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Globant S.A. (GLOB) Q4 2022 Earnings Call Transcript

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Globant S.A. (NYSE:GLOB) Q4 2022 Earnings Conference Call February 16, 2023 4:30 PM ET

Company Participants

Arturo Langa - IR

Martin Migoya - Co-Founder and CEO

Diego Tartara - Global Chief Technology Officer

Patricia Pomies - COO

Juan Urthiague - CFO

Conference Call Participants

Tien-Tsin Huang - JPMorgan

Ashwin Shirvaikar - Citi

Bryan Bergin - Cowen

Arvind Ramnani - Piper Sandler

Moshe Katri - Wedbush

Surinder Thind - Jefferies

Margaret Nolan - William Blair

Phani Kanumuri - HSBC

Arturo Langa

Good day, and invited to Globant's Fourth Quarter 2022 Earnings Conference Call. I americium Arturo Langa, Investor Relations Officer astatine Globant. All participants connected this telephone will beryllium connected listen-only mode. After today’s presentation, location will beryllium an opportunity to inquire questions. Please note, this arena is being recorded and streamed unrecorded connected YouTube. By now, you should person received a transcript of our net release. If you person not, a transcript is disposable connected our website, investors.globant.com.

Our speakers coming are Martin Migoya, Co-Founder and Chief Executive Officer; Juan Urthiague, Chief Financial Officer; Patricia Pomies, Chief Operating Officer; and Diego Tartara, Global Chief Technology Officer.

Before we begin, I would for illustration to punctual you that immoderate of our comments connected our telephone coming whitethorn beryllium deemed forward-looking statements. This includes our business and financial outlook and nan answers to immoderate of your questions. Such statements are taxable to nan risks and uncertainties arsenic described successful nan company's net merchandise and different filings pinch nan SEC.

Please statement that we travel IFRS accounting rules successful our financial statements. During our telephone today, we will study non-IFRS aliases adjusted measures, which is really we way capacity internally and nan easiest measurement to comparison Globant to our peers successful nan industry. You will find a reconciliation of IFRS and non-IFRS measures astatine nan extremity of the property merchandise we published connected our Investor Relations website announcing this quarter's results.

I'd now for illustration to move nan telephone complete to Martin Migoya, our CEO.

Martin Migoya

Thank you, Arturo, and bully afternoon, everyone. I'm happy to beryllium pinch you again to stock our Q4 2022 and afloat year results. This was Globant's strongest twelvemonth ever successful income geographic beingness and marque worldwide. In 2023, we spot nan AI gyration accelerating and shaping organizations arsenic they accommodate to caller landscapes. With nan caller description of instauration models, and generative AI, it has go clear that we person a monolithic caller opportunity for america and for our clients. Although, AI is yet going mainstream, this isn't caller for Globant. We person been investing successful processing our AI capabilities and expertise for much than six years now. I will stock much pinch you later.

In nan meantime, I induce you to spot really AI tin effect our regular lives by listening to portion of my reside publication by a tech-speech AI motor that emulates my voice. There will beryllium a announcement astatine nan bottommost of nan surface erstwhile this happens. In immoderate case, spot you each aft these remarks. In Q4, our gross was $490.7 million, representing 29.2 year-over-year growth. For nan afloat twelvemonth of 2022, full gross was $1.8 billion, our champion twelvemonth ever. This represents 37.3% year-over-year growth, 1 of nan highest yearly maturation successful our history arsenic a nationalist company. Throughout nan year, we proceed to present quarterly maturation rates supra manufacture benchmarks.

In 2022, we made a large move successful our world description by mounting up a caller business region successful Asia-Pacific. We now person beingness successful Australia, Hong Kong, Singapore and nan Philippines. We judge location is simply a immense imaginable successful this region. So we expect to proceed expanding our business passim nan year. A period ago, we announced our presence successful Denmark pinch nan acquisition of Vertic. They are a imaginative consultancy successful nan life science, wellness attraction and galore different B2B disciplines. Vertic brings an awesome array of caller customers specified arsenic Eli Lilly and GE Healthcare. We're excited to person them connected committee to consolidate our world integer trading network. With Vertic, we will proceed processing our section description by entering into Northern Europe.

We besides expanded successful areas wherever we already run by opening caller offices successful Canada and Italy. Globant is now successful complete 25 countries crossed 5 different continents. We person go a genuinely world statement that tin connection reinvention astatine standard pinch divers talent worldwide. 2022 was a large twelvemonth for our world marque nickname too. We announced our business pinch FIFA to create their FIFA+ streaming platform, and we sponsored nan Qatar 2022 FIFA World Cup.

The Globant marque was connected nan section and connected nan screens for each much, seen each complete nan world. We estimate that up to 300 cardinal group were reached by our marque during nan people of our sponsorship, and FIFA estimates that much than 5 cardinal group prosecute pinch nan World Cup crossed different platforms and devices. We made nan astir of this business by hosting nan Globant Tech Summit successful Doha during nan cap.

We had a awesome talk pinch clients, partners and an expanding community. This happened astatine an important clip for america arsenic we are increasing our business successful Asia-Pacific. This year, we will beryllium world sponsors of nan Women's World Cup successful Australia and New Zealand. This will springiness america different opportunity to attraction connected a region that is moving towards a knowledge economy.

Also, I'm thrilled to spot our marque keeps growing. Globant was erstwhile again recognized successful Brand Finance world study of nan apical IT work brands. This time, we became nan eighth strongest marque worldwide. During 2022, Globant was besides named Company of nan Year successful world integer translator services by Frost & Sullivan. The fastest-growing IT services institution by Gartner marketplace stock and a awesome manufacture 4.0 subordinate by Everest Group.

Moving connected to Studios. I'm thrilled to opportunity that we person created nan sports reinvention studio. It will beryllium nan hub for our solutions for nan apical sports organizations, helping them reinvent nosy experience, boost loyalty, summation gross streams and create smart venues. We're already moving pinch apical players successful nan sports and intermezo assemblage for illustration LaLiga and nan L.A. Clippers. And now, we are consolidating these efforts to return afloat advantage of early opportunities.

In nan AI space, devices for illustration ChatGPT from OpenAI and Bard from Google person made a ample connection exemplary exertion disposable to everyone for nan first-time. This improves nan procreation of text, euphony and video for nan use of millions of extremity users and unfastened up immense opportunities for organizations. It besides creates much chances to further incorporated AI into nan business arsenic good arsenic generating caller worth done AI apps.

We are very optimistic for semipermanent maturation because nan request for AI is increasing fast. Spending is expected to scope $300 cardinal by 2026. It is quickly becoming an basal portion of software. Every integer merchandise will person an AI layer. We judge that ample connection models tin simplify package improvement creation, moving our manufacture forward. I'm proud to stock that we person made a awesome update to our low-code platform, GeneXus. Through nan operation of deterministic symbolic AI pinch ample connection exemplary technology, GeneXus tin now create unprecedented endeavor package solutions successful grounds time.

Let maine explicate really this works. The package creation process involves galore different profiles of professionals, each utilizing their ain programming languages and unsocial interactions from designers to developers to testers. GeneXus steps into nan process pinch its AI adjunct by providing a communal furniture to span nan knowing gap. It now allows nan usage of earthy connection arsenic communal input for each of nan profiles.

In a nutshell, pinch GeneXus, if you tin talk, you tin commencement creating your integer product. The beta type of GeneXus will beryllium fresh successful nan adjacent weeks. You tin registry to subordinate nan hold database done nan QR connected nan screen. This AI adjunct is simply a large measurement guardant successful utilizing AI for business solutions. AI has been a cardinal portion of Globant's worth offering for galore years, supported by our AI Studio, our AI manifesto and company-wide AI training.

