Globant S.A.

Good day and welcome to Globant's first quarter 2022 earnings conference call. I am Carolina Dolan Chandler, Chief Digital 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 that 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.global.com. Our speakers today are Martín Migoya, Co-Founder and Chief Executive Officer, Juan Urtiague, 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 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 our 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.

Good afternoon, everyone. I'm happy to be back with you again. This has been another important quarter for our company's growth. I'm excited to share some of our news and updates. Globan's creativity, innovation, and entrepreneurial culture continues to deliver strong results. In Q1, total revenue was $401.4 million, representing 48.6% year-over-year growth. and 5.7% quarter-over-quarter growth. This was made possible by our ability to meet the expanding demand for digital transformation. Regardless the short-term events in global markets and geopolitics, organizations everywhere need the right technologies to grow. Because of this, Gartner estimates that through 2025, 75% of enterprises will accelerate their plans for digital business transformation. Across all sectors and geographies, users need to interact seamlessly with companies at all times. So organizations are eager to leverage all sorts of technologies and touchpoints to deliver superb experiences. New ways of engaging with customers and employees, such as the metaverse, will continue to appear. At Globan, we have built our capabilities to scale and identify new trends as they arise. Just like we have done with artificial intelligence, augmented reality, the metaverse, or blockchain technologies. We're confident in our capacity to offer clients the best mix between ideation, innovation, design, and engineering. We deliver end-to-end solutions through our full agile and global delivery model. Now, before we move on, I'd like to say on behalf of the Globan family how shocked and sad we are regarding Russia's invasion of Ukraine. Even though we don't have operations or clients in either country, we stand with the families affected by this conflict. We will continue providing all the help that we can as this situation develops. Now, I would like to share some insights on our plan for the future as we continue to grow our teams of talent. First, regarding our geographic expansion. In Latin America, we continue executing on our plans to expand in the region. In Chile, we intend to increase our workforce by 40%. To accommodate such growth, we have recently opened a new office in Santiago. In Buenos Aires, one of our largest talent development centers, we have opened our office in the newest high-rise building in the city, which we are calling the Globan Tower. It will enable us to continue expanding our local team. Beyond our physical locations, we want to reinforce ourselves as the employer of choice for digital nomads. In this sense, we have launched different plans to promote autonomy and flexibility. For example, our Work from Anywhere policy aims to provide flexibility for those who want to travel and develop their career at the same time. Our second growth pillar involves global innovative platforms developed under our Global Next division. I'm excited to share our most recent acquisition that comes to expand our Global Next portfolio of platforms, as well as the geographic reach of our clients. Last month, we announced our acquisitions of GeneXus, an AI-powered low-code software solution company. Their products simplify software development by generating enterprise applications and user experiences without the need to learn each new technology from scratch. GeneXus is a trusted partner for companies in all regions of the world with over 1,700 organizations using its products. Globan is also taking a big step in our geographic expansion into Asia with this acquisition, as 30% of its revenue comes from Japan. Most importantly, this acquisition is directly addressing a huge trend regarding low-code and no-code software. The concept of making software development easier through AI will guide organizations' strategies for the future. GeneXus comes to address the vision and complements two of our global X platforms. First, Augur, our augmented coding product that accelerates the coding process. Its AI power engine removes the complexity from cluttered code bases. Augur makes code more accessible by helping people understand and automatically document code bases from multiple repositories fast and simple. Second, Magnify, a product that offers automated visual testing to enable better and faster quality assurance in products. Magnify acts as an AI-powered magnifying glass that delivers amazing results. Today, the product is already being used by clients such as Rockwell Automation, Disney, and Nissan. And finally, we continue to drive the way forward for our invention studios. With these studios, we are helping our clients as we challenge the way things are done across different industries. Today, I'm pleased to talk about two new reinvention studios. I'll begin with our smart payments reinvention studio. Digital payments have been an amazing growth trend for many decades and hit an inflection point with the pandemic. Today, consumers have many choices in how, where, and even when to pay for their products and services. Companies across all sectors need reliable ways for clients to interface with their platforms. With the Smart Payments Reinvention Studio, we leverage Globan's capabilities in AI, UX, analytics, and blockchain to make digital payments simpler, faster, and more secure. We created customized payment solutions that provide a scalable adaptability to deliver frictionless experiences and drive trust. Recently, we have also launched the EdTech Studio to respond to an important paradigm shift in education sector. Until recently, most professionals spend the early parts of their lives with formal education and then move into the workforce. Today, disruptive technology is constantly changing the world, creating the need for lifelong learning, upskilling, and reskilling. With the EdTech Studio, we leverage our vast experience in the industry to develop personalized learning pathways and provide engaging experiences. Lastly, I would like to share some news about our board of directors. We're glad to welcome Andrea Petroni as our newest board of director member. Based in Hong Kong, Andrea has built an extensive career at JP Morgan in business advisory, investment banking, and human capital, both in Asia Pacific and Latin America. She brings a new and more diverse perspective to the table. We look forward to her insights as we seek to expand to exciting new growth markets and find even more ways to connect with partners, clients, and communities throughout the world. As we look forward, Globan continues to have a strong pipeline across different clients, sectors, and regions of the world. We are confident in our ability to deliver high growth in the upcoming years. For a closer look at our expanding technological offering, I would like to turn it over to Diego Tartara, our CTO. Diego, please, thank you very much.

