Globant S.A.

Good day and welcome to Globant's first quarter 2023 earnings conference call. I am Arturo Langa, Head of Investor Relations 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 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 Urteague, chief financial officer, Patricia Pomias, chief operating officer, and Diego Tartara, 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 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 Globan to our peers in the industry. You'll 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.

Thank you, Arturo. Good afternoon, everyone. You may have noticed that I'm not the real Martin Migoglia. I am his digital twin. My appearance and my voice emulate Martin and are fully developed by AI engines. The real Martin asked me to join to highlight how this technology is changing many aspects of our lives. I will be joined by similar digital twins of Diego Tartara, Patricia Pomis, and Juan Urtiage. For transparency, there will be a notice at the bottom of the screen every time we appear or use any AI engine. The Real Martin, Diego, Patricia, and Juan join you all for the Q&A session after these remarks. We have now completed the first quarter of what is a very special year for us, as 2023 marks Globun's 20th anniversary. Since we founded this company, our vision has been simple but ambitious. Become the leader and help reinvent the IT and digital transformation arena worldwide. In these 20 years, we have come a long way, with a team formed by almost 27,000 people in more than 25 countries all over the globe, working for the world's top brands in nearly every industry. First, let's take a look at this quarter. Total revenue for Q1 reached $472.4 million, representing 17.7% year-over-year growth. Amid high macroeconomic uncertainty, we were able to deliver results above our guidance expectation, showing robust growth while executing on all of our strategic pillars, expanding geographically, growing our studio model, accelerating our platforms of GlobantX and Strategic M&A. We have a healthy pipeline with an encouraging array of bookings and backlog creation from early months of this year. This fuels our optimism for sequential growth in Q2. Even with the challenges that the global economy faces, we remain optimistic and ambitious about the growth of our total addressable market. According to this quarter's CEO study by IDC, technology will be the most prioritized area of the agenda for global CEOs in 2023, with 87% planning to sustain or increase technology spending this year. IT investments are expected to reach $4.5 trillion this year, 5.4% higher than last year. Globant is delivering growth well above market averages and aims to keep building its leadership in this space. Looking ahead, we will continue to prioritize creating long-term value for all our stakeholders, driven by profitability, organic growth, and a positive social impact. The nature of our work is in line with market demand. As I've shared with you in the past, Globant has been able to build an array of services and products to support organizations in every stage, whether they are looking to expand and fully transform their product offering and user experience, or if they are seeking greater efficiency and productivity. In that sense, our wide array of studios, ranging from digital experience platforms and commerce to our enterprise studio cluster, continues to position us as the best partner to help companies gain relevance. Organizations everywhere are growingly seeing AI's potential to create new user experiences and revenue streams, and to make business and processes more efficient at scale. Our focus on AI goes back to more than eight years, when we first launched a specific AI studio and started investing in several strategic initiatives. During this time, we have introduced and evolved four key products and platforms deeply rooted in AI, Starmieup, Magnify, Augur, and GeneXus Next. These products have seen and will continue to see an incredible expansion of their capabilities and are now experiencing exponential growth in their pipeline. This is a testimonial of the interest that organizations are placing into AI and of how much they are looking to boost their operations with AI. We will continue to scale up our artificial and human intelligence power to influence every area, industry, and business for the better. Complementing our product portfolio, we have also consolidated our AI offering and initiatives into an end-to-end program that we call MINDS so that we could have a solid outlook on best practices across several industries. At the center of the MINDS concept is our Globers. We are making sure that every one of our pods is trained to understand AI opportunities and certified on how to use data and observe privacy safeguards when using generative AI engines. As we mentioned in previous meetings, these and other AI certifications are targeted to all Globers and not only the ones working on client projects. This way, we ensure to leverage the best of these new tools in order to enable us to move faster and more efficiently. Our Chief Technology Officer, Diego Tartara, will later go into finer detail on specific services included in the MINDS program. As Globant always enjoys sparking the conversation and interest on disruptive technologies, we launched a new AI challenge initiative. We invite entrepreneurs to provide proposals on how AI can transform their business. And we will be awarding up to $200,000 to the best ideas in order to fuel them into reality. Check it out at globant.com slash AI contest. Also, we just released the first of a series of reports on how AI will impact the finance industry entitled A New Banking Era. This report provides an analysis of how organizations can harness the power of AI to improve the quality, efficiency, and velocity of their operations. You may download the report at reports.globant.com. Now some thoughts on the ongoing execution of our strategic growth pillars. Our M&A strategy continues to complement Globant's expansion plans by seeking to add new capabilities, geographic areas, and market specialization to Globant's offering. Early this week, we announced that Globant entered into a definitive agreement to acquire Pentalog, a renowned digital transformation consultancy in Europe. Based in France, Pentalog offers a diverse array of services and a robust portfolio of clients throughout Europe and will support our expansion plans for that region, adding to the family an