Globant S.A.

Good day and welcome to Glowand's fourth quarter 2023 earnings conference call. I am Arturo Langa, Investor Relations Officer at Glowand. All participants on this call will be on listen-only mode. After today's presentation, there will be an opportunity to ask questions. Kindly refrain from raising hands as we'll aim to address a select number of questions to ensure efficiency. 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 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 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 your questions. Such statements are subject to the risks and uncertainties as described by 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 will publish in our investor's website announcing this quarter's results. I'd like now to turn the call over to Martin Migoya, our CEO.

Good afternoon, everyone. I'm happy to be here to report our earnings results from Q4 and the full year of 2023. As we mark our first 20 years, we are very proud of what we have accomplished as a company. First, our quarter's results. In Q4 2023, Globant made $580.7 million in revenue, representing an 18.3% increase year-over-year and 6.5% quarter-over-quarter. We continue to demonstrate our ability to grow profitability, to generate cash, and to manage our robust balance sheet. Total revenue for 2023 was a record $2.1 billion. This was above our guidance and represents 17.7% year-over-year growth. Last year, we entered over 10 new markets, each with exciting growth opportunities for both our client and delivery networks. We also began exciting relationships with more than 250 new clients. We keep expanding and diversifying our service offering. The Globant concept means the simplicity of having a trusted end-to-end partner, one that can craft multiple solutions with a larger breadth of services, platforms, and capabilities. Over the past year, we have launched seven new studios in line with the expanding needs of the market. I am encouraged to see that Globant's global recognition continues to spread. Brand Finance has recently named Globant as the world's fastest growing IT brand and the fifth strongest IT brand globally. The future growth of our total addressable market remains promising. After an uncertain 2023 for IT spending, Gartner estimates momentum to return in 2024, with 6.8% expected growth globally. From cloud migration to data management strategy, digital branding projects to AI initiatives, companies are resuming investments to stay ahead of the innovation curve. We see this change reflected in our pipeline. Clients are requesting a wider scope of transformation projects that require more sophisticated and dynamic solutions. As we close 2023, we saw a higher demand for projects with AI components. The AI-related business is outpacing the total growth of our service offering. According to Forrester, generative AI will have a 36% CAGR through 2030 to finally capture 55% of the AI software market. Gartner estimates that by 2027, 90% of service providers will use generative AI for software development services, including code compiling and optimization, automated debugging, and automated quality assurance testing. Globant has been significantly investing to take advantage of the estimated $450 billion opportunity we see in AI services. Since the consolidation of our AI studio, we have built up capabilities in the space that are ready to apply now that AI is going truly mainstream, and with IT service companies as the proxies for adoption. Globant has completed over 500 AI-centric projects in nearly every field of AI, including predictive analytics, natural language programming, computer vision, and custom-made neural networks, among others. In generative AI, we have been leveraging many of the large language models since 2017 in internal applications, powering efforts behind code enhancement, feedback, and testing tools. This has given us a head start in developing and deploying GenAI. One example is our work with the Latin American e-commerce powerhouse of MercadoLibre. We are leveraging generative AI and machine learning for provider assistance, fraud and anomaly detection, and generation of financial reports. We are particularly excited about this project due to the impact it can have on the MercadoLibre ecosystem, which includes fintech, logistics, digital marketing, and more. We also see a great opportunity to take advantage of the heightened appeal we see in spatial computing. This technology is blurring the line between the physical and digital experience. Similar to the iPhone moment that Gen AI had last year, spatial computing is gaining traction as new and exciting products, such as the Apple Vision Pro, are becoming widely available. This presents a timely opportunity for us because we have been working in the space since 2022, when we began our work with Magic Leap. We drew on the expertise from several of our studios to partner with them to develop their Magic Leap 2 headset. Currently, GeneXus teams are developing an accelerator specifically designed for VisionOS, the operating system of the Vision Pro. The accelerator will help create applications that inherently understand and adhere to the design and experience paradigms of VisionOS. We will be offering a beta version to clients next month. As Globant has been able to deliver early on in the generative AI space, we are confident in our ability for a similar execution as the spatial computing sector grows. I am confident that Globant boasts one of the more sophisticated and proficient teams in the world to make this adoption happen. As a company, there are several growth drivers that will move us forward. First, our global