easier, our works -- makes us much more efficient so far consumption will continue to grow, will continue to grow. It's just only one example that showcases, this 20 years ago, even less than 20 years ago, the portion of the cost of a car that was about software was low 10s, 12% around that. Nowadays, we're seeing over 60%, over 60% and continue growing. I think every single industry will follow that powder. And that's what makes us think that there's a long and healthy way for us into the future.

Perfect. And if I can just one quick follow-up on that. Just with this, we have seen this trend before, right? The cloud comes and you made money on cloud, but big revenue streams came from analytics and a changing business workflow and kind of building a front-end consumer apps, like you've already always taken as a tech trend and like built an entire ecosystem of revenue based around like a single technology theme. Have you finally, like you've talked about AI for the last 50 years, AI has been around for a long time. But are we at a point where this new way of AI is going to be as big as what cloud did to your revenues. And if you can provide metrics great, if you can at least qualitatively, how do you compete as generative to some of the things, whether it's mobile or cloud or something else?

Something, we received. And honesty, I think it's AI has been there for a long time. We have business in AI. We created the studio six years ago. We even built our own technologies. I think -- like Martin said, I think what ChatGPT brings and it's amazing for us. It's a big opportunity is marketing. Now everyone knows about AI, everyone has gone to ChatGPT and tried a few things. And even though I think that -- I mean, into the model behind ChatGPT is amazing. It's very good. It's a point to leap forward in terms of what it brings to the table. This is actually an evolution. And we've been part of that evolution. And actually, we are very ready to bring this everywhere. But I think it's exactly to your point, I think, yes, moving forward, we will see much more revenue coming from that technology.

Terrific. Thank you.

Welcome.

Thank you so much.

Thank you, Arvind. The next question comes from Moshe Katri from Wedbush. Moshe, please go ahead.

Hey. Thanks. So I have two. One, probably a bit more broad-based regarding the pipeline and the other one is more focused on Disney. So -- you indicated that your pipeline is at record levels. Some of your peers are talking about a pivot in terms of the nature of the work in terms of what's really in demand. And the focus seems to be on cost optimization and cost takeouts. Is that something that you're seeing as well? Was this something that you would consider kind of focusing on, given the fact that in the past, you focused more on transformation? So that's kind of the broad kind of big picture question about the pipeline.

Thank you, Moshe, for question. And listen, I don't think in the past, we were not doing cost-saving projects. I mean, we have been doing a lot of different things with our customers, including saving billions of dollars for our customers, not just on the back end, also on the front end. So this is not something new for us. And of course, what we do and the projects we do that our digital transformation has a lot to do with costs. So we have seen some kind of shift of interest of the customers, of course, and we are playing that. And I think that, that would be the mood for the whole year. And the question is how you answer to that question. All these new technologies that are bringing new ways of doing things, can also save a lot of money if you do the things right. I mean teams can be smaller and/or it can be the same size and do much more things than before. Efficiencies are changing. So I believe that all those things still needs to be articulated and brought to execution, although things are not happening right now. I mean people are using those tools to accelerate the way that they do things. And they are starting to use our tools to accelerate the way they do things, still that needs to go much deeper and companies need to appropriate that saving because of the efficiencies that are happening. So we need to help our customers to go through that process. And that's a long process. And it will be -- it won't be in 1 month. It will be across many years. So to your question, I believe that there's a shift and Globant is absolutely ready and catching those opportunities and fighting with our competitors in that space and being fortunately, very, very successful. So I know Diego, if you want to complement that?

That's okay.

All right. Understood. And then shifting to Disney, this is probably the top -- the biggest topic in terms of conversations with investors. What's embedded in terms of growth in that mid-teens number that you provided for the year? I think 400 basis points you said was from M&A. Is that I mean should we assume that Disney grows somewhere in the low teens for the year. And then it will be helpful if you kind of give us a refresher in terms of the different parts of Disney that you're dealing with, where are we seeing growth? Obviously, you have Park, Disney Parks and some of the other elements, just to get us kind of an update on some of the different variables in Disney that you're dealing with in the context of, obviously, a new management team that's coming onboard.