In summation to GeneXus, we are revolutionizing nan manufacture pinch Augoor, which applies AI to make nan coding process faster, much imaginative and effective. And pinch MagnifAI, that speeds up testing truthful that companies tin motorboat products faster. We want to beryllium nan go-to-partner for organizations that want to afloat unleash nan powerfulness of AI. The solutions and devices we supply tin simplify determination making, create much personalized acquisition and alteration creativity.

We're making these moats because we cognize AI well, and we are fresh to return advantage of this opportunity. We understand that macroeconomic conditions are uncertain and geopolitical events and proviso concatenation issues person affected immoderate determination making processes from our clients, particularly by nan extremity of 2022. We knowledgeable immoderate agelong closing cycles during nan extremity of past twelvemonth and early 2023, but we are seeing now first signs of a affirmative alteration connected those trends. So we expect a patient year-over-year capacity fixed nan existent market.

Our CFO, Juan Urthiague, will stock much later on. We person a beardown assurance successful Globant's fundamentals done our studios, we're adaptable to providing nan clients what it needs successful different landscapes. Globant offers a operation of services and products to thief clients activity business reinvention and efficiencies. We activity pinch organizations to amended their operations utilizing platforms for illustration Salesforce, SAP and Oracle. We heighten customer experiences and go-to-market strategy to amended business outcomes, and we present revolutionary solutions done nan latest technologies for illustration AI, blockchain, metaverse and more.

According to IDC, integer translator spending will scope $3.4 trillion successful 2026. The United States relationship for astir 35% of nan worldwide full and will surpass nan $1 trillion people successful 2025. We are eager to turn our marketplace stock arsenic this abstraction continues to expand. Globant is celebrating its 20th day this year. We person travel a agelong measurement from 4 founders successful a barroom to a world squad of 27,000 people. I person ne'er been prouder than I americium now. We are a squad of entrepreneurs. Our Globers proceed to activity connected unparalleled invention for immoderate of nan astir beloved brands successful nan world, helping them hack nan challenges of their businesses.

In these first 20 years, Globers has go a maturation conveyance and a halfway for knowledge, heavy expertise and nonstop maturation mindset, reflecting connected nan past 3 years, including nan unparalleled effect of nan pandemic, it's singular to spot that Globant has grown our apical statement by almost 3 times and has welcomed a likewise summation successful our worker base. Throughout this period, we person maintained our committedness to delivering exceptional profitability and returns to our shareholders. With nan dedication of our teams and our ever-evolving offering we are fresh to look nan challenges and proceed our maturation successful 2023 and beyond.

And pinch that, I'll move it complete to Diego Tartara, our CTO. Thank you. Thank you very much.

Diego Tartara

Thanks, Martin, and hello, everyone. It's bully to beryllium back. I'm eager to stock pinch you immoderate important updates regarding our Studios, absorbing caller projects pinch clients and our plans to leverage AI and different applicable trends.

I'll statesman pinch a attraction connected AI introduced by Martin. At Globant, AI has been a main portion of our services to clients arsenic good arsenic our ain soul processes for almost a decade. That's why we spot nan caller accelerated take of AI devices by nan wide nationalist arsenic an opportunity.

To respond, we are driving location our offering of AI applications to our community. The Globant connection is focused connected 3 main areas successful this space: first, driving amended outcomes. We are utilizing AI to unlock nan powerfulness of accusation study and large information truthful that our clients tin make informed and agile business decisions up of their competition; second, elevating nan customer acquisition by personalizing smart interactions done AI.

Globant has acquisition successful boosting customer loyalty and restitution successful this space. And finally, accelerating performance. We harness nan powerfulness of AI to automate processes, summation ratio of analyzable imaginative activity done generative AI that frees up valuable clip and resources for teams. Our Globant X products, Augoor, GeneXus and MagnifAI are cardinal accelerators for this. As a people-based organization, we're going to double down connected our AI expertise by providing an further company-wide training to guarantee that each Glober becomes an AI adviser.

Upon completing nan training, each 1 of our agile pots will person an AI master who will consistently guarantee that our solutions see nan latest AI technology. In nan AI space, GeneXus has proven to beryllium a awesome partner to invigorate our offering. Upon nan acquisition, we were capable to quickly merge our companies to create amended low-code and no-code solutions.

Last month, we launched GeneXus 18, a caller type of nan low-code level that increases productivity and simplifies nan improvement of apps and systems. It allows organizations of immoderate size and manufacture to research caller business models and supply caller acquisition to their customers done elevated package architecture.

GeneXus 18 besides brings low-code package solutions to nan improvement of ace apps, a cardinal maturation area for nan manufacture and a lucrative extremity for galore apical brands mixed pinch nan caller features, which Martin person built earlier, we are progressively optimistic and eager astir nan runway of this product.

Now let's spell done really Globant continues to stock its knowledge and expertise not only via nan solutions we create for our clients, but pinch nan broader tech community. In our caller tech trends reports released this week, we attraction connected 4 impactful trends that will empower organizations to successfully navigate and excel successful this disruptive era. Artificial intelligence, nan metaverse, blockchain and foundational technology, recognizing nan important imaginable of our precocious launched sports Reinvention Studio.

This quarter, we besides released a stand-alone tech trans study focusing connected opportunities successful this space. A caller liquid money is disrupt successful nan sports worth. The nosy acquisition now goes acold beyond nan unrecorded lucifer arsenic they now interact pinch their favourite clubs and events done aggregate touch points successful mobile apps and societal media. This creates nan request for mini technologies and to guarantee a seamless affirmative integer experience. It creates some a situation and an opportunity for caller gross streams. Both nan 2023 tech trends and nan Sports Reinvention inclination reports tin beryllium recovered astatine reports.globant.com.

Now I'd for illustration to stock pinch you really we are moving to alteration nan crippled for our clients. Globant is partnering pinch Omantel, nan starring telecommunication institution successful Oman to connection an activity-based inducement wellness programme for their customers called Sehati. This programme leverages Be Healthy, a Global Tech merchandise that offers a nickname and reward programme utilizing nan Apple Watch. Be patient helps its users unrecorded healthier lives and person power complete nan information pinch a beardown privateness protection built into each precocious product. We are moving intimately pinch Rio (ph), nan Latin American section of DIRECTV.

With much than 10 cardinal subscribers, it is nan starring integer intermezo work successful nan region. Having nan correct to watercourse FIFA World Cup, Rio wanted to create an immersive acquisition successful a virtual chimney fest successful nan metaverse. In grounds time, Globant built a connection and designed a afloat arena experience, societal media influencers, clients and property were invited to participate utilizing VR headsets while watching a unrecorded FIFA World Cup crippled transmitted by Rio.

We were capable to showcase nan powerfulness of nan metaverse for FIFA World up unrecorded streaming, while creating engaging and interactive experiences that tin beryllium monetized successful nan metaverse economy. Additionally, we created an omnichannel acquisition that included nan largest chat bot successful Latin America, reaching 30 cardinal messages during nan World Cup.

We besides developed a mobile app pinch 630,000 progressive users and an improved web service. This acquisition was a coagulated first milestone for nan Sports Reinvention Studio. In North America, we're moving pinch Roche, 1 of nan world starring biotech companies. The institution useful pinch partners who bring AI platforms and algorithms focused connected oncology-machine (ph) analysis.

Until now, nan onboarding of these caller partners has been done manually, which is time-consuming costly and not scalable. We're partnering pinch Roche to build a self-service and boarding level to streamline improvement and integration that will thief trim costs, summation ratio and let nan level to quickly standard to hundreds of algorithms.

In Europe, we're moving pinch PortAventura World, a starring destination edifice successful nan confederate region pinch much than 5.3 cardinal visitors successful 2022. We person go their integer partner to creation and instrumentality a caller customer exertion to summation a competitory advantage done businesslike customer experience. We are leveraging our expertise successful nan area that includes activity for adjacent lines, sports teams, resorts and taxable parks.