Thanks, Martin, and hello, everyone. I'm here to share insight on Globant's growing network of studios and how we find new ways to help our clients transform. As Martin mentioned, we have launched two new reinvention studios. We see that there's a need to understand industries holistically as they face the need to reinvent due to several trends that are driving consumer expectation. One of these trends is the appearance of the metaverse. While in its early stages, it is here to stay. Organizations now face a key challenge as they need to get their business ready for this new world, while their users are still learning to embrace this new era. We just launched our Sentinel report about this trend with very interesting findings. We uncovered that while 73% of the respondents feel the metaverse is accessible to them, only 26% of them have experienced it. So there's a huge potential for the metaverse and we'll continue accompanying our clients as they dive into this new world. To read more about this key trend, we invite you to check our Sentinel report at sentinel.globan.com. As we expand our digital capabilities, we want to give our clients the right tools and processes to build an organization that is ready to succeed as they digitally transform. Last month, we announced the creation of the Digital Performance Studio to improve output of teams within organizations. In two decades of assembling agile pods, we have learned that not all organizations have the same level of performance and disposition to carry out change. In many cases, the leaders who are tasked with fixing this lack the right information to make the right decisions. We have collected and aggregated data through our pod methodology. This in-studio has turned these learnings into a proprietary platform to provide insight into the efficiency and performance of teams. These insights help leaders make informed decisions that not only improve performance, but also foster environments that are attractive for top talent. Now, I would like to share with you more about Globant's story told through our work with our clients and our partners. I'm excited to share that our digital payment platform, PowerChat, part of our GlobantX portfolio, has recently closed a deal with Spanish venture capital firm, Sevensonic. Together, we will create a groundbreaking fintech solution set to transform how consumers make payments, moving from apps and cards to WhatsApp, the most used platform in Spain. Moreover, we are providing engineering and art services to Improbable, a UK-based metaverse technology company. They are establishing a network of interoperable Web3 metaverses powered by their Morpheus technology. This technology allows companies, brands, and creators to interact in virtual spaces with less friction. We are eager to be participating in this new space because simplifying human experiences in intuitive ways through technology is Globant's core mission. Then, we are partnering with Dropbox to create a new platform for artificial intelligence and context-driven enterprise search. This project integrates a vast array of its internal and third-party knowledge repositories. This search engine will help Dropbox engineers and customer support professionals to design better products for its customers while working smarter and faster. The AI component of this engine is expected to improve the developer productivity by as much as 15%. In Latin America, we're working with Mall Plaza, a shopping center with 23 sites and part of the Falabella Group, one of the region's largest retailers. We're partnering with them to build an agile delivery model carried out by a click and collect digital solution. To do this, we're bringing together hardware integration and a flexible back office management platform for commercial partners. The result for the customer will be to seamlessly purchase a product online and pick it up from the smart locker located at one of Wall Plus' sites. Lastly, also in Latin America, we continue to work with the financial services sector, an industry in the middle of a profound transformation. Interbanking is a leading platform for B2B payments and Intelligent Treasury. Through its platform, multi-bank operations are centralized into a single platform solution, making transactions more efficient and ensuring streamlined accounting management. Globant is boosting their digital transformation and acceleration program to develop and launch new and disruptive digital products and capture the market momentum. Now I'd like to turn it over to Patricia Pomis, our COO.