footprint. Every year, Globant is more diverse. We are now present in a total of 33 countries. No one country contains more than 20% of our workforce. This enables us with the adaptability to scale our projects as quickly as is required, regardless of time zone, culture, or logistics among our global delivery network. Our prominence in Latin America, our home region, is particularly beneficial right now, as more of the biggest companies choose this region due to its proximity, multilingualism, and adaptability. In the past months, we have made significant investments in Mexico and Brazil, the two largest economies and responsible for 38% of Globant's revenue in the region, because we are eager to take up this demand. In Mexico, over the past year, we have established a new team specifically dedicated to life sciences to address the fundamental changes and growth of the sector in the region. In Brazil, we have almost doubled our team over the past year, betting high on keeping our leadership in enterprise applications, especially Salesforce, and reinforcing digital transformation projects with the acquisition of Eteris. We are optimistic about our future expansion this year as we see a robust business pipeline and organizations' IT expenditures recovering compared to last year. Regarding our studios, the consolidation into our four studio networks is fostering ecosystems of ideas and expertise among our specialized business units. Cross-pollination between studios is strengthening the 360 nature of our solutions as well as creating a pathway to cross-selling. Beyond showcasing the amazing portfolio of services Globant offers, it mirrors our vision for the industry moving forward. For example, the most recent acquisition of Gut, that Diego and myself will expand on later, is a step of our drive to reinvent the creative marketing industry through technology. Through areas such as our enterprise studio network, which has experienced a 4x increase in the past four years, we can serve clients regardless of their enterprise software of choice. Being cloud agnostic and vendor agnostic enables us to scale our adaptable solutions to each client. We see increasing growth interest in the sports and entertainment industry as the sector reinvents itself. Streaming is quickly becoming the number one way to view live and sports. Additionally, companies will need to rely on zero and first-party data to maintain loyalty as fan engagement this year will likely become cookie-less. Globant has proven expertise in both areas, as well as in creating comprehensive fan experiences from working with FIFA on their FIFA Plus platform to helping top sports teams understand their fan behavior. We focused our expertise and growth in this space through our joint venture with La Liga last year, known as Sportion. By leveraging technology, data, experience design, and business strategy, we are able to create new experiences, emotionally connect with fans around the world, and create tangible value for fans, players, sponsors, and sports organizations in a sustainable way. We have recently established the Sportion Advisory Board. The first members include Manu Janowili, the NBA All-Star, and George Gregan, Australian rugby captain and World Cup winner. We look forward to working with them to make our mark together on this fascinating and rapidly growing industry. In addition to our organic growth, Q4 saw the incorporation of exciting new members to the Globant family, including Gut in the United States and Iterus in Brazil. Announced in late November, Gut brings a fire of creativity to Globant. They were recognized as the 2023 Cannes Lions Independent Network of the Year and Adweek's Breakthrough Agency of the Year. They work with over 60 clients globally, including AB InBev, Kraft Heinz, Coca-Cola, and MercadoLibre. Technology and creativity have never been more closely linked than they are today. We always say that Globant is where innovation, design, and engineering meet scale, and we couldn't be more excited to bring the world's most creative global network into the mix. We are also thrilled to support GUT's global expansion and to keep GUT's leadership team in place with a continued focus on building culture and driving growth. Both companies will now work together to identify valuable cross-selling opportunities. The acquisition of Iteris, a Brazilian business and technology consultancy specializing in digital transformation, is a doubling down on our commitment to Latin America's largest economy. They have over 600 experts in industries, including payments and banking, manufacturing, communications, education, retail, and healthcare. We keep expanding our connections with our community as well. With record attendance, we had our annual Converge event, bringing together fascinating and influential thinkers who are on the cutting edge of technology. I enjoyed my own conversations with Mark Benioff from Salesforce and David Bellis from NewBank on the future of technology and what it means to transform industries. You can check them out as well as the multitude of content at converge.globant.com. On a personal note, as I close out, it was an emotional moment for us to commemorate our 20th anniversary at the New York Stock Exchange on December 4th. Seeing this company grow from my three co-founders and I in a bar to a global team of more than 29,000 creative minds has been fantastic. However, I genuinely believe that we are just scratching the surface of what we can do. Company-wide entrepreneurship, creativity, and resilience will push us forward over the next 20 years. With that, I will hand it over to Diego Tartara, our CTO. Thank you very much.

