Globant (NYSE: GLOB) Second

Quarter 2024 Earnings Call

[Music]
[Music]
he [Music]
he
[Music]
[Applause]
[Music]
[Music]
oh
[Music]
he
[Music]
he [Music]
[Music]
[Music]
glan was founded uh with the
idea to bring opportunities to
people in Latin
America to create technology
and to demonstrate how good
they can be 10
years ago four friends who
dreamed of bringing techn ology
from Latin America to the world
embarked on a new Mission
getting listed on the New York
Stock Exchange we decided to
go public in essence because we
like to dream really
big we're just the the the five of
us in in a small room and so my
oh probably we
are building something different
it was a something that kept
us like with a very clear goal in
our minds and it was a way of
starting showing the brand uh to
the world right
and after years of preparation
they were ready to ring the most
iconic Bell in New York and and
finally it was a very long
process it took four years
something like that and in 2014
uh we start being public in the
New
York change the first
technological Latin American
company to go public in the
state I get emotional about that
and
that is because we have been
building this company with so
much love and so
much um compromise and so
much uh we give a lot of us in
this company on
everyday basis and it's not
something common in the in the
professional career
of Finance people you know to
go through Pro processes like
that what's next for
these Brave players what other
challenging dreams do they have
in mind we will not be happy
with less than
becoming the best company in
the world doing what we do one
thing is certain this is just the
beginning glob technology that
dares to [Music]
Delight good day and welcome
to Glow's second quarter 2024
earnings conference call I am
aruro langa investor relations
officer at glan all participants on
this call will be on listen only
mode after today's presentation
there will be an
opportunity to ask questions
kindly refrain from Raising
hands as we aim to address a
select number of questions to
assure efficiency please note
this event is being recorded and
streamed liveed on YouTube by
now you should have received
a copy of the earnings release if
you have not a copy is available
on our website investors.
glo.com our speakers
today are Martin migoya co-
founder and chief executive
officer Juan urag Chief Financial
Officer Patricia pomes Chief
Operating Officer and Diego
tartara Global Chief technology
officer before we begin I would
like to remind you that
some of the comments on our
call today may be deemed
forward-looking statements this
includes our business and
financial
Outlook and the answers to
some of your questions such
statements are subject to the
risk and uncertainties as
described
in the company's earnings
release and other filings with
the sec please note that we
follow IFRS accounting rules in
our financial statements during
our call today we will report non
IFRS or adjusted measures which
is how we Track
Performance internally and the
easiest way to compare glow
appears in the industry you will
find a Reconciliation
of IFRS and non IFRS measures
at the end of the press release
we publish on our investor
relations website announcing
this quarter's results I'd now like
to turn the call over to Martin
migoya our CEO good afternoon
everyone it's my
pleasure to be back with you hey
how are you digital Martin thank
you so much enjoy your holidays
I will take it from
here good afternoon everyone
it's my pleasure to be back with
you again I'm
giving a well deserved break to
my digital twin uh and this
quarter we are
changing the format of our call
we will be more concise in our
remarks and live
more time for discussion with
our analyst Community glob
remains committed to our
long-term growth we continue
expanding our market share at
this important time
for our industry we aim to be the
leading Innovation partner for
our customers as AI Revolution
continues to
expand I will begin with our
quarterly results hu re Revenue
totaled
$587.5 million up 18.1% year-
over-year and almost 3%
quarter over quarter this growth
was shared across
the geographical regions and
Industry verticals where we
work it included a significant
step
forward with our top customer
and our media sports and
entertainment vertical
we continue to deliver in
profitability forecasting EPS
growth while maintaining
a healthy balance sheet we're
improving our margin outlook
for the year raising
both our adjusted operating
income and our adjusted EPS
while returns and
profitability have eroded across
the IT services industry in recent
years gloman
sustained them while delivering
industry-leading growth this
quarter
also marks a special milestone
for us we have reached our 10th
anniversary as a
public company since our IPO we
have delivered over
1800% in shareholder returns
and 15x revenue growth at a
compound annual
growth rate of 29.6% this was
made possible through our
always in beta mindset our
digitally native and
entrepreneurial culture
Empower us to build longlasting
relationships with our clients
over the
short and medium term
generative AI presents us with a
massive opportunity
we haven't seen this scale since
the smartphone revolution in the
late
2000s back then users
demanded new apps to interact
with their preferred brands
companies everywhere reacted
to meet consumers demand and
kick off multi-year
digital transformation programs
many of which are ongoing
today currently we see gen tools
quickly
