Globant S.A. (NYSE:GLOB) Q4 2023 Earnings Call Transcript

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 organization.

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 omnichannel 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. health care 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 US. 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 GlobantX AI platforms. Oracle clients also can now use selected GlobantX 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 Globant’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 Pomies, our Chief Operating Officer.

Patricia Pomies: Thanks Diego, and hello, everyone. Since our inception, Globant’s operational fundamentals anchored in a strong culture, engaged teams, and a unique delivery model have been pivotal in enabling growth, driving innovation, and delivering disruptive solutions to our clients. Now these pillars stand reinforced, ready to catalyze further expansion and boost our business moving forward. Our current global footprint is diverse and well-balanced across key dimensions. With our presence in 33 countries and several industry revenue streams, we are strategically positioned to capitalize on opportunities and navigate market fluctuations with resilience. Furthermore, we have recently enhanced our Agile Pod methodology, achieving a significant milestone by certifying almost 100% of our pods in AI.

By leveraging AI through our specialized suite of products, we have augmented our analytical prowess and accelerated decision-making, granting us a clear competitive advantage. In conjunction, we have redesigned our people and staff areas to better support our pods, enhancing our agility, and enriching the quality and creativity of our solutions to increase responsiveness to client needs. Let me share some key figures regarding our clients. Our 100 squared remains the compass for strengthening the relationships with our clients and offering more services as we grow our collaboration over time. To complement it, we have recently revamped our global account model so that we can scale up our partnerships with organizations that span multiple geographies, all while harnessing the talents of multiple studio networks.

We currently have 16 clients bringing in more than $20 million in annual revenue and we now have 311 clients that provide more than $1 million of annual revenue, 20.1% more than one year ago. Revenue from our largest client, the Walt Disney Company, remained the same quarter-over-quarter. The rest of our accounts collectively grew quarter-over-quarter by 7.1% and 21.9% year-over-year, reflecting the increasing diversity of our prime revenue sources. In Q4, 57.4% of our revenue came from North America, 22.9% came from Latin America, 17.2% from EMEA and 2.5% from APAC. When assessing business verticals, no vertical accounts for more than 22% of total revenue. We proudly work across multiple sectors, ensuring a robust and balanced business model.

Now to our headcount. As of December 31st, we were 29, 150 Globers of which 93% are IT professionals, representing an addition of 1, 541 IT professionals on a sequential basis. Today, Colombia, our largest delivery hub, represents 20% of our global workforce, while the broader Latin region accounts for 70% of Globers and India 15%. We are excited to welcome new Globers from Netherlands after the acquisition of Gut. Also, to amplify our position in Europe, we opened our first innovation hub in Berlin. Our attrition rate over the past 12 months is 8.1%, a record low, 1.4 percentage points lower quarter-over-quarter, and 8.6 percentage points lower year-over-year. As of Q4, our utilization rate stood at 80.2%, and as previously conveyed to the market, we continue to have positive net additions on an organic basis, which is a reflection of the demand we see.

To foster a thriving culture that cultivates talent and consistently provides the best experience for our teams, active listening is essential. We are happy to share that we concluded Q4 with a solid uptick in the Engagement Index, tracking pride, sense of belonging, likelihood to recommend, and desire to remain at Globant, of 2 percentage points from our previous pulse check, reaching a truly positive overall score of 84%. As Globant continues to become a more global and diverse company, our culture must evolve as well. Recognizing the need for entrepreneurship relationship building throughout our organization, we decided to add three new values to our corporate culture. Own the place inspires the entrepreneurial spirit and trust powered by autonomy while encouraging every Glober to be proactive, passionate, and committed to growing the company.

Cross-selling hero aims to foster synergy. It encourages different teams to collaborate across our services, platforms, and studio networks. With this cross-selling mindset, we build bridges and amplify the impact of our solutions. Finally, AI hero reflects the importance of AI at our company to everything we do and celebrates those that excel at applying and improving our AI capabilities both in-house and for our clients. I’d like to share a quick update on how we are leveraging AI internally. The platforms of Gino and Sensei presented to you on last quarter’s earnings call have demonstrated substantial growth. Gino, our AI human capital partner, which helps managers build teams in a conversational way, has already supported 16, 000 initiatives, 91% of which resulted successful.

Sensei, our AI assistant for tailored professional skill development, completed more than 2, 300 assessments in Q4 alone. Sensei has had a profound effect on how we skill up at Globant, with the average learning hours having increased by 40% year-over-year. And finally, some updates on our Be Kind initiative. Our Be Kind to yourself holistic strategy showed great results. Over 79% of Globers expressed that they feel well physically, mentally, and spiritually when working, showing an increase of 3 percentage points compared to our last pulse. This quarter, we were recognized on the Financial Times, Statista Diversity Leaders ranking as one of the most diverse organizations across all industries and sectors. We continue to share our Be Kind to the planet voice and sustainability best practices on the global stage.