Juan Urthiague : Thank you, Tien-Tsin. So for the first quarter, we guided $570 million, which is around 20.7% year-over-year growth. That is a 1.8% sequential decrease. That decrease, when we reported back in November, we spoke about some one-off that we had Q4 related to licenses. And then there was another impact that we got, which was the significant depreciation of the Argentinian economy and that resulted in renegotiation of contracts with some of our customers. So when we combine those two events, we ended up with a slight sequential decrease heading into Q1. Going forward after Q1, basically, we are seeing sequential growth of around 45% every quarter and that lead us to around 16.2% year-over-year growth, which is, we believe, a very strong growth for the year.
Tien Huang: Okay, now that’s clear. Thanks for going through that. And then maybe my follow-up, I’ll ask an AI question, if that’s okay. I know you mentioned 500 projects around AI. So can you comment just on average deal size, how tight is that, or disperses that, or spread out is that? I’m just curious what the deal projects look like and if it drives any pull through for other larger projects at this point.
Martin Migoya: I’ll take the first part and then we’ll let Diego. Hi, Tien-Tsin, how are you? So in the space, we are seeing like, I mean, it’s what everybody’s talking about. And that’s pretty clear. It has been pretty clear for the last quarters. Still, I believe the projects are exploratory. And we are seeing some evolution in them. And we are seeing some evolution on the demand. I think during this year at some point, we will see those large digital transformation like projects on the AI space coming. For now, companies are exploring how to use it. But I would divide it, the thing and adoption of AI into specific portions. One is how people adopted to create content on any kind of any kind. How to program faster, how to write code faster, how to write text faster.
Everybody’s using AI for that and generative AI for that, which is ideal. And of course, companies are already leveraging those things. And then the big discussion is how we start using that on the internal processes to optimize what we do inside the companies. And that’s something that we are managing at every single pot level in which an AI champion is taking care of all the AI initiatives for 100% of the projects we do for our customers. Now, I would turn it over to Diego to comment on the size of the project. So once [inaudible] which is, I think, pretty interesting.
Diego Tartara: So I think, Tien-Tsin, the most important thing is how this behaves. What we are seeing and what we are tracking is the penetration of AI into our clients and into our projects. That a project has an AI component does not mean that it’s an AI project. It’s a business project. It’s solving a that typically before was being sold by other means, now with the use of AI. That is expanding dramatically. And it’s exactly how we see it from day one. This will be everywhere. This is not like a niche for some specific type of projects. With regards to that, the growth of the AI studio is definitely by far outpacing that of the company. We are seeing, we continue to see a lot of those projects being advocated to, as of today, to productivity.
Doing what we used to do in some way, more effectively, much faster, cheaper, with the use of AI automation, content generation. But we’re seeing two different trends. The first one is we’re seeing, to see a slight increase of the type of projects that have to do with consumer facing products being impacted by some AI components. Content, just having suggestion engines, chatbots that help aiding the user, automatic generation of certain type of content for the user. The second thing we are seeing as a change is that the type of projects we’re now doing, even when it comes to the space of productivity, are becoming more complex. And this is actually very good. We are trying to solve deeper complex problems. Now the data problems, we are feeding the same type of things, but from a much more complex ecosystem.
And that becomes a data problem, which is part of the solution. The models are much more complex. We’re working afterwards with ML Ops to improve that over time. So we are seeing those type of projects maturing. So I think it’s a continuation of what we’ve been telling you since last year. This will eventually take some time, but what we see is that within this year, we will definitely see the switch into the AI being used for new business likes, like having new revenue streams, new type of interfaces, consumer facing applications, et cetera.
Arturo Langa: The next question is coming from the line of Ashwin Shirvaikar from Citi.
Ashwin Shirvaikar: Good to see you all. Hi. If I can go back to sort of the previous question, because you mentioned obviously the one-time license, you mentioned the impact of Argentina devaluation, but there’s also two acquisitions. Is there something different about the seasonality of those acquisitions perhaps? Or how would you quantify the various pieces? And if I can get you also to comment on, when you say positive change of form, what form is that currently taking? Are these discussions about bigger projects? Is the ramp faster that you’re discussing? Because there is a lot of confidence about 2Q through 4Q.