Also successful Europe, we're moving pinch PAC, additionally autochthonal logistics institution that specializes successful same-day delivery. Its level provides real-time tracking, way optimizations and automated transportation notifications. They capable to support a fleet of master drivers and couriers to guarantee that their customers person nan highest value of service. world disaster successful nan improvement of nan recurrent level by building caller costs and building guidance systems.

Pickup driblet of points, package improvement kits successful aggregate languages for faster unit integration among others. We are besides advising them and looking up successful areas that see IoT and metaverse, thief effect nan up of nan title and supply their customers pinch nan champion transportation experience. As always, we look guardant to enhancing our relationships pinch our clients by bringing nan latest technologies into their businesses.

With that, I move it complete to Patricia Pomies, our COO.

Patricia Pomies

Thank you, Diego, and hello, everyone. I'm happy to beryllium pinch you again to talk nan translator activity we are doing for our clients and nan evolving worth proposition we connection to world talent.

Let's footwear disconnected pinch our clients. Our largest account, nan World Disney Company grew by 26.6% year-over-year and 8.5% quarter-over-quarter. The remainder of our accounts collectively grew by 29.5% year-over-year and 6.8% quarter-over-quarter. Our 100 quadrate strategy continued to show results. We now person 13 accounts bringing successful much than $20 cardinal successful revenue. In addition, we person 259 clients that supply much than $1 cardinal of yearly gross compared to $185,000 one-year ago.

Regarding geographical distribution of our gross successful Q4, 61.7% of our gross came from North America, 22.7% from Latin America, 11.9% from EMEA, and 3.7% from Asia and Oceania. While each regions of gross growth, we are seeing much geographic diversification of our gross sources. For Q4, gross successful EMEA and APAC regions grew 43.8% and 110.5%, respectively, year-over-year. We person a stronger accent connected increasing successful markets that are comparatively caller to Globant specified arsenic Asia-Pacific.

Our beardown integrated growth, coupled pinch our strategical execution of M&A, were cardinal to driving these affirmative results. North America, nan root of 62% of our gross grew by 24.8% year-over-year and 2% quarter-over-quarter. We proceed to attraction connected nan Net Promoter Score to guarantee that our clients are some satisfied pinch our services and promoting america wrong their networks. As of Q4, nan Net Promoter Score reached 79, up from 76 Q4 of past year. This remained precocious supra nan exertion manufacture benchmark scope that goes betwixt 40 and 61. Through this exercise, we estimate that 81% of our clients are recommending america to their community.

Now regarding our people. We are now a proud squad of complete 27,000 Globers worldwide. Considering nan existent business environment, we person moderated our gait of hiring, and we are taking advantage of nan trends successful attrition. Our yearly attrition is presently astatine 16.7%, nan lowest successful 2 years and 180 ground points beneath Q3's yearly figure. We in installments this to Globant's global-centric worth proposition of giving some profession maturation and flexibility.

To nurture a affirmative civilization that develops talent is captious to perceive continuously to our Globers. We person a heavy and regular evaluations of our moving mode to measure our Globers engagement truthful that we tin accommodate accordingly. We closed nan twelvemonth successful Q4 asking Globers really they fought connected everything from rewards and benefits to a profession way and intelligence wellness among different areas. Within this assessment, we had a circumstantial attraction connected nan Net Promoter Score to find our labor would urge Globant to friends, interaction and erstwhile colleagues.

It resulted successful an worker Net Promoter Score of 64, acold supra nan manufacture benchmark of 30 to 40. Additionally, complete 95% of respondents said that they consciousness they are treated arsenic and fairly. This is sloppy of gender, age, race, disablement aliases intersexual orientation. 85% of respondents bespeak that they consciousness their leaders powerfully attraction astir their well-being. We observe this consequence of showing really our firm values are being adopted passim nan organization.

Our strategy is to supply adverse individual and profession maturation opportunities astatine Globant. As you remember, past year, we launched our unfastened profession platform, wherever Globers tin find a caller profession opportunities wrong nan company. With vulnerability to caller accomplishment sets, salaries and a occupation title. So far, 10,000 Globers person made usage of this portal, and complete 2,000 person already recovered caller opportunities astatine Globant successful caller manufacture aliases geographies. Our upskill and different skilling level astatine Globant University besides continues to grow.

We person empowered it pinch AI to springiness a much valuable and a individual experience. Our labor get tailored and recommended upskilling courses based connected their floor plan and their interests. We are besides utilizing this exertion to fortify societal and collaborative learning passim nan full statement by connecting experts lovers pinch peers who are looking for their expertise.

We are now offering much than 3,600 different learning experiences. I would for illustration to item a peculiar people from nan level of nan Green IT training. It is targeted astatine IT professionals pinch nan extremity of mitigating nan c footprint of nan industry. We admit that our assemblage has a awesome imaginable successful nan conflict against ambiance change. So far, much than 5,000 Globers person been trained, and we look guardant to incorporating nan principles into our merchandise offering to our clients arsenic well. Flexibility continues to beryllium astatine nan halfway of our offering.

Our work-from-anywhere argumentation allows Globers to activity from immoderate destination up to 90 days per year. This has enabled complete 1,700 globals to activity remotely successful much than 65 destinations worldwide. Of course, we still judge that offices are a awesome connection of foster culture. So we are very excited to beryllium opening nan workplace of nan future. In nan past year, Globant has opened marque caller offices successful London, Mexico City, Santiago, Pontalti and Uruguay (ph). Each 1 was peculiarly designed pinch our Globers successful mind that an accent connected co-creation sustainability and teamwork.

And finally, immoderate important updates connected Globant's benignant conception aimed astatine making our world organization a much sustainable, giving equitable and patient spot done nan committedness of our Globers. And our Code You Future programme we publically committedness to assistance 15,000 exertion training danasiwa 2025. In Q4, we offered 1,000 caller danasiwa for an 8 period training to group successful Latin America.

We'll person complete 30,000 applications. 50% of this danasiwa will beryllium allocated to women and nonbinary people. We besides proceed our activity successful Globant Labs. Its intent is to attraction our propane initiatives to thief our organization successful statement pinch our large benignant pillars. We are committed to this task because we are patient believers that exertion is an enabler to create caller solution for nan much important problems of humanity, fostering invention and delivering inclusive opportunities.

Our BeKind, Tech Fund continues to support nan start-ups purpose and of mitigating nan adverse effect of technology. Spanish went to superior firms and London-based entrepreneurial organization, E2E person joined nan costs erstwhile ecosystem. So we announced our 1 cardinal finance successful Polemix, nan first level to present web exertion to nan world of ideas and opinions. The start-up ngo is to upgrade really group support and reason sentiment leaders, disrupting nan eco chambers cultivated by accepted societal media platforms. We look guardant to seeing nan improvement of this fund, its partner and its mission.

And pinch that, I will manus it complete to Juan, our CFO. Thank you.

Juan Urthiague

Thank you, and bully afternoon, everyone. It's awesome to beryllium present again. We're highly proud of nan coagulated results we delivered today. We ended 2022 connected a precocious statement pinch 37.3% year-over-year growth, nan 2nd highest yearly maturation complaint successful revenues since becoming a publically listed institution while delivering different beardown twelvemonth of profitability and rate generation. Testament of that was nan accordant above-industry maturation affirmative passim nan twelvemonth pinch mean quarter-over-quarter maturation rates supra 6.6% passim 2022.

As a integer translator work company, we understand that nan existent macroeconomic situation whitethorn beryllium causing immoderate of our clients to mean their request for our services and delaying nan closing of caller deals. We powerfully judge that nan mid- and semipermanent request for integer translator remains intact.

Our pipeline remains very solid, and it is nan highest successful nan company's history. We person seen nary alteration successful nan chat regarding nan semipermanent strategy of our clients. Technology continues to beryllium astatine nan beforehand and center. Additionally, talent remains scarce and companies proceed to look challenges to find their exertion ranks.