I'll take the first part of the numbers, and I will then let the team here to chip in. So in terms of growth is assumed for Disney at this point. Although, we are seeing in the short-term, we are expecting a sequential decrease in Q1, driven by what we explained during the call, changes of people, changes of projects, changes of priorities. But we're already seeing a recovery head into Q2 and a more stable scenario. Now for the full year, we are seeing -- or we're assuming a low-teens number as you mentioned. That's an assumption that is embedded in the guidance right now. As for the type of -- of the type of projects that we will be working with Disney.

No, we will keep on working on the same stuff. And again, there's projects that are on the media side and the payment side. There's projects that are on the park side, parks are performing extremely well. Media is where they're concentrating some of the cost-cutting efforts. Now on these projects, we are having like a big like a big involvement in be part of the savings, actively part of the savings. So I think that relationship, as I said, relationship is extremely healthy, and that's the most important part of all this story. Now they go from some ups and downs have always been the case with Disney. I'm not really concerned about the future of the relationship.

Understood.

To add a little bit more on top of that. I think that given the managerial changes and the strategy behind it, there's a strategy that is about returning control to the creative part of Disney. What we do know is parks will remain strong, and we're in very good position there. In fact, it was our first client for many years. We are also seeing demand in the enterprise sector as well within Disney. That's another good thing. And what is happening now is that budgets are shifting in with that. And that's why during Q1, we are seeing that deceleration while they're doing their planning. In any case, the relationship is as strong as ever and stronger than ever, and we just have a little bit less visibility in certain areas.

That’s great. Thank you.

Welcome. Thank you so much, Moshe.

Thank you, Moshe. Our next question comes from Surinder Thind from Jefferies. Surinder, please go ahead. Your line is open.

Thank you. I guess two capital-related questions here. The first one I'd like to ask is just about the advertising spend. So how do you actually measure the return that you're getting from the spend that you have for brand recognition with, let's say, the work that you did at FIFA. Is that -- is the goal here to drive a lot of new introductions with new logo clients? How should we think about the time frame that you're looking at that and how you're measuring.

That's a great question. The first thing is, I would tell you is, the amount of round recognition we got from that appearance on the World Cup is massive. Thanks God, we are Argentinians and we got awarded the World Cup. So we are very happy for that. But not just that. I mean, in general, the connection with our customers and with potential customers has been great. I would say that, as far as I know, connecting just two or three projects that come to my mind and not making a deep measurement about it, which is very difficult, by the way, but two or three projects that comes to my mind that are connected directly with our spending that specific investment paid the whole thing, the whole investment. So all the rest needs to be upside. So I'm very positive about that idea has been, I think it has positioned Globant in a place, which, number one, we deserve; and number two, we were due, and we needed to do something like that. So we found that we were very lucky, and I hope that this relationship with FIFA will keep on expanding this year. We will have the Women's World Cup. And the Women's World Cup -- the men World Cup is seen by 4 billion people. The women work at is seen by 4 -- by 2 billion people, half, which is still a lot and you have a great audience here in the U.S. So we have like a very I would say that the initial project has already paid the full investment. Now we have seen that the things are coming with FIFA and with other customers will be upside for us in the future. And the relationship, I think, is great. And other things that we have done on the space like LaLiga or L.A. Clippers are also extremely -- has been extremely profitable. So we're happy with those things. And although they were very difficult to decide, and I cannot tell you that there were easy decisions, but we're happy with the outcome.

Just to add not only for FIFA, but also for every marketing event or every event that are conference that we organized, there is, of course, a track we follow what are the leads that were generated from that. We try to measure the return on the projects that are generated from there and then compare with initial investment. In this case, as Martin said, it's a little bit more difficult because it's such a big event. But again, these projects that we already spoke about, plus the fact that, as we know, we launched our new market, which is basically MENA plus APAC region recently, being the World Cup played in MENA, I think it was great also to make a lot of connections into a region that is going to be investing heavily in technology over the next few years.

First of the one that is going to happen now in Australia, right? The Women World Cup is putting us in Australia just opened some office there, and we have a beautiful family there, so of Globers. So I think that is a perfect moment to be also near that area and open new leads there also.

That’s helpful. And then the related question on capital here is have we thought about share repurchases? Even where the stock price is or is there -- does that enter into the equation at any point or is it just another thought at this point?

