Globant S.A.

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 Urtiaga, 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 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.

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 Globan'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 is not 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-to-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 the life science, healthcare, and many others B2B disciplines. Vertec brings an impressive array of new customers such as Eli Lilly and GE Healthcare. We're excited to have them on board to consolidate our global digital marketing network. With Vertec, we will continue developing our local expansion by entering into Northern Europe. We also expanded in areas where we already operate by opening new offices in Canada and Italy. Globan is now in over 25 countries across five different continents. We have become a truly global organization that can offer reinvention at scale with diverse talent worldwide. 2022 was a big year for our global brand recognition too. We announced our partnership with FIFA to develop their FIFA Plus streaming platform and we sponsored the Qatar 2022 FIFA World Cup. The Globan brand was on the field and on the screens for every match, seen all over the world. We estimate that up to 300 million people were reached by our brand during the course of our sponsorship. And FIFA estimates that more than 5 billion people engaged with the World Cup across different platforms and devices. We made the most of this partnership by hosting the Global Tech Summit in Doha during the Cup. We had a great talk with clients, partners, and an expanding community. This happened at an important time for us as we are growing our business in Asia Pacific. This year, we will be global sponsors of the Women's World Cup in Australia and New Zealand. This will give us another opportunity to focus on a region that is moving towards a knowledge economy. Also, I'm thrilled to see our brand keeps growing. Global was once again recognized in brand finance global report of the top IT service brands. This time, we became the eighth strongest brand worldwide. During 2022, Globan was also named company of the year in global digital transformation services by Frost and Sullivan, the fastest growing IT services company by Gartner market share, and a major industry 4.0 player by Everest Group. Moving on to studios, I'm thrilled to say that we have created the Sports Reinvention Studio. It will be the hub for our solutions for the top sports organizations, helping them reinvent fan experience, boost loyalty, increase revenue streams, and develop smart venues. We're already working with top players in the sports and entertainment sector, like La Liga and the LA Clippers. And now we are consolidating these efforts to take full advantage of future opportunities. In the AI space, tools like ChatGPT from OpenAI and BART from Google have made the large language model technology available to everyone for the first time. This improves the generation of text, music, and video for the benefit of millions of end users and opens up huge opportunities for organizations. It also creates more chances to further incorporate AI into the business, as well as generating new value through AI apps. We are very optimistic for long-term growth because the demand for AI is growing fast. Spending is expected to reach $300 billion by 2026. It is quickly becoming an essential part of software. Every digital product will have an AI layer. We believe that large language models can simplify software development creation, moving our industry forward. I'm proud to share that we have made a major update to our low-code platform, GeneXus. Through the combination of deterministic symbolic AI with large language model technology, GeneXus can now create unprecedented enterprise software solutions in record time. Let me explain how this works. The software creation process involves many different profiles of professionals, each using their own programming languages and unique interactions, from designers to developers to testers. GeneXus steps into the process with its AI assistant by providing a common layer to bridge the understanding gap. It now allows the use of natural language as common input for each of the profiles. In a nutshell, with GeneXus, if you can talk, you can start creating your digital product. The beta version of GeneXus Next will be ready in the next weeks. You can register to join the waitlist through the QR on the screen. This AI assistant is a big step forward in using AI for business solutions. AI has been a key part of Globin's value offering for many years, supported by our AI studio, our AI manifesto, and company-wide AI training. In addition to GeneXus, we are revolutionizing the industry with Augur, which applies AI to make the coding process faster, more creative, and effective. And with Magnify, that speeds up testing so that companies can launch products faster. We want to be the go-to partner for organizations that want to fully unleash the power of AI. The solutions and tools we provide can simplify decision-making, create more personalized experience, and enable creativity. We're making these moves because we know AI well, and we are ready to take advantage of this opportunity. We understand that macroeconomic conditions are uncertain, and geopolitical events and supply chain issues have affected some decision-making processes from our clients, especially by the end of 2022. We experienced some long closing cycles during the end of last year and early 2023, but we are seeing now initial signs of a positive change on those trends. So we expect a healthy year-over-year performance given the current market. Our CFO, Juan Urtiaga, will share more later on. We have a strong confidence in Globan's fundamentals. Through our studios, we are adaptable to providing the clients what it needs in different landscapes. Globan offers a mix of services and products to help clients seek business reinvention and efficiencies. We work with organizations to improve their operations using platforms like Salesforce, SAP, and Oracle. We enhance customer experiences and go-to-market strategy to improve business outcomes. And we deliver revolutionary solutions through the latest technologies like AI, blockchain, metaverse, and more. According to IDC, digital transformation spending will reach $3.4 trillion in 2026. The United States accounts for nearly 35% of the worldwide total and will surpass the 1 trillion mark in 2025. We are eager to grow our market share as this space continues to expand. Globant is celebrating its 20th anniversary this year. We have come a long way from four founders in a bar to a global team of 27,000 people. I have never been prouder than I am now. We are a team of entrepreneurs. our Glovers continue to work on unparalleled innovation for some of the most beloved brands in the world, helping them hack the challenges of their businesses. In these first 20 years, Globach has become a growth vehicle and a centre for knowledge, deep expertise and non-stop growth mindset. Reflecting on the past three years, including the unparalleled impact of the pandemic, it's remarkable to see that Globant has grown our top line by almost three times and has welcomed a similarly increase in our employee base. Throughout this period, we have maintained our commitment to delivering exceptional profitability and returns to our shareholders. With the dedication of our teams and our ever-evolving offering, we are ready to face the challenges and continue our growth in 2023 and beyond. And with that, I'll turn it over to Diego Tartara, our CTO. Thank you, thank you very much.