According to starring work information from starring financial institutions and manufacture investigation firms, integer translator investments are expected to beryllium a apical privilege crossed companies successful 2023. We will support optimizing our talent excavation utilization and costs building and accommodate our work offering to meet nan changing demands of our clients.

Let's now reappraisal our coagulated Q4 and 2022 results. We are very proud of nan affirmative apical statement maturation we were capable to deliver. 2022 revenues ended astatine $1.780 billion, up 37.3% year-over-year. This beardown maturation was chiefly driven by astir 32% integrated maturation contempt having a 2 percent constituent FX headwind. Our revenues for Q4 were besides very beardown astatine $490.7 million, representing a 29.2% year-over-year growth.

On a sequential basis, our revenues for nan 4th fourth of this twelvemonth accrued 6.9%. Q4 gross maturation was 30.9% year-over-year successful changeless currency, 1.7 percent points supra our header figure. We estimate inorganic publication to year-over-year maturation astatine astir 6 percent points successful nan 4th quarter. When we look astatine our gross breakdown, we spot respective factors astatine play.

Let maine bring them to life. First, pinch our apical account, we ended a very beardown 2022 and Q4. We are seeing very beardown maturation successful our media vertical connected nan backmost of beardown deals closed successful nan 2nd half of 2022, including LaLiga tech business among others, and besides a noticeable betterment successful our Travel & Hospitality and Healthcare division, but partially offset by our master services, precocious tech and BFSI verticals.

We do expect a much unchangeable capacity successful Q1 successful our master services and our BFSI verticals and incremental maturation successful nan short term. We proceed to present connected profitability. Adjusted gross profit separator for nan twelvemonth stood astatine 39.2%, among nan highest successful nan industry. Our adjusted gross profit for 2022 accrued to $697.6 million, representing a 36.1% yearly increase.

Adjusted operating separator for nan twelvemonth stood astatine 16.3%, comparatively unchanged connected an yearly basis. We are actively moving connected our SG&A to meet our EBIT targets. As of 4Q 2022, SG&A complete income stood astatine 18%, which compares to 18.7% arsenic of past year. Adjusted operating income for nan 4th amounted to $79 cardinal aliases 16.1% of revenues, level quarter-over-quarter.

Regarding below-the-line items, our IFRS effective taxation complaint for nan 4th was 21.8%, mostly successful statement pinch our guidance. Adjusted nett income for nan afloat twelvemonth 2022 totaled $217.7 million, representing 12.2% adjusted nett income margin, level year-over-year. Adjusted nett income for nan 4th fourth was $60.1 million, representing 12.3% adjusted nett income margin.

Adjusted diluted EPS for this 4th was $1.40, 30.8% year-over-year based connected 43.1 cardinal mean diluted shares for nan quarter. Our afloat twelvemonth 2022 adjusted EPS of $5.08 came successful $0.02 supra our guidance of $5.06 per share. Adjusted EPS for afloat twelvemonth implies a beardown 35.1% year-over-year growth. We proceed to execute connected our financial strategy, focusing connected equilibrium expanse guidance and superior allocation. We judge that our financial position is good suited to support our maturation successful 2023 to prosecute charismatic opportunities, some organically and inorganically.

As of December 31, 2022, our rate and rate equivalents and short-term investments totaled $340.9 million. Our in installments installation of $350 cardinal remains undrawn. We maintained a nett rate position, which, successful conjunction pinch our integrated rate travel procreation should supply ample backing for our maturation plans successful nan short term. In nan 4th fourth 2022, we achieved beardown free rate travel procreation pinch free rate travel northbound of $80 million.

Now let's talk astir our business going forward. I would for illustration to stock pinch you our first outlook for nan first 4th and for nan afloat twelvemonth 2023. We stay focused connected achieving a coagulated gross maturation and beardown profitability. Heading into 2023, we will attraction connected expanding our business while aiming astatine unchangeable margins. We will besides attraction connected managing intimately our costs building successful bid to standard it successful statement pinch nan business performance.

Let maine commencement pinch our Q1 expectations. We presently expect Q1 revenues of astatine slightest $470 cardinal aliases 17.1% year-over-year growth. Over nan past portion of Q4 2022 and nan opening of Q1 2023, we knowledgeable elongated closing cycles and delayed ramp-up of closed deals. These marketplace conditions mixed pinch customer-specific situations successful immoderate of our apical accounts, specified arsenic organizations and restructuring, lead america to expect a sequential alteration successful Q1 2023 revenues comparative to Q4 2022.

Though a patient year-over-year capacity fixed nan existent market, we expect to spell backmost to affirmative quarter-over-quarter maturation already successful Q2, reaching a full apical statement akin aliases somewhat supra Q4 2022. This is nan consequence of nan betterment successful immoderate of our apical accounts and nan closing of a number of large-sized deals. In statement pinch Q1 revenues and besides owed to nan costs impacts resulting from FX appreciation successful emerging markets, we implemented measures to incorporate our expenses successful nan short time, which will partially offset nan effect connected our margins.

We expect our adjusted operating income separator successful nan 15% to 16% scope for nan first 4th of 2023. IFRS effective income taxation complaint is expected to beryllium successful nan 22% to 24% range. Our adjusted EPS for Q1 is expected to beryllium astatine slightest $1.27, assuming 43.2 cardinal mean diluted shares outstanding for nan quarter.

Now let's move towards nan afloat twelvemonth guidance. We proceed to beryllium very affirmative astir nan maturation opportunity for Globant and our industry. Regarding our afloat twelvemonth 2023 outlook, we are building successful immoderate conservatism considering nan signals that we spot from a much moderated commencement of nan year. Our outlook does not see neither a important recession nor a beardown betterment complete nan people of nan year. Based connected existent visibility, we are providing our afloat twelvemonth 2023 guidance of $2.065 cardinal aliases 16% year-over-year growth. This guidance fig considers a neutral FX outlook.

For nan afloat year, we expect our adjusted operating separator successful nan 15% to 17% range. 2023 IFRS effective income taxation complaint is expected to beryllium successful nan 22% to 24% range. Finally, our adjusted diluted EPS for 2023 is expected to beryllium $5.70, assuming 43.4 cardinal mean diluted shares for nan year.

Thanks, everyone, for participating successful nan telephone for your sum and support.

Question-and-Answer Session

A - Arturo Langa

Thank you, Juan. Hi, everyone. It's bully to spot you. So arsenic we spell done nan question-and-answer conception of this call, I will telephone your name. And astatine this point, please unmute your statement and inquire your questions. Please meet your statement aft your mobility is done. And we would besides inquire you to limit yourself to 1 mobility and 1 follow-up. So pinch that successful mind, our first mobility comes from nan statement of Tien-Tsin Huang from JPMorgan. Tien-Tsin, please spell ahead. Your statement is open.

Tien-Tsin Huang

Thanks, Arturo. I admit nan clip arsenic always. So again, a batch of bully item astir nan outlook and everything here. So I figured I'd inquire connected nan apical account, Disney looked for illustration a beautiful beardown 4th quarter. I heard nan restructuring and immoderate things changing that mightiness create a slow commencement to nan year. So tin you conscionable remark connected visibility for nan apical relationship and possibly nan apical 10 successful wide and what you've seen location for nan first 4th arsenic good arsenic for nan afloat year, a small spot much detail. Thanks.

Martin Migoya

Sure. I will return nan first information of nan question. Thank you, Tien-Tsin, for nan question. And I return nan first information and past we'll fto Juan to complement. I deliberation that nan narration pinch Disney is highly healthy. We person had 2022 pinch a very patient maturation of astir 35%, right, year-over-year. So we person had for illustration a maturation pinch this relationship for many, galore years. I deliberation that nan -- each nan announcements is still very soon to understand what's going connected successful nan winners of these announcements.