being adopted by users the
barrier to entry for building AI
has been lowered
but creating Enterprise class
solutions that are effective
Beyond a demo remains
a challenge for the industry
generative AI has brought
significant gains in productivity
and efficiency of development
however history has shown us
that after every massive Tech
breakthrough user demands
more from the
brands they love this pushes
companies to go further the
scope of their
ambition increases and they
need to create the expected AI
based experiences that the
users demand many of those
were imposs possible before and
they will trigger
the next generation of projects
and programs we firmly believe
that the net
effect between these Dynamics
Foster a positive future for our
industry at
gloan we acknowledge this and
we are ready to adapt and win AI
related revenues are growing
close to 130% in the first half of
2024 versus the same period
last year
during the first half of this year
we have produced over $150
million of
Revenue that included AI
workloads far above the $100
million in revenues that
we reported in November last
year this quarter globan also
presented its own AI
agents to enhance the software
development life cycle having
invested
for years in our range of AI
platforms which include Aur
magnify
navigate genexus they now form
the backbone of our new AI
agents augmented and
supervised by humans the
agents will accelerate each
stage of the development
process including product
definition backend prototyping
design code testing and code
fixing they will assist from
designing individual tasks and
interactions to
understanding users goals and
crafting experiences that
seamlessly guide them
towards the desired outcomes
we're also Keen to announce our
growth in the marketing
technology space
at the can lions International
Festival of creativity this
summer gloan presented our
new globan Gat Network it
combines our previously
acquired advertising
organizations with gut the
award-winning Global creative
agency the new network offers a
One-Stop shop for
marketers leveraging the best of
global creativity media and
Technology I'm also
pleased to announce that IDC
recognized globant as a leader
in the latest
marketscape for the media
industry I'm excited to invite you
to our annual
signature event globan Converse
this year it will take place at the
new in
Dome of the LA Clippers in Los
Angeles gloan has been behind
the technologies
that will change how Live Events
are experienced it is my
pleasure to be back
with you again and share my
passion for Innovation recently I
penned a letter to
our community to go over our
growth Vision in Greater detail
you can check
it out by accessing the QR code
on your screen and with that I'll
hand it over
to our CTO Diego tartara Diego
please thank you very much
thanks Martine and
hello everyone we are focusing
our AI expertise on clear and
effective use cases to positively
impact our clients
businesses this quarter the AI
reinvention Studio network has
recently closed large deals in
Europe and Middle
East connecting directly with
CEOs and the broader non-tech
seite Executives
globant has become a
transformation partner not only
from a technology perspective
but from an expanding
business one we continue to
lead in our AI offering over the
past year we
increased the number of data
science and AI engineering
specialists at globant by 70% so
that we can take advantage of
the
increasing AI demand we see an
excellent example of these
focused capabilities
with a leading us-based health
research institute globant is
applying Ai and
machine learning to improve
data quality and make healthare
data research ready
the upcoming phase of the work
will be to apply AI predictive
models to understand various
aspects of patient
Health Journeys among our new
AI powered Innovations is
Advanced video search a
solution we developed with
Google leveraging The Google
Cloud platform technology stack
Advanced video search
detects what is actually being
shown in any video on a frame
byf frame basis and provides
semantic search
capabilities this opens
opportunities for industry
verticals where globant is strong
such as media gaming sports
and
entertainment it's particularly
promising for our sporan
division enabling contextually
smart advertising
improving the efficiency and
monetization levels for ad
companies initial projects with
clients are
already underway in our globin
Enterprise Studio Network we
have recently Advanced
opportunities in the
evolution towards sap s4hana
that major organizations using
sap are embarking on
recently at Sapphire Sap's
signature event we announced a
partner parip with AWS to
accelerate businesses
migrations
to Sap's rise S4 Hana their
Flagship Erp Cloud offering they
also recently chose
globin to co-create an app house
one of their few partner-led
editions in the world our
relationship with Salesforce
also continues to grow as we
were recently certified as one of
its few expert level partners for
healthare and
Life Sciences globally the first
and only expert level partner for
its data
cloud offering in Latin America
as well as invited to join their
Global partner Advisory board
for data and AI in
healthcare globant is working
with a global pharmaceutical
company they came to us
because they were looking to
establish a unified approach to
accelerate AI deployment across
all of their business units and
regions we are
developing an adoption strategy
and an operating model for an AI
Center of Excellence a place