impressive reach into France, Germany, the Netherlands, Switzerland, and Austria. Pentalog serves some of the strongest brands in key industries, such as Adidas, Bitpanda, TripAdvisor, Ipsos, and G4S, among over 500 other companies in several sectors. Founded in 1993, Pentalog houses 1,300 professionals in France, Romania, Moldova, Mexico, Vietnam, and the United States, among other countries. We have also recently completed the acquisition of Experience IT, a United States-based digital transformation consultancy with a diverse array of services and deep expertise in healthcare. With this acquisition, beyond landing in Minneapolis, Globant strengthens its ability to accelerate digital and cognitive transformation to an amazing roster of clients among top United States players in the healthcare industry and other 40 leading companies in other sectors. As we keep expanding geographically, Globant is now in more than 25 countries on five continents. We continue our strategy of opening new offices that go beyond the traditional urban areas, focusing on growing hubs in niche markets to be closer to talent or to particular industries. In March, we celebrated the opening of Globant's iconic building in the city of Tandil, Argentina. Tandil, with now 300 Globers, was the site of Globant's first office outside Buenos Aires 16 years ago. Since then, the city has multiplied the local IT talent by seven, and the technology companies in the area have quadrupled. This evolution shows the impact we can generate in talent, cities, and countries as we create more local opportunities. In Monterrey, Mexico, we also opened a new center of innovation of AI applied to the manufacturing and consumer technology sectors. One of the main pillars of Industry 4.0 is incorporating AI and other technologies in the decision-making process. This center will focus on making this premise become real. In Europe, we doubled our presence in Malaga, Spain, by opening up a new office which will serve as an innovation hub for fintech, gaming, and other areas. Our array of studios of expertise continues to grow, with three new studios recently launched. We believe that brands and technology are more intertwined than ever before. Consumers are asking for more personalization and better interaction, and it's time for every brand to find the best way to leverage AI, data, and other technologies to create amazing experiences. Last week, we launched Globe and Create. This new studio will be a creative powerhouse that merges the digital sales and digital marketing studios with our acquired creative agencies in Europe and Latin America to provide full funnel digital marketing solutions, leveraging the power of trending technologies. Globant Create has a unique agency approach as it combines creativity and marketing strategy with AI, data, and other technologies to offer its clients unique ways of connecting with their customers. This global new team has also become one of the most certified and validated creative organizations worldwide, with partnerships with Adobe and Salesforce, along with being one of the few Google Partner Premier worldwide. We are also excited to announce the launch of Globant's Commerce Studio. Fueled by eWave, a company acquired in last November in Australia, this team aims to help organizations create the best commerce-enabled experiences with design and engineering at the core. These integrated teams have extensive experience in large and complex commerce transformations in both B2B and B2C domains. This new studio will support our clients to respond to changing customer expectations and offer personalized, relevant, and engaging omnichannel experiences across all touchpoints in the consumer journey. The team has crafted a comprehensive value offering composed of an end-to-end digital commerce planning and consultancy service, bespoke custom solutions tailored to individual business needs, along with the capability to integrate multiple platforms and services, including hosting managed development and more. And finally, expanding a relationship that has now been more than 16 years and taking steps to address the rising demand for Google Cloud products, we announced an expansion of our global collaboration with Google and created a new dedicated Google Cloud Studio. The new business unit will be focused on helping clients across Globant's multiple verticals to adopt and maximize the transformative benefits of Google Cloud platforms and tools, helping them to stay competitive and lead their industries in a rapidly changing business landscape. Our proprietary platforms continue to show greater autonomy, growth, and use in helping our clients embrace technology to adapt quickly. Diego will refer to our latest features in most of Globantex's products in a few minutes, but now I'd like to share a major update on our AI-powered testing platform, Magnify. By leveraging generative AI technology, Magnify is at the forefront of the AI revolution, positioning itself as an AI-powered companion to streamline the testing journey even further. Moreover, to answer a consistent demand from clients, we decided to include Magnify in all our test automation projects by default. This is how it works. As we know, the testing process involves several tedious and time-consuming tasks. Through the use of generative AI, Magnify 5.0 can now auto-generate automation code snippets and test cases by simply describing requirements using natural language, unlocking new levels of efficiency and quality. Magnify 5.0 is now available. Discover more about it through the QR on the screen. Lastly, a few weeks ago, we were recognized as a market leader among digital engineering service providers in a new report by HFS Research. The report examines 25 service providers' role in digital engineering, and Globant achieved the highest possible rank, Horizon Level 3, which indicates industry leadership across a range of dimensions, including value proposition, innovation capabilities, go-to-market strategies, and market impact. Now that our global society is undergoing widespread adoption of our key technologies and capabilities, I believe that this is Globant's moment to spur our expansion and growth. We are committed to the compound effect of daily effort and drive. We believe that this effort, combined with constant innovation and reinvention, will bring long-term growth for our company and great value for our stakeholders. With that, I will turn it over to the digital twin of Diego Tartara, our CTO.