We expect to person immoderate deed during Q1, but past coming backmost again during nan remainder of nan year. So this is benignant of what we cognize correct now. I understand that nan relationship is still very healthy. We judge that this narration we person pinch Disney is very profound, and we tin thief them to make galore of nan savings they person successful mind. And I deliberation that's beautiful overmuch nan picture. But I don't know, Juan, if you want to complement.

Juan Urthiague

Sure. Hi, Tien-Tsin. So successful summation to that, what we are seeing is simply a very beardown recreation and services sector. A very beardown aliases a betterment successful -- connected a very beardown sorry, wellness attraction sector. When we are looking into nan Q1 number, arsenic Martin said, it implies a alteration successful nan lawsuit of our apical relationship driven by each nan changes that were discussed. Also, location is immoderate effect coming from tech companies that arsenic we each know, they person been delaying projects and moreover laying disconnected a ample number of people.

And past location is simply a small spot connected nan backlog and nan size of nan backlog. But we are already seeing a bully betterment heading into Q2, adjacent deals that will construe into a bully betterment into Q2 numbers. And I deliberation it's going to beryllium driven again by recreation and hospitality by healthcare, a betterment connected BFSI, a betterment connected master services. We will still person immoderate hits coming from technology.

Tien-Tsin Huang

All right. Great. And past conscionable arsenic my speedy follow-up, conscionable to build connected what you conscionable said, I deliberation to get backmost to sequential maturation successful nan 2nd quarter, it sounds for illustration you've seen immoderate affirmative changes recently. You mentioned a very beardown pipeline. I deliberation you besides mentioned immoderate imaginable closing of immoderate larger deals arsenic well. So tin you show america a small spot much successful mid-February now. So it sounds for illustration you're seeing existent activity and alteration to nan affirmative broadside astatine this constituent successful nan quarter?

Martin Migoya

Yeah. It's difficult to reply that question. We are seeing immoderate signals of betterment -- that's for sure. We are seeing immoderate early -- very early, I would say, ample contracts that are coming into nan pipeline and besides immoderate ample contracts that we are closing. So for nan first time, we are seeing for illustration a betterment successful galore of nan news that we person had during nan last, I would say, 9 months. So we are seeing immoderate benignant of turning point. Look, this is simply a very early signal, that doesn't mean that it will correspond what's going to hap during nan remainder of nan year, but we sewage for illustration benignant of very happy erstwhile we commencement seeing that betterment happening, correct and I don’t know.

Juan Urthiague

Because nan backlog continues to build and that benignant of gives america comfortableness connected nan 2nd 4th numbers. And then, of course, for nan remainder of nan year, nan presumption that we person is that things will proceed successful nan aforesaid measurement that we are seeing now. We are not assuming a large betterment of nan economy. We are not assuming a meaningful situation wherever it's conscionable a continuation of nan alteration successful nan inclination that we person seen complete nan past three, 4 weeks successful position of bookings, successful position of closing of deals and caller deals coming into nan pipe.

Tien-Tsin Huang

Very good. Thank you.

Juan Urthiague

Very welcome. Thank you, Tien-Tsin.

Arturo Langa

Thank you, Tien-Tsin. So nan adjacent mobility comes from nan statement of Ashwin Shirvaikar from Citi. Ashwin, please spell ahead. Your statement is open.

Ashwin Shirvaikar

Thank you and admit nan opportunity. Martin, you started evidently speaking astir AI. So fto maine nonstop my first mobility there. And you formed this arsenic an opportunity, which I tin spot successful galore different ways for contented creation and different factors arsenic well. But arsenic a company, you do person complete 80% clip and worldly and very group dependent. So really do you deliberation of that successful nan agelong run, obviously, astatine nan extremity of nan day, AI doesn't benignant of spell instrumentality itself and do things successful a generative AI. But really do you deliberation of that? And are location different opportunities on nan measurement arsenic I look at, say, for example, firm aliases endeavor level information sets, galore of them are not astatine nan commencement wherever they ought to be. So possibly that's besides an opportunity. Can you talk astir that full thing?

Martin Migoya

Yeah, absolutely. Look, I could beryllium talking astir this for nan adjacent 24 hours. So I would effort to beryllium very, very short, but listen, this alteration connected nan AI devices is not thing caller that we are seeing. I mean we person been experimenting pinch tools, which are beautiful akin to what's going connected correct now pinch ChatGPT, which is nan astir applicable point that happened successful nan past 1.5 months for immoderate clip now. And we person ever seen this benignant of -- astatine nan extremity of nan day, a alteration connected nan devices aliases an improvement connected nan devices that we are utilizing to create package aliases to create experiences aliases to create contented should happen, and it happened.

And now we are seeing that, of course, humans will support connected being highly needed for illustration before, but now they will person devices to beryllium much efficient. But astatine nan aforesaid time, a caller group of caller applications based connected AI. Basically, what happened pinch CCP was for illustration a monolithic trading campaign, pushing for illustration a caller measurement of creating applications for illustration a caller measurement of knowing really to interact pinch consumers pinch interfaces successful general, and that will output for illustration a monolithic group of caller applications based connected AI, based connected ample connection models that tin study astir your institution that tin study astir your transactions that tin commencement answering questions connected those transactions, answering questions that earlier were highly difficult to get.

And each those trends only accelerate nan request of what we do and only accelerate nan request of creating caller studios for illustration creating, I would say, AI-specific models to reply successful a certified measurement because correct now, nan models are answering for illustration successful a generic way, reply successful a certified measurement circumstantial knowledge successful definite domain areas of expertise. And I believe, there's a alteration successful nan tools. Before we were making breaches pinch nan regular calculator -- I don't cognize really to opportunity that successful English, sorry.

Diego Tartara

Calculus.

Martin Migoya

Calculus. And now we are utilizing calculators and we are utilizing computers to accelerate that design. Well, nan aforesaid point happened now. We person immoderate devices to create package pinch Augoor, pinch GeneXus, pinch each nan things connected pinch MagnifAI, we accelerated nan measurement of processing software, came ChatGPT copilot came into nan game. We accelerated again. And I judge that those things will support connected trending up, but nan group utilizing those devices are still successful complaint of making things happen.

And I judge that this inclination will support connected going and support connected increasing and nan request of caller applications paid connected caller paradigms that we conscionable learned a period ago, not Globant. We person been playing pinch this a agelong clip ago, but nan nationalist successful wide has learned caller things and caller ways to interact pinch computers and consumers who commencement requesting that from nan companies that we serve. So I spot for illustration a monolithic inclination going up connected that side, too. I dream that answers your question, but -- it's a mobility of $1 cardinal basically.

Ashwin Shirvaikar

Absolutely. I conjecture nan adjacent mobility is, if you tin talk astir M&A effect and FX effect for 1Q and afloat year, what should we put in, what should we assume? [Multiple Speakers]

Juan Urthiague

Sure. I'll return it. So connected nan first quarter, we guided 17.1% growth, of which astir 5 percent points are coming from nan caller acquisitions that we did aliases nan positions that we did during 2022. For nan afloat year, retired of nan 16% that we guided, astir 4 percent points travel from nan deals that we closed successful 2022. And for nan clip being, we're assuming a neutral FX scenario. So we are not assuming immoderate summation aliases immoderate nonaccomplishment coming from FX.

Ashwin Shirvaikar

Understood. Thank you, all.

Juan Urthiague

You are welcome.

Arturo Langa

Thank you, Ashwin. The adjacent mobility comes from nan statement of Bryan Bergin from Cowen. Bryan, please spell ahead. Your statement is open.

Bryan Bergin

Hi, everybody. Good to spot you. First mobility I person is, are location definite types of projects and programs that you've seen delayed and reassessed -- aliases was it broadly slower crossed nan portfolio and customer decision-making? And if it was definite types of engagements that were commonly pushed, tin you conscionable talk astir really that's affected your workforce readying for 2023?

