Globant S.A.

Good day and welcome to Globant's third quarter 2022 earnings conference call. I'm 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 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 Martin Migoya, co-founder and chief executive officer, Juan Urtiaga, chief financial officer, Patricia Pomias, 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 answer to some of your questions. Such statements are subject to risk 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 Globan 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.

Thank you, Arturo, and hello everyone. It's great to be here to share our Q3 results. Globan continues to deliver on our commitment to grow and to be the best transformation partner for our clients. My team and I are identifying the strongest growth opportunities ahead and going for them. I'm looking forward to discussing our outlook with you. But first, let's begin with the financial results. In Q3, Globan brought in $458.9 million in revenue. This represents 34.2% year-over-year growth and 6.9% quarter-over-quarter growth. We continue to lead above the broader market. We are delivering strong revenue growth, robust profitability, and generating healthy free cash flow. Globan is fully committed to delivering 360 transformations with consumer-centric solutions. We execute this through smart process optimization that helps streamline operations and achieve maximum efficiency. Our service offering helps our clients improve their cost structures. Our end-to-end capabilities help them deliver innovative experiences for their customers, leading to better top-line performance and stronger returns. As we look forward, we do anticipate some challenges caused by macroeconomic and geopolitical uncertainty affecting the global economy. However, we are ready to run these challenges into strategic opportunities. In today's complex operating environment, we see a greater emphasis on high return on investment spending. We have the expertise and unique offering ready to meet this need. End-to-end digital transformation projects continue to deliver some of the highest returns for our customers. They streamline operations while improving top-line KPIs. According to Gartner, 69% of CFOs aim to increase their digital technology spending to be more efficient and resilient. We're confident that Globan is well positioned to face this market opportunity. We look forward to helping our clients reinvent themselves and navigate these times. Moving forward, we will be investing in our people, new markets, our brand, and growth areas. we will keep growing and our fundamentals remain strong. We also have a solid pipeline of projects in the near future, and we have become leaders in growth markets such as media, entertainment, healthcare, and the life sciences. Gartner Marketshare recently named Globant as the fastest growing IT services company worldwide when looking at the full year performance for 2021. Also, Frost & Sullivan recognized Globan as the company of the year for 2022 in the global digital transformation services industry. They credited this recognition to our unique studio model, the innovation hub of GlobanX, and our autonomous culture. Globan now has over 26,000 employees present in more than 20 countries. As we continue to execute on our main growth pillar, we deliver a deeper and broader array of services and products. I begin with the growth pillar of our geographic expansion. We will have a more targeted and aggressive focus on expanding in Asia Pacific and Middle East. We have created a new regional leadership specifically focused on this market, who has already been serving our customers there. As a new step in this endeavor, today we have announced the acquisition of E-Wave. Born in Australia, eWave is a digital commerce experience consultancy. They are an award-winning Adobe Platinum partner and a Salesforce Gold partner. eWave will reinforce Globan's digital commerce capabilities and support the company's expansion in Asia Pacific. They have offices in Australia, Hong Kong, and Singapore. and they have delivery presence in seven countries in the region. eWave has an expansive portfolio of B2B and B2C clients. They implement end-to-end digital commerce transformations in many industries and service areas, including CX design, platform engineering, optimization, and growth. Finally, we see eWave's passion for digital transformation and its culture with a global mindset as a great fit for our team. They will be valuable partners in the next stage for Globant. We're also expanding our network of clients and talent in the regions where we already work. This quarter, we expanded our presence in Italy through our acquisition of Sysdata. were now present in all of Western Europe's five largest economies. Sysdata provides advisory capabilities and services to blue-chip companies in data analytics, business intelligence, mobile apps, and other fields. Having a bigger local team in Italy is a great step for Globant because it brings new clients such as Maserati. It will add to our relationship with our current clients there that include Unicredit and Alliance. Now to our family of studios. They continue growing, evolving and adapting to the latest technology trends and market needs. In today's environment, companies need to accelerate their digitalization, especially in the areas of cost optimization and process efficiency. We have created a new cluster of studios for enterprise platforms to take advantage of this opportunity. This cluster will consolidate our alliance and efforts with Salesforce, SAP, and Oracle. All of our finest platform specialists will be working closer together in order to support clients' reinvention from their own core. This involves improving process optimization as a backbone of the organization, while taking into account the ever-changing context for every industry. As you may remember, last August, we launched the Fast Code Studio upon the incorporation of GeneXus. Our aim is to boost new ways of creating low- and no-code software. This is also an applicable tool for clients that need to reduce time and cost when developing and deploying products. There is a particular market opportunity that we see right now due to the demand for efficient time to market and the growth sector of super apps. With the recent release of GeneXus 18, we now have the first enterprise-grade platform for