No, at this point, I mean we see opportunities to keep on expanding organically into countries where we are not there, keep on adding talent development centers that we may need for the future. And on top of that, we are seeing a very interesting and attractive market for potential acquisitions. So we do see uses of the cash that we have and that we generate. And at this point, we think that that's the right thing to keep on doing to expand our business.

Thank you.

Thank you, Surinder. For the next question, Maggie Nolan from William Blair. Maggie, please go ahead. Your line is open.

Thank you. Hi. Juan, you referenced some SG&A initiatives and your talking points. Is there anything you can detail on those? And then would they be material enough that we'd see an inflection point from them at any point in '23?

Yeah. Thank you. Good to see you again. It's been a while. So what we are doing, given that we are living in a, I would say, a more challenging market, we need to be careful how we spend money. We need to be careful, not just on SG&A but also in terms of CapEx. So what we are doing is looking into every investment that we are doing, making sure that it makes sense, maybe not doing some things that we may have done last year or the year before when you know the market was booming for everyone. And what we will try to do is being able to maintain our margins by being careful in how we operate on the SG&A. I mean we will keep on investing. We will keep on expanding, increasing our sales coverage, but we need to be careful in how we spend the money. And until we see a strong recovery ahead of us, and we can then accelerate on the investment side.

Okay. Great. Thank you. And then to follow up on the last question. How are you thinking about your willingness to do M&A in 2023? And can you talk about your strategic objectives there, maybe weaving in some of the recent acquisitions that you've done in the last several months.

Yeah. Sure. We're always open for strategic things that we find in the market. We are exploring the pipeline is very deep, very wide. Things are around geographic expansion, about expanding capabilities to new places and to new -- not to new places, to new knowledge places. And also, I would say that has to do with specific customers or specific sectors that we want to tackle. So the reinvention studios that has been talking many times around how we do acquisitions that has to do with getting deeper expertise on certain industries or how we go deeper into Europe or how we go deeper into EMEA sorry, into MENA, how we go deeper into areas of knowledge that we didn't have before. The rationales are exactly the same as last year, and we expect to keep on growing on the M&A side during 2023.

Thank you. Great to see you all.

Thank you, Maggie.

Thank you, Maggie. Our next question comes from Thomas Blakeley from KeyBanc. Thomas, your line is open. Please go ahead.

Hello. Hello?

Well, in that case, let's move on to the next participant. Our last question comes from Phani Kanumuri from HSBC. Phani, please your line is open. Go ahead.

Yeah. Thanks for taking my question. So my question now is more related to geographical diversification. So in terms of your guidance, how are you seeing the demand geographically? Are you seeing more demand in Europe or what's your growth rate expectations according to geography?

First, thank you. Good to see you. First time we meet. So we see Europe performing strongly, both from organic customers that are expanding together with the impact of some of the acquisitions that we did last year and the great partnership that we're doing that we did with LaLiga. So Europe, we have -- we show strong levels of growth. We are seeing North America probably most kind of stable or slightly growing in Q1, but then showing already a recovery into Q2. And then LatAm is going to have a softer start of the year and a good recovery in quarter two and onwards. So that's the overall situation. And then, of course, we have MENA and APAC, which are the new regions that you should see growth because we are just there, and we are closing deals and starting to work. So the comparison is easier. So in summary, strong Europe, North America getting better as we go by. LATAM will start slow, but will then recover and you will see strong APAC and MENA.

Okay. Sure. And looking at the adjusted shares for 2023 at 43.4 million, does it mean that your share-based compensation will be lower this year or how do you see this going forward?

No. Look, we target 3% to 3.5% of revenues in stock-based compensation. And that number, we believe, is the right number for the time being. On top of that, sometimes, we use shares for some of the acquisitions that we make. Typically, we pay part in cash, part in shares. And you should expect a similar trend for 2023 compared to the last few years.

Okay. Yeah. Thank you. Thanks for taking the question.

Thank you.

Thank you very much.

So thank you, everybody that will be it for the Q&A session for today. I would like to turn the mic now to Martin for some closing remarks.

So thank you very much, guys, for being here today. Thank you very much for your coverage and support and looking forward to see you in the next quarter. Bye-bye.

Bye.