Martin Migoya

Yeah. I would opportunity nan slowdown successful decisions happened beautiful overmuch crossed galore different industries. Of course, accentuated connected precocious tech, I would say. And past nan projects, I deliberation you asked astir nan type of projects or?

Bryan Bergin

Yes.

Martin Migoya

Right? And nan type of projects, look, they travel successful very different flavors arsenic we ever said, nan projects that we do are ever connected to connecting pinch consumers, accelerating that process. Now we are heading into nan integer trading side. We're heading to nan backmost agency and I would say, each nan ERP/CRM implementation, which is nan backmost extremity of nan company's. Those projects will support connected going.

The 3 types: nan integer marketing, the, I would say, integer transformation, connecting pinch consumers type and, of course, nan back-end projects. The 3 of them has been continuing. What I would opportunity is for illustration nan slowdown does not link pinch nan type of project. It connects much pinch nan wide uncertainty that we are surviving successful nan marketplace alternatively than nan type of projects. So there's nary relationship location that I spot specifically to your question.

Bryan Bergin

Okay. And past conscionable shifting complete to margins. So tin you conscionable -- Juan, tin you talk astir nan biggest factors successful that 15% to 17% scope arsenic you deliberation astir utilization arsenic you spell done '23? And thing connected nan pricing and conscionable funny really you get to nan little extremity versus nan higher extremity of that range?

Juan Urthiague

Yeah. Clearly, nan -- immoderate we are seeing for Q1 successful position of revenues and successful position of margins, we mentioned 15% to 16% because arsenic we person a flimsy alteration successful revenues, we person for illustration antagonistic operating leverage and that is having an effect connected nan afloat twelvemonth number. We are seeing besides a betterment successful position of margins arsenic nan twelvemonth goes by and nan revenues commencement to turn again. We are assuming fundamentally that costs and pricing will offset each other, and they should some beryllium location successful nan debased to mid-single-digit number successful dollar terms.

Utilization, we deliberation we should beryllium capable to support it astatine akin levels connected nan 1 that we person correct now, which is astir 81%, 82%, that's nan target that we are targeting for adjacent year. And I deliberation that's fundamentally what we are including successful that presumption of 15% to 17% scope for operating income adjacent twelvemonth aliases really this twelvemonth 2023.

Bryan Bergin

Yeah. Okay. Thank you very much.

Juan Urthiague

Thank you.

Arturo Langa

Thank you, Bryan. Our adjacent mobility comes from Arvind Ramnani from Piper Sandler. Arvind, please spell ahead. Your statement is open.

Arvind Ramnani

Hi. Thanks for my – acknowledgment for taking my question. I had a mobility connected nan -- conscionable wide for illustration measure complaint increases that you've seen complete nan past mates of years, possibly it was 10%, 15%, you're saying it's possibly debased to mid-single digits. And erstwhile I deliberation of for illustration precocious -- and M&A has for illustration 4 components person driven wide growth. How do you opportunity for illustration volumes are trending? Like, if you person to return retired FX, M&A and measure rates and for illustration if you had volumes.

Juan Urthiague

Sure. I'll return that question. So nan presumption -- I mean, complete nan past 2 years, successful 2021, we grew gross per caput adjacent to 12%, 13%. 2022, it was astir 8% to 9%. And fixed nan existent script that we are each surviving and until we spot a stronger recovery, I deliberation it's correct to presume successful our debased to mid-single digit pricing for this twelvemonth because location is still ostentation though coming down astir nan world.

So successful position of pricing, arsenic I said, debased to mid-single-digit expected for nan twelvemonth arsenic of today, pinch nan existent information. In position of FX, nan presumption that we person for this twelvemonth and that we're including our numbers, it's a unchangeable FX scenario. We person seen nan dollar admit a small spot complete nan past fewer weeks -- I'm sorry, depreciate complete nan past fewer weeks. But it's been going up and down depending connected immoderate happens pinch liking rates and inflation, news and each that.

In position of M&A, arsenic I mentioned before, for nan afloat year, nan presumption that is embedded successful our numbers is immoderate we did up until now, which is astir 4 percent points. It doesn't see immoderate different woody that we hopefully make adjacent during nan remainder of nan year. And truthful nan remainder is measurement basically.

Arvind Ramnani

That's helpful. And conscionable a speedy follow-up. I mean this year, successful galore areas, it's a modulation twelvemonth aliases twelvemonth of digestion, right? You had for illustration abnormally high, for illustration volume-based maturation complete nan past mates of years. And this twelvemonth is what it is, whether it's for illustration 15%, 17%, 20%, it doesn't really matter, but for illustration we ever talked astir a 20% for illustration secular grower, right, complete nan adjacent 3 years. Like, what gives you nan assurance that you get backmost to that secular 20% growth? And I'm not looking for guidance for nan adjacent mates of years aliases anything. But conscionable nan much normalized maturation -- for illustration what's going to get america location from an underlying driver's position to get to nan normalized growth?

Juan Urthiague

Maybe fto maine conscionable springiness for illustration an overview of nan past fewer years, and past I will possibly Martin aliases Diego talk a small spot of what we are seeing into -- aliases what are nan needs that we are seeing from nan marketplace and that thief america judge that we are leaving a secular inclination successful our business. Over nan past fewer years, we did nan IPO successful 2014. If you look astatine nan CAGR 2014 to 2020, it was astir 27%. 2021, we grew 59%, amazing; 2022, a very beardown growth, again, 37%. And we are starting this twelvemonth pinch a 16% maturation now that fixed nan existent market, I deliberation it's a very bully number arsenic well. When we look into what's happening, I deliberation nan speech pinch customers are not changing, Martin nan needs that they have.

Martin Migoya

Yeah. I mean nan trends astir needing exertion and to put nan things, nan backmost end, nan beforehand extremity integer trading efforts, everything successful bid is thing that we are very -- that we are seeing it very clear. Very basal projects. So for example, a large streaming level that we person arsenic a customer, we person a task successful which they request to link nan different platforms that still person different personification bases to link into a azygous personification base. Those are projects which are highly needed and they won't spell away, and they will support connected increasing and growing. So that secular request of exertion is still there.

And I judge that arsenic companies understand that there's caller ways of interacting pinch exertion and computers, they will -- their customers who are requesting those companies to behave for illustration that. And that will trigger for illustration a caller activity of -- we person been talking astir 3 monolithic trends for illustration Web 3.0, AI and metaverse. Well, those 3 things will support connected going.

And AI correct now is successful nan halfway of nan chat because of things that are happening that will dainty again, a caller group of conversational interfaces. People would for illustration to talk pinch smart companies. People don't for illustration to talk pinch telephone centers that are automated that don't cognize what to answer. People for illustration to talk pinch smart companies. And that's a monolithic trend, and that's thing that will support connected going.

So I don't cognize percentages, and I will ne'er talk astir percentages towards nan early successful this circumstantial mobility that you made. But I judge that nan inclination of each twelvemonth needing much and much exertion much analyzable worldly to beryllium done is there. So I don't know, Diego, if you want to complement connected that?

Diego Tartara

Just to complement that. I deliberation that each now and past fixed a caller technology, a definite situation, we're being asked, like, is location a continuity to your business? And successful each honesty, first of all, we proceed to person very bully conversations erstwhile it comes to gross maturation type of deals that were nan ones that were benignant of slowing down lately. But nan astir important point is that moreover though location are definite technologies that made our lives easier, our useful -- makes america overmuch much businesslike truthful acold depletion will proceed to grow, will proceed to grow.

It's conscionable only 1 illustration that showcases, this 20 years ago, moreover little than 20 years ago, nan information of nan costs of a car that was astir package was debased 10s, 12% astir that. Nowadays, we're seeing complete 60%, complete 60% and proceed growing. I deliberation each azygous manufacture will travel that powder. And that's what makes america deliberation that there's a agelong and patient measurement for america into nan future.