Thanks, Martine, and hello, everyone. I'd like to begin with two major technology trends that present interesting growth opportunities for Globant. First, there's a growing synergy between the digital and physical worlds through AI-powered wearables. Products from companies like Rabbit, Humane, Ray-Ban, Meta, and Apple enhance decision-making for users and foster a more human-centric experience. Many of these products, such as the ML2, R1, or the Vision Pro, may revolutionize how we interact with technology in an intuitive way. Second, the integration of virtual and augmented reality into the digital experience. We see this trend gaining momentum through innovations like Disney's hollow tile floor. This technology enhances collective digital interaction for a more immersive experience. applicable to the metaverse, live action shows, and many other instances. Organizations that want to leverage the best of both trends will rely heavily on AI and machine learning. This is where Globant's expertise comes into play to actively collaborate. We see a shift from isolated proofs of concept to full integration with experiences and processes. we have shared our vision of the AI market in our recently published Tech Trends Report, which also expands on our perspectives on other disruptive trends, including quantum computing, robotics, blockchain, and immersive experiences. I encourage you to check it out at reports.globant.com. We continue to position our studio networks to expand and diversify our value offering. The incorporation of GUT into the Globant family means a major growth step in our Create Studio network. As Martine mentioned, our ability to offer current and future clients new ways of engaging and surprising users will be impacted big time. Also within this network, we have created a new studio to focus on customer loyalty. According to Forrester, over 50% of leading companies plan to increase their current investments in customer loyalty programs in the next two years. Globent's new loyalty studio brings together our related experience in aviation, retail, and sports, among other sectors, as well as strong expertise across payment systems, digital wallets, digital currencies, blockchain, AI, and more. A recent prime example of our expertise has been our work with the LA Clippers. This program represents a non-traditional initiative designed to incentivize specific fan behaviors both at home and in the venue. Its goal is to consistently enhance motivation, energy, and engagement through a reward system. The loyalty engine seamlessly connects with the fan identity, multiple IoT devices to measure fan activity, and ticketing systems, among others. Our team collaborates on shaping the program strategy, integrating the loyalty engine into the platform, and developing the user interfaces for fans and staff, along with multiple use cases. Our Reinvention Studio network, focused on transforming not only clients' businesses, but also the industries themselves, has consolidated the new Connected Experiences Studio. With today's multiple touchpoints for interactions between organizations and their customers, companies need to craft unique and meaningful experiences to boost revenue. According to Forrester, solid investments in customer experience can yield a 700% return over 12 years. With this new studio, Globant brings to the table its expertise from initiatives such as the technology-integrated experience at the Intuit Dome, the customer journey we designed for Royal Caribbean, and the digital pre-buying experience we developed for Nissan. As an end-to-end partner, Globant can make a profound difference in how brands engage with their customers throughout their entire journey. Also, within the Reinvention Studio network, we have made exciting new strides in the health and life sciences sector. Globant is finalizing agreements with three major pharmaceutical companies as their strategic partner in contract marketing and medical organizations. The final product means combining the strengths of multiple digital studios, Globant X platforms, and enterprise tools from Salesforce. The end-to-end solution includes three main steps, digital insights, customized and omni-channel strategy development, and finally, a dedicated team improving brand awareness and patient outcomes through effective communication and services. All projects are long-term, five years or more, positioning Globant as an industry leader in this competitive space. We are also working with one of the largest U.S. healthcare companies. They came to us because they were looking for a solution to detect events from camera images inside their hospitals so that they could make decisions more quickly and efficiently. Globant is applying AI to process images captured from cameras in real time. We generated synthetic data to train and test the detection and classification models. Before this project, this was carried out through the use of real data, which is a longer and more costly process. The project is being executed by combining the knowledge and efforts of our gaming, data, and healthcare and life sciences studios and our delivery networks in India and the U.S. Globant's Enterprise Studio network continues to expand. Our unique position to address this market stems from years of developing our own capabilities, acquiring companies with enterprise application skills, and building strong alliances with global leaders such as Salesforce, SAP, Oracle, and ServiceNow. Globant has remained cloud agnostic and not industry siloed, making our solutions fully customizable and adaptable to every client. As an example, we are leveraging our Salesforce multi-cloud capabilities in our work with the Intercontinental Hotels Group. Together, we created a streamlined action plan with field and operation support users. The objective is to improve hotel performance through better tracking of engagements and actions. Through the work, we're delivering actionable insight to the IHG teams from over 10,000 data points. In our Oracle studio specifically, we were called upon by Oracle to establish a joint program to help their clients design and execute an AI enterprise innovation roadmap. The project catered to each client's business goals and even opened the possibility to work with the clients to rethink their businesses, considering new AI paradigms. To execute, we combined Oracle AI platforms, including generative AI services, machine learning, and Oracle Cloud infrastructure for AI workloads with our Globant X AI platforms. Oracle clients also can now use selected Globant X solutions to empower their enterprise applications as we are currently publishing them in the Oracle marketplace. Our unique digital studio network, which harnesses disruptive technologies including data and AI, blockchain, Internet of Things, quality engineering, and much more, has been named a leader by IDC Marketscape in their Worldwide Software Engineering Services 2023 Vendor Assessment. This acknowledgement is a nod to Globin's engineering talent and its ability to drive high ROI for our clients and clear roadmaps to reduce business and technology costs. Now let me share some updates on GeneXus Enterprise AI, the platform that is revolutionizing how we and our clients approach corporate challenges. With this technology, we are developing a groundbreaking AI-based drilling assistant for tech petrol in the Latin American energy sector. This solution provides real-time data analysis, transforming drilling operations management, enhancing efficiency, and enabling precise real-time decision-making. At our GX30 event last quarter, we emphasized the incredible possibilities of generative AI to our global community. The entire GeneXus partner and development ecosystem is now fully aware of GeneXus Enterprise AI, and this is broadening our channel of sales as more organizations are directly exposed to the product. Thank you for your attention. I'll now pass it over to Patricia Palmes, our Chief Operating Officer.