Thank you and good afternoon, everyone. I'm happy to be here. During this time when AI is revolutionizing industries across the spectrum globally, it's time for Globant to be closer than ever to our clients. educating and helping them accelerate their digital transformation paths. We have a unique opportunity to pair our experience in key industry sectors that are transforming the global economy, including travel, supply chain, financial services, healthcare, with our decade of expertise in AI. We are confident that we are in a unique position to offer flexibility, deep industry knowledge, and AI prowess. First, I'd like to expand on the MINDS program, which Martine introduced. On a daily basis, more information on AI is released and more applications are developed. In order to support our clients in their own quests for value delivered from AI, we condensed a set of knowledge, best practices, and services to connect the capabilities of generative AI with their specific business needs. Minds also offers ready-to-play solutions for areas in which there is a shared understanding that AI plays a significant and immediate role. Some of these are customer support, for which we designed a service called Hello AI, navigating complex data tackled by our Converse AI segment and protecting intellectual property and organization knowledge addressed by IP protection and augmented knowledge global solutions, among others. We understand AI could bring unintended consequences on various fronts. Therefore, we also require every pod to understand and adhere to our AI manifesto so that any application complies with our ethical approach to business and innovation. Also, we believe that AI is to be developed in a collaborative way. We are set to build great partnerships with other industry leaders such as Microsoft, GitHub, and organizations that are taking a stake in the AI stage, such as La Liga Tech, with whom we have created a joint venture with La Liga. Now, some updates from our innovation hub of GlobantX. Our proprietary platforms that make up this offering act as accelerators of our offering. Let me share some of the latest new features in some of them. Magnify, adding to the demo Martin just shared, our signature visual testing platform is now available on the Microsoft Azure Marketplace. This opens up a new sales and marketing channel, allowing us to tap into a vast pool of potential customers using Azure. To further our growth strategy, Magnify will also be listed on the AWS marketplace soon. GeneXus has fully launched its star product, GeneXus Next, that develops digital products from written notes. We have added new features to Star Me Up powered by generative AI that will now help write clear, constructive feedback that will make all the difference to colleagues. Augur has introduced Codemap, a feature that enables faster and better code exploration by creating easy to understand graphs to code bases. This improves readability, simplifies the navigation of large and complex code bases, and in the end, makes developers more productive. This functionality is a perfect complement to Augur's goal of making large, complex, and undocumented code bases more accessible and maintainable. Globant X world-class product portfolio also incorporates Walmeric, FluentLab, and Navigate. Now I'd like to talk about what we're doing through our work with our clients. We are living in a time where consumer dynamics and buying behaviors are rapidly evolving as consumers seek more personalized and impactful experiences. Globant's Retail Reinvention Studio is helping retail and consumer goods companies reimagine the engaging experiences that create meaningful impact and drive consumer stickiness. They are working with global brands such as Gap, Levi Strauss and Company, REI, among others. In North America, for example, Globant is engaged at Ross Stores to help redesign their entire user experience for their new merchandising application. Globant's expertise in designing and implementing unique experiences that matter to consumers and users complements Ross's promise to deliver organized, fun-filled, and treasure-hunting shopping experiences at the best bargains. In Europe, we are working with Allianz Bank Financial Advisors, the banking arm of Allianz Italy. Allianz Bank has a widespread presence throughout the national territory with a network of 26 branches, over 235 financial advisory centers, and over 2,000 financial advisors, qualified professionals at the service of clients, and over 60 billion euros in assets under management. Globant is currently designing advanced AI-based applications using GPT models for Allianz Bank to enhance the operational efficiency of their advisors, operation unit, and marketing unit. Also in Italy, we are working with Hype, a leading fintech player with more than 1.7 million customers. Launched in 2015, Hype is driving daily banking to the ultimate level in simplicity and customer experience, offering a simplified digital bank model, which is constantly expanding the offer thanks to third-party products, such as mortgages with Bankacela. deposit with Illimiti, crypto trading with Bitpanda. Hype's plan also aims to guarantee the best customer experience standards through a digital community and lifestyle against traditional bank realities limited to financial services. Globant Italy has been partnering with Hype since 2022 concerning the market launch of the new Hype digital platform and supporting the integration with Bitpanda for trading operations. We continue to invest in new endeavors through our corporate venture capital fund, Globant Ventures. Last month, a $4 million investment was granted to Fivi, a leading SaaS financial industry platform. Fivi's innovative solutions unlock immense value hidden within financial data, empowering banks to offer a more customer-centric experience to increase revenues. With a streamlined implementation process, banks can become data-driven and customer-centric organizations in as little as three months. We are excited to support FIVI's vision of revolutionizing the financial services industry and positioning the company as a top SaaS platform in the Americas. The Be Kind Tech Fund, the investment vehicle operated by Globant Ventures that looks to support projects that mitigate the misuse of tech, completed five investment committees in its first full year. As always, we look forward to enhancing our relationships with our clients by bringing the latest technologies into their businesses. With that, I'll turn it over to the digital twin of Patricia Pomes, our COO.