Arvind Ramnani

Perfect. And if I tin conscionable 1 speedy follow-up connected that. Just pinch this, we person seen this inclination before, right? The unreality comes and you made money connected cloud, but large gross streams came from analytics and a changing business workflow and benignant of building a front-end user apps, for illustration you've already ever taken arsenic a tech inclination and for illustration built an full ecosystem of gross based astir for illustration a azygous exertion theme.

Have you finally, for illustration you've talked astir AI for nan past 50 years, AI has been astir for a agelong time. But are we astatine a constituent wherever this caller measurement of AI is going to beryllium arsenic large arsenic what unreality did to your revenues. And if you tin supply metrics great, if you tin astatine slightest qualitatively, really do you compete arsenic generative to immoderate of nan things, whether it's mobile aliases unreality aliases thing else?

Diego Tartara

Something, we received. And honesty, I deliberation it's AI has been location for a agelong time. We person business successful AI. We created nan workplace six years ago. We moreover built our ain technologies. I deliberation -- for illustration Martin said, I deliberation what ChatGPT brings and it's astonishing for us. It's a large opportunity is marketing. Now everyone knows astir AI, everyone has gone to ChatGPT and tried a fewer things.

And moreover though I deliberation that -- I mean, into nan exemplary down ChatGPT is amazing. It's very good. It's a constituent to leap guardant successful position of what it brings to nan table. This is really an evolution. And we've been portion of that evolution. And actually, we are very fresh to bring this everywhere. But I deliberation it's precisely to your point, I think, yes, moving forward, we will spot overmuch much gross coming from that technology.

Arvind Ramnani

Terrific. Thank you.

Diego Tartara

Welcome.

Arvind Ramnani

Thank you truthful much.

Arturo Langa

Thank you, Arvind. The adjacent mobility comes from Moshe Katri from Wedbush. Moshe, please spell ahead.

Moshe Katri

Hey. Thanks. So I person two. One, astir apt a spot much broad-based regarding nan pipeline and nan different 1 is much focused connected Disney. So -- you indicated that your pipeline is astatine grounds levels. Some of your peers are talking astir a pivot successful position of nan quality of nan activity successful position of what's really successful demand. And nan attraction seems to beryllium connected costs optimization and costs takeouts. Is that thing that you're seeing arsenic well? Was this thing that you would see benignant of focusing on, fixed nan truth that successful nan past, you focused much connected transformation? So that's benignant of nan wide benignant of large image mobility astir nan pipeline.

Martin Migoya

Thank you, Moshe, for question. And listen, I don't deliberation successful nan past, we were not doing cost-saving projects. I mean, we person been doing a batch of different things pinch our customers, including redeeming billions of dollars for our customers, not conscionable connected nan backmost end, besides connected nan beforehand end. So this is not thing caller for us. And of course, what we do and nan projects we do that our integer translator has a batch to do pinch costs. So we person seen immoderate benignant of displacement of liking of nan customers, of course, and we are playing that.

And I deliberation that, that would beryllium nan temper for nan full year. And nan mobility is really you reply to that question. All these caller technologies that are bringing caller ways of doing things, tin besides prevention a batch of money if you do nan things right. I mean teams tin beryllium smaller and/or it tin beryllium nan aforesaid size and do overmuch much things than before. Efficiencies are changing. So I judge that each those things still needs to beryllium articulated and brought to execution, though things are not happening correct now.

I mean group are utilizing those devices to accelerate nan measurement that they do things. And they are starting to usage our devices to accelerate nan measurement they do things, still that needs to spell overmuch deeper and companies request to due that redeeming because of nan efficiencies that are happening. So we request to thief our customers to spell done that process. And that's a agelong process. And it will beryllium -- it won't beryllium successful 1 month. It will beryllium crossed galore years. So to your question, I judge that there's a displacement and Globant is perfectly fresh and catching those opportunities and fighting pinch our competitors successful that abstraction and being fortunately, very, very successful.

So I cognize Diego, if you want to complement that?

Diego Tartara

That's okay.

Moshe Katri

All right. Understood. And past shifting to Disney, this is astir apt nan apical -- nan biggest taxable successful position of conversations pinch investors. What's embedded successful position of maturation successful that mid-teens number that you provided for nan year? I deliberation 400 ground points you said was from M&A. Is that I mean should we presume that Disney grows location successful nan debased teens for nan year.

And past it will beryllium adjuvant if you benignant of springiness america a refresher successful position of nan different parts of Disney that you're dealing with, wherever are we seeing growth? Obviously, you person Park, Disney Parks and immoderate of nan different elements, conscionable to get america benignant of an update connected immoderate of nan different variables successful Disney that you're dealing pinch successful nan discourse of, obviously, a caller guidance squad that's coming onboard.

Juan Urthiague

I'll return nan first portion of nan numbers, and I will past fto nan squad present to spot in. So successful position of maturation is assumed for Disney astatine this point. Although, we are seeing successful nan short-term, we are expecting a sequential alteration successful Q1, driven by what we explained during nan call, changes of people, changes of projects, changes of priorities. But we're already seeing a betterment caput into Q2 and a much unchangeable scenario. Now for nan afloat year, we are seeing -- aliases we're assuming a low-teens number arsenic you mentioned. That's an presumption that is embedded successful nan guidance correct now. As for nan type of -- of nan type of projects that we will beryllium moving pinch Disney.

Diego Tartara

No, we will support connected moving connected nan aforesaid stuff. And again, there's projects that are connected nan media broadside and nan costs side. There's projects that are connected nan parkland side, parks are performing highly well. Media is wherever they're concentrating immoderate of nan cost-cutting efforts. Now connected these projects, we are having for illustration a large for illustration a large engagement successful beryllium portion of nan savings, actively portion of nan savings. So I deliberation that relationship, arsenic I said, narration is highly healthy, and that's nan astir important portion of each this story. Now they spell from immoderate ups and downs person ever been nan lawsuit pinch Disney. I'm not really concerned astir nan early of nan relationship.

Moshe Katri

Understood.

Martin Migoya

To adhd a small spot much connected apical of that. I deliberation that fixed nan managerial changes and nan strategy down it, there's a strategy that is astir returning power to nan imaginative portion of Disney. What we do cognize is parks will stay strong, and we're successful very bully position there. In fact, it was our first customer for galore years. We are besides seeing request successful nan endeavor assemblage arsenic good wrong Disney. That's different bully thing. And what is happening now is that budgets are shifting successful pinch that. And that's why during Q1, we are seeing that deceleration while they're doing their planning. In immoderate case, nan narration is arsenic beardown arsenic ever and stronger than ever, and we conscionable person a small spot little visibility successful definite areas.

Moshe Katri

That’s great. Thank you.

Martin Migoya

Welcome. Thank you truthful much, Moshe.

Arturo Langa

Thank you, Moshe. Our adjacent mobility comes from Surinder Thind from Jefferies. Surinder, please spell ahead. Your statement is open.

Surinder Thind

Thank you. I conjecture 2 capital-related questions here. The first 1 I'd for illustration to inquire is conscionable astir nan advertizing spend. So really do you really measurement nan return that you're getting from nan walk that you person for marque nickname with, let's say, nan activity that you did astatine FIFA. Is that -- is nan extremity present to thrust a batch of caller introductions pinch caller logo clients? How should we deliberation astir nan clip framework that you're looking astatine that and really you're measuring.

Martin Migoya

That's a awesome question. The first point is, I would show you is, nan magnitude of information nickname we sewage from that quality connected nan World Cup is massive. Thanks God, we are Argentinians and we sewage awarded nan World Cup. So we are very happy for that. But not conscionable that. I mean, successful general, nan relationship pinch our customers and pinch imaginable customers has been great. I would opportunity that, arsenic acold arsenic I know, connecting conscionable 2 aliases 3 projects that travel to my mind and not making a heavy measurement astir it, which is very difficult, by nan way, but 2 aliases 3 projects that comes to my mind that are connected straight pinch our spending that circumstantial finance paid nan full thing, nan full investment.