low-code development of native super and mini apps. We have trained over 5,000 Glovers in relevant specialties of the space, including UX and business analysis. As we grow, our products and platforms continue to consolidate their own identity and recognition with our client community. Let me share some quick updates on some of this. We're seeing growth in our visual testing platform, Magnify. Many of our clients are renewing and increasing their usage of the tool to improve testing quality so that they develop better products faster. Manual testing processes are being reduced significantly. The Software as a Service version of the product was launched in October, and we will expand the features in the month to come. Our platform Augur, which accelerates the way to create code, also continues to grow. After a year of implementing this tool at Globan, software development has become faster and more efficient. We look forward to seeing this efficiency multiplied through the services we offer our clients, positively impacting their development costs. Now some thoughts and growth areas. that we are very proud of. As you may remember, in 2020, we launched our Smart Venue concept. This vision is to reinvent the user experience in live sports and entertainment through technology. After the exceptional digital adoption after the 2020 pandemic, we have seen the growing need for this transformation. Fans now demand more. And they should. In Q3, we scored major goals in turning this vision to life, landing some exciting new projects. In late September, my team and I went to Spain to publicly announce our joint venture with La Liga, Spain's top soccer league and one of the largest in the world. Together, we will leverage Globan's experience in delivering industry transformation with La Liga's expertise in global sporting events. We're creating a new global technology company that will deliver digital reinventions to sport organizations by leveraging Web 3.0 technologies, metaverse, and gaming capabilities, among other fields. Three weeks later, we announced a multi-year partnership with FIFA to become the global platform supporter of FIFA Plus, their signature content app. This agreement gives us global exposure for our brand. Globan will be seen on the screen during every World Cup match. This is a huge step for us. We strongly believe in the power of sports in bringing people together and the key role that technology plays to do it. Finally, I admit that I am a soccer fan, but I am excited that Globan will be working on other sports as well. we have signed a multi-year partnership with Los Angeles Clipper to provide the game-changing digital platform for their new Intuit Dome opening in 2024. Globan will turn Steve Ballmer's vision of a digital fan-centric experience into a reality. It is an honor to be working on this transformation to create such a meaningful and seamless user experience. Our goal is to achieve a maximum benefit for staff, players, and fans. In addition to these exciting new projects, I'm happy to see Globan's vision of tech trends and our society shared with our audiences. On November 2nd, we hosted our eighth annual Converge event. It is an opportunity for Globan to bring together some of the world's creative and leading voices. This year, we focus on the issue of reinventing connections, to go over how technology is changing the way our society interacts. I myself had the pleasure of sitting down with Bob Iger, former Disney chairman and CEO. We had a great conversation about the future of technology, the constant pursuit of perfection, and Disney's reinvention. Some of my colleagues had similar talks with thought leaders, including Arianna Huffington, Karlie Kloss, and Refik Anadol. The recording is available at converge.globan.com. Closing out, I continue to believe that we are among the most dynamic, innovative, talented, and diverse organizations in the world. We're constantly reinventing the way we offer our services and products. Also, how we structure our teams to take advantage of every opportunity. I am confident in the future and keep expanding our presence and growth. It is a pleasure to work with our Glovers. who broaden the horizon of digital transformation every day. With that, I'll turn it over to Diego Tartara, our global CTO. Thank you very much.

Thank you, Martin, and hello, everyone. It's great to be back with you to discuss the evolution of Globan's technology offering. We're making exciting advances into new technologies and platforms for our clients. We're also providing them with the solutions to improve their systems and platforms to optimal efficiency. I'd like to begin with a closer look at what Martin mentioned about our studios. We'll launch two new enterprise studios for SAP and Oracle. As Martin mentioned, they will become part of the enterprise platform studio cluster together with Salesforce and process optimization studios. This cluster will help current and prospective clients increase productivity, reduce cost, and maximize their business results. Now, some new development regarding our current studios that are reinventing the game for our clients. Our healthcare and life sciences re-invention studio is capitalizing on opportunities of each sector now that technology and life sciences are completely intertwined. This studio is working with a British multinational pharmaceutical and biotech company. We're helping them to develop a virtual contact platform that expand the reach of doctors who today are not accessible due to geography, relocation of resources, among other reasons. This industry re-invention studio has earned recognition for its work. In September, Quadrant Knowledge Solutions named Globan an industry leader in 2022's Spark Matrix for healthcare IT services. They highlighted Globan's end-to-end consulting capabilities to enhance customer impact and service excellence for clients as the reasons behind their recognition. In financial services, business ecosystems are notoriously complex and undergoing a transformation through technology. We have been expanding and leveraging our expertise in the sector for our global clients through our finance studio. This team is leading business transformation and advanced analytics with proprietary models, helping clients to optimize the use of their data and adapting their management models quickly. This studio is currently working with a top 10 