Juan Urthiague : Yes, with regards to the first question, when we look at the impact of licenses and the situation in Argentina, we estimate that between $15 million to $20 million, there is an ongoing renegotiation of contracts that we don’t know where that’s going to end in some cases. And then we had the positive impact of Gut and Iteris, both of those companies have some seasonality typically for those companies, Q4 tends to be a stronger quarter. Then you have, in the case of Iteris, they are mainly in Brazil. In the case of Gut because of what they do, they tend to have a very strong end of the year, and then a slightly lower beginning of the year, and then they become stronger. When we talk about the conversations with customers, I think that we continue to see some improvement in terms of not just talking about savings, about efficiencies, they are talking again about building new products, building new features, innovation in general.
And I think we think that’s a positive change of tone in conversations, and we have a number of customers in different sectors that are already engaging into some of those large and very attractive type of projects. That also gives us, and we see how the bookings are starting to trend in Q1. That gives us some confidence into the rest of the year as well.
Ashwin Shirvaikar: Okay. And the second question, this may be about Diego’s comment with regards to increased complexity, I guess that might apply to not just AI, but to other projects as well. Your fixed price contract is now 21% a total, year ago, 17%. And that’s a pretty good size jump in terms of how maybe you’re engaging with your clients or maybe your clients are engaging with you also. Could you provide maybe a deeper explanation of that trend?
Diego Tartara: Yes, definitely. In many occasions, when we engage with the client, and especially when we have the reinvention studios, we can now go deeper into the solution for different industries. We tend to repeat certain types of solutions and that allow us to go into richer type of contracts like committing putting some skin in the game. This brings the certainty on our client and the maturity on the relationship that allows us to increase that portion of the fixed price. And it’s still, as you see, not significant, but it’s visible. And I think it’s a good and healthy trend.
Arturo Langa: The next question comes from Tyler DuPont from Bank of America.
Tyler DuPont: Sorry about that, is that better? It’s like every year, it’s a Zoom and I still can’t figure it out. Thanks guys. So I’d be curious if we can just start by double clicking on the types of conversations you guys are having with clients as we begin 2024 with respect to visibility, in particularly with budgeting decisions as we start to firm up for the beginning part of the year. What are the types of projects that clients seem to be focusing on and are there any particular callouts worth mentioning?
Martin Migoya: Yes, I would take the first part. So I’m seeing like very much more positive conversations than a year ago and that’s remarkable to see the difference between first quarter 2023 and first quarter 2024. So that’s encouraging and that keeps us excited about the opportunities moving forward. More projects are all over the place from AI to Metaverse or spatial computing and going to traditional digital transformation or optimizations. I mean, we’re doing any kind of process in the four studio networks. On the enterprise side, we see very good growth coming from Salesforce, from ERP re-implementation, or transformation. We’re seeing good things on the cloud migration space. Then on the digital space, everything going from the traditional consumer engagement platforms to digital experiences going to AI, so on and so forth.
On the Create Studio, we are moving forward very fast into pitching pretty much every single customer we had out of the 1, 600 customers we have. I’m pretty sure that we will be able to cross-sell there and indeed, as you have seen on our last presentation, we have been pushing a lot on cross-selling so we can go from one network to the other with pretty much all our customers and that has been extremely important. And of course, the Reinvention Studios, where we play on the airline space, on the retail space, on the many different industries in which we play, we have seen demand in all of them. Talking about specific sectors that has been growing, one is healthcare or life sciences. The other one is retail and the other one is travel and leisure.
Those three sectors specifically have been pushing a lot during this quarter — during this last quarter and last year, I would say, in general. So overall, and then I let Diego to go more in-depth about the type of projects, but overall we see a much more positive environment at this same quarter last year.