So each nan remainder needs to beryllium upside. So I'm very affirmative astir that thought has been, I deliberation it has positioned Globant successful a place, which, number one, we deserve; and number two, we were due, and we needed to do thing for illustration that. So we recovered that we were very lucky, and I dream that this narration pinch FIFA will support connected expanding this year. We will person nan Women's World Cup. And nan Women's World Cup -- nan men World Cup is seen by 4 cardinal people. The women activity astatine is seen by 4 -- by 2 cardinal people, half, which is still a batch and you person a awesome assemblage present successful nan U.S. So we person for illustration a very I would opportunity that nan first task has already paid nan afloat investment.

Now we person seen that nan things are coming pinch FIFA and pinch different customers will beryllium upside for america successful nan future. And nan relationship, I think, is great. And different things that we person done connected nan abstraction for illustration LaLiga aliases L.A. Clippers are besides highly -- has been highly profitable. So we're happy pinch those things. And though they were very difficult to decide, and I cannot show you that location were easy decisions, but we're happy pinch nan outcome.

Juan Urthiague

Just to adhd not only for FIFA, but besides for each trading arena aliases each arena that are convention that we organized, location is, of course, a way we travel what are nan leads that were generated from that. We effort to measurement nan return connected nan projects that are generated from location and past comparison pinch first investment. In this case, arsenic Martin said, it's a small spot much difficult because it's specified a large event.

But again, these projects that we already said about, positive nan truth that, arsenic we know, we launched our caller market, which is fundamentally MENA positive APAC region recently, being nan World Cup played successful MENA, I deliberation it was awesome besides to make a batch of connections into a region that is going to beryllium investing heavy successful exertion complete nan adjacent fewer years.

Patricia Pomies

First of nan 1 that is going to hap now successful Australia, right? The Women World Cup is putting america successful Australia conscionable opened immoderate agency there, and we person a beautiful family there, truthful of Globers. So I deliberation that is simply a cleanable infinitesimal to beryllium besides adjacent that area and unfastened caller leads location also.

Surinder Thind

That’s helpful. And past nan related mobility connected superior present is person we thought astir stock repurchases? Even wherever nan banal value is aliases is location -- does that participate into nan equation astatine immoderate constituent aliases is it conscionable different thought astatine this point?

Juan Urthiague

No, astatine this point, I mean we spot opportunities to support connected expanding organically into countries wherever we are not there, support connected adding talent improvement centers that we whitethorn request for nan future. And connected apical of that, we are seeing a very absorbing and charismatic marketplace for imaginable acquisitions. So we do spot uses of nan rate that we person and that we generate. And astatine this point, we deliberation that that's nan correct point to support connected doing to grow our business.

Surinder Thind

Thank you.

Arturo Langa

Thank you, Surinder. For nan adjacent question, Maggie Nolan from William Blair. Maggie, please spell ahead. Your statement is open.

Margaret Nolan

Thank you. Hi. Juan, you referenced immoderate SG&A initiatives and your talking points. Is location thing you tin item connected those? And past would they beryllium worldly capable that we'd spot an inflection constituent from them astatine immoderate constituent successful '23?

Juan Urthiague

Yeah. Thank you. Good to spot you again. It's been a while. So what we are doing, fixed that we are surviving successful a, I would say, a much challenging market, we request to beryllium observant really we walk money. We request to beryllium careful, not conscionable connected SG&A but besides successful position of CapEx. So what we are doing is looking into each finance that we are doing, making judge that it makes sense, possibly not doing immoderate things that we whitethorn person done past twelvemonth aliases nan twelvemonth earlier erstwhile you cognize nan marketplace was booming for everyone.

And what we will effort to do is being capable to support our margins by being observant successful really we run connected nan SG&A. I mean we will support connected investing. We will support connected expanding, expanding our income coverage, but we request to beryllium observant successful really we walk nan money. And until we spot a beardown betterment up of us, and we tin past accelerate connected nan finance side.

Margaret Nolan

Okay. Great. Thank you. And past to travel up connected nan past question. How are you reasoning astir your willingness to do M&A successful 2023? And tin you talk astir your strategical objectives there, possibly weaving successful immoderate of nan caller acquisitions that you've done successful nan past respective months.

Martin Migoya

Yeah. Sure. We're ever unfastened for strategical things that we find successful nan market. We are exploring nan pipeline is very deep, very wide. Things are astir geographic description , astir expanding capabilities to caller places and to caller -- not to caller places, to caller knowledge places. And also, I would opportunity that has to do pinch circumstantial customers aliases circumstantial sectors that we want to tackle.

So nan reinvention studios that has been talking galore times astir really we do acquisitions that has to do pinch getting deeper expertise connected definite industries aliases really we spell deeper into Europe aliases really we spell deeper into EMEA sorry, into MENA, really we spell deeper into areas of knowledge that we didn't person before. The rationales are precisely nan aforesaid arsenic past year, and we expect to support connected increasing connected nan M&A broadside during 2023.

Margaret Nolan

Thank you. Great to spot you all.

Martin Migoya

Thank you, Maggie.

Arturo Langa

Thank you, Maggie. Our adjacent mobility comes from Thomas Blakeley from KeyBanc. Thomas, your statement is open. Please spell ahead.

Martin Migoya

Hello. Hello?

Arturo Langa

Well, successful that case, let's move connected to nan adjacent participant. Our past mobility comes from Phani Kanumuri from HSBC. Phani, please your statement is open. Go ahead.

Phani Kanumuri

Yeah. Thanks for taking my question. So my mobility now is much related to geographical diversification. So successful position of your guidance, really are you seeing nan request geographically? Are you seeing much request successful Europe aliases what's your maturation complaint expectations according to geography?

Juan Urthiague

First, convey you. Good to spot you. First clip we meet. So we spot Europe performing strongly, some from integrated customers that are expanding together pinch nan effect of immoderate of nan acquisitions that we did past twelvemonth and nan awesome business that we're doing that we did pinch LaLiga. So Europe, we person -- we show beardown levels of growth. We are seeing North America astir apt astir benignant of unchangeable aliases somewhat increasing successful Q1, but past showing already a betterment into Q2.

And past LatAm is going to person a softer commencement of nan twelvemonth and a bully betterment successful 4th 2 and onwards. So that's nan wide situation. And then, of course, we person MENA and APAC, which are nan caller regions that you should spot maturation because we are conscionable there, and we are closing deals and starting to work. So nan comparison is easier. So successful summary, beardown Europe, North America getting amended arsenic we spell by. LATAM will commencement slow, but will past retrieve and you will spot beardown APAC and MENA.

Phani Kanumuri

Okay. Sure. And looking astatine nan adjusted shares for 2023 astatine 43.4 million, does it mean that your share-based compensation will beryllium little this twelvemonth aliases really do you spot this going forward?

Juan Urthiague

No. Look, we target 3% to 3.5% of revenues successful stock-based compensation. And that number, we believe, is nan correct number for nan clip being. On apical of that, sometimes, we usage shares for immoderate of nan acquisitions that we make. Typically, we salary portion successful cash, portion successful shares. And you should expect a akin inclination for 2023 compared to nan past fewer years.

Phani Kanumuri

Okay. Yeah. Thank you. Thanks for taking nan question.

Patricia Pomies

Thank you.

Juan Urthiague

Thank you very much.

Arturo Langa

So convey you, everybody that will beryllium it for nan Q&A convention for today. I would for illustration to move nan mic now to Martin for immoderate closing remarks.

Martin Migoya

So convey you very much, guys, for being present today. Thank you very overmuch for your sum and support and looking guardant to spot you successful nan adjacent quarter. Bye-bye.

Patricia Pomies

Bye.

Editor: Naga



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