European bank that offers a full range of financial services for 15 million individual customers and for about 500,000 companies in several European countries. Globant is carrying out a transformation in digital lending for their SME segment. we're helping transform the full end-to-end experience and the go-to-market value proposition for SMEs. The customer experience is now feasible and improved for optimum customer satisfaction. Through AI technology and advanced analytics, we are assisting reinventing this client's credit and lending decisions, an issue of additional importance during times of higher interest rates and market volatility. Now, some news regarding our sustainable business studio. Global launched the studio in 2020 because we understand the role that disruptive technologies can play in closing sustainability gaps. The studio has been providing solutions that achieve both a stronger strategic focus as well as an incorporation of sustainable processes. This quarter, the studio performed a research initiative for INMARSAT, the world leader in satellite communications, to explore the positive impact of the space technology toward the net zero emissions goal. The findings revealed that existing satellite technologies could save up to 5.5 billion tons of CO2 per year, This is particularly encouraging because it's one step closer in creating a pathway to reach net zero emissions by 2050. A goal that is looking more possible through consistent global education and implementation from both the public and private sectors. As leaders in technology, we recognize our own company can have a multiplier effect in the global effort to help the planet. This is made possible through education and training. We're now providing a company-wide green IT training to both inform and inspire our global team. Just as we had our entire company training both AI and blockchain in recent years, regardless of their focus area, they now will be encouraged to design and develop digital solutions according to low-carbon tools, processes, and best practices. The training offers education fundamentals in green software and digital sobriety, sustainable coding practices for web UX, mobile and backend specialists, and best practices to efficiently create and manage data and optimize cloud infrastructure in terms both of cost and energy consumption. Now, some additional context on exciting projects for some new clients. Our work with FIFA is aimed to supercharge the growth of the FIFA Plus streaming platform. Global will create new features and connected experiences for FIFA Plus users while supporting the platform's distribution. By doing this, FIFA will be able to exponentially increase the viewership of its official content while allowing fans to share their preferred content with friends and family on bigger screens. As you heard earlier, we were selected as the official digital transformation partner of the Intuit Dome, the new home of the LA Clippers. When completed in 2024, it is expected to be one of the most technologically advanced smart venues in the world. Globant has begun to co-develop the digital roadmap for the brand new arena. We will apply our most disruptive technologies to bring to life a new user experience that includes seamless ticketing, personalized loyalty programs, touch and go payments, point of sales, among other features. Globon's differential is that we're offering all of these different services in a cohesive 360 implementation package in an extensive and close partnership with the LA Clippers. Also in North America, Globon is partnering with Amazon Web Services to enable a large-scale cloud transformation for Stryker, one of the world's leading medical technology companies. We are working on voice communication services for their nearly 2,000 institutions, which include hospitals and healthcare facilities throughout the world. We're planning to offer these services through a highly scalable multi-tenant solution via the AWS cloud. Loan is playing a key role in transforming the existing monolithic VoIP service into a microservices architecture, enabling Striker to add new customers at twice the speed and saving them millions of dollars over the next three to five years. In Latin America, we're working with Grupo de Narvaez, a multinational retailer with operations in that region, to carry out a major expansion plan. Their ambition for both organic and inorganic growth present the need and opportunity to redefine the operating model and technology strategy to accelerate the fulfillment of the group's business objectives. Our joint work includes a brand new IT strategy, an organizational group linked several quick win business cases and a roadmap that will help Grupo de Narvaez transform their IT to support their business ambition. In Mexico, we're working with the leading retailer, They approached Globan because they wanted to enter the fintech space. We developed a virtual wallet and enabled the company to issue its own debit card for global purchases and ATM withdrawals. This has enormous multiplayer potential in Mexico, where 60% of the population remains unbanked. Globan carefully designed workflows to meet the goal of creating a banking interface that offers the best user experience, understanding that many of the users would be using such technology for the first time. Within the first month, more than 5,000 digital accounts were opened, and the growth has been exponential. By the end of the fourth month, 180,000 monetary transactions were carried out. Today, the wallet is used by almost 4 million people. It is a true honor for Globen to be working on this business because of the financial inclusion that it is providing to the society. Now some news on our exciting work for Nissan. In 2019, Nissan chose Globen as partner to support its Global Customer Experience vision based in London. Today, our teams work together in Europe and the Americas in support of the Nissan Ambition 2030, aimed to empower mobility and beyond for a cleaner, safer and more inclusive world. We're also working with them to reinvent the customer experience of buying a new car, enable them with technology to improve and add new touchpoints. In October, we hosted the Global Nissan Customer Experience Summit at our new flagship office in London. Over 70 Nissan executives were in attendance from all over the world. With that, I'll hand it over to Pato Pomis.