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 the 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 global 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. Glovent 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, augment complex creative work through generative AI that frees up valuable time and resources for teams. Our global tech products, Augur, GeneXus, and Magnify, 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 Glover becomes an AI advisor. Upon completing the training, each one of our agile pods 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 low-code and no-code solutions. Last month, we launched GeneXus 18, a new version of the local platform that increases productivity and simplifies the development of apps and systems. It allows organizations of any size and industry to explore new business models and provide new experience to their customers through elevated software architecture. GeneXus 18 also brings local software solutions to the development of super apps, a key growth area for the industry, and a lucrative goal for many top brands. Combined with the new features which Martín unveiled earlier, we are increasingly optimistic and ambitious about the runway of this product. Now, let's go through how Globon continues to share its knowledge and expertise, not only via the solutions we create for our clients, but with the broader tech community. In our new tech trends reports released this week, we focus on four impactful trends that will empower organizations to successfully navigate and excel in this disruptive era. artificial intelligence, the metaverse, blockchain and foundational technology. Recognizing the significant potential of our recently launched sports re-invention studio, this quarter we also released a standalone tech trends report focusing on opportunities in this space. A new liquid fun is disrupting the sports world. The fun experience now goes far beyond the live match, as they now interact with their favorite clubs and events through multiple touchpoints in mobile apps and social media. This creates the need for smart technologies and to ensure a seamless positive physical experience. It creates both a challenge and an opportunity for new revenue streams. Both the 2023 tech trends and the sports reinvention trend reports can be found at reports.global.com. Now, I'd like to share with you how we are working to change the game for our clients. Globant is partnering with OMANTEL, the leading telecommunication company in Oman, to offer an activity-based incentive wellness program for their customers called Sehati. This program leverages BeHealthy, a GlobantX product that offers a recognition and reward program using the Apple Watch. BeHealthy helps its users live healthier lives and have control over their data with the strong privacy protection built into every Apple product. We are working closely with VRIO, the Latin American division of DIRECTV. With more than 10 million subscribers, it is the leading digital entertainment service in the region. Having the right to stream FIFA World Cup, Brio wanted to create an immersive experience in a virtual fan fest in the metaverse. In record time, Globan built a proposal and designed the full event experience. Social media influencers, clients, and press were invited to participate using VR headsets while watching a live FIFA World Cup game transmitted by Brio. we were able to showcase the power of the metaverse for FIFA World Cup live streaming, while creating engaging and interactive experiences that can be monetized in the metaverse economy. Additionally, we created an omnichannel experience that included the largest chatbot in Latin America, reaching 30 million messages during the World Cup. We also developed a mobile app with 630,000 active users and an improved web service. This experience was a solid first milestone for the Sports Reinvention Studio. In North America, we're working with Roche, one of the global leading biotech companies. The company works with partners who bring AI platforms and algorithms focused on oncology image analysis. Until now, the onboarding of these new partners has been done manually, which is time-consuming, costly and not scalable. We're partnering with Roche to build a self-service onboarding platform to streamline development and integration that will help reduce cost, increase efficiency and allow the platform to quickly scale to hundreds of algorithms. In Europe, we're working with PortAventura World, a leading destination resort in the southern region with more than 5.3 million visitors in 2022. We have become their digital partner to design and implement a new client application to gain a competitive advantage through a digital customer experience. We are leveraging our expertise in the area that includes work for cruise lines, sports teams, resorts, and theme parks. Also in Europe, we're working with PAK, a digitally native logistics company that specializes in same-day delivery. Its platform provides real-time tracking, route optimizations, and automated delivery notifications. They also maintain a fleet of professional drivers and couriers to ensure that their customers receive the highest quality of service. Globant is assisting PAC in the evolution of their current platform by building new cost and billing management systems, pickup drop-off points, software development kits in multiple languages for faster retail integration, among others. We are also advising them in looking ahead in areas that include IoT and metaverse, helping PACs stay ahead of the competition and provide their customers with the best delivery experience. As always, we look forward to enhancing our relationships with our clients by bringing the latest technologies into their businesses. With that, I turn it over to Patricia Pomis, our COO.