where they can
experiment and test different AI
initiatives across the organ
organization in the United States
globant has been named as a
digital transformation partner
for one of the country's largest
privately held
companies we have Blended the
expertise of 21 different Studios
into a complex
yet cohesive solution that will
execute a multi-year
transformation program the
program will focus on Legacy
technology and application
modernization Cloud
infrastructure support and
developing
new capabilities to Future prooof
their business globant is also
advancing our
capabilities in providing
solutions that bring both
business growth and
sustainability for our clients our
offering includes technologies
that analyze the potential
environmental impact of carbon
water and waste in
corporate decisions they can
therefore balance the financial
budget and carbon budget of
choosing one Energy System
from another this has already
been implemented successfully
with Rockwell Automation
the result is an ESG Focus that is
Quantified iable and impactful
and can be melded into the
corporate
decision-making process our
globant gut Network continues
to expand gut keeps
working for some of the most
beloved Brands and getting
rewarded their campaign
handshake hunt for Mercado lib
in brail received a Grand Prix at
cans in June this campaign
where contextual
Black Friday discounts popped
up on TV screens every time a
handshake which also happens
to be Mercado Li's logo was
shown is another great great
example of how technology and
creativity are
revolutionizing advertising and
creating new effective Revenue
driving opportunities gut won a
total of 21 can
lions confirming another great
year for the agency we are
excited to augment the work for
globant guts array of clients
which include coca colola Google
Stella Artois Michelob Ultra Tim
Hortons FIFA
La Liga and Mattel among many
others from two decades in
investing at the
Forefront of Technology Trends
we are determined to make our
Mark now that our investments
in areas from Enterprise to
sustainability and AI are coming
to fruition I leave you all with
Patricia pomies our coo thank
you hello everyone
happy to be back let's start with
our clients we currently have 19
clients
bringing in more than $20
million of annual revenue and
329 that provide more
than $1 million of annual
revenue 16.3% more than 1 year
ago our largest client
the Walt Disney Company grew
11.1% year over-year and 3%
quarter over quarter
among our 20 biggest accounts
the average duration of our
client relationships is over 10
years this is
Testament to globin focus on
developing true thought
partnership with our clients
executed through the quality of
our delivery as of Q2 2024 we
see better traction and growth
in every region
compared to the same quarter in
2023 our best performing region
this quarter was Europe growing
44.7% year-over-year as we
announced in our last earnings
call in May here we
were able to land the largest
deal in our company's history
made possible by our scale and
growth of our delivery
Network in the region our new
markets region grew by 25.1%
year-over-year Latin America 20
3.2% year-over-year and North
America grew by 99.7% year-
over-year in addition
globan Global Revenue stream is
the most diverse it has ever
been North America
now makes up 56.3% of our
Revenue followed by Latin
America at 23% Europe
at 16.9% and the Middle East
and APAC at 3.8% of the eight
industry verticals we
provide services for seven are
up on a year-over-year basis and
four
experiencing double- digigit
growth year-to dat all verticals
have shown
Positive Growth this quarter our
fastest growing vertical was
travel and Hospitality up
58.9% year-over-year consumer
retail and Manufacturing grew
38.7% year-over-year media and
entertainment is up 20% year-
over-year this is on the back of a
very strong performance with
our top client Cent Disney along
with our expansion and
momentum in sports with
work we're delivering in the
Middle East the bank's financial
services and insurance vertical
showed a 11.6%
increase in revenues compared
to the same period last year as
of Q2 our total
headcount is 29,100 globers up
12.2% year-over-year
of this figure 27,1 33 are it
professionals our you
ization rate is currently 79.5%
20 basis points up quarter over
quarter as we look forward our
hiring is set to increase to meet
our expanding demand our
attrition level over the last
12 months is currently at 88.6%
this is down from 11.6% in Q2
2023 finally our bind initiative
continues to develop and impact
our
communities as globant has
learned from our work fusing
sustainability with our business
we developed green it to guide
sustainable software
development we crafted a
training for sustainable design
Essentials which aims to equip
our stakeholder ecosystem with
the Knowledge and Skills
necessary to create sustainable
designs that minimize
environmental impact and
optimize Energy Efficiency we
have partnered with udemy
one of the world's largest online
learning platforms to also offer
this training to a global audience
for free
in July our corporate investment
fund globant Ventures invested
seed capital in Asteroid
Technologies a company
dedicated to improving the
quality of life for people with
various disabilities through aalo
their
inclusive technological platform
asteroid Technologies facilitates
communication for over 400,000
people
with speech disabilities
worldwide with this investment
we aim to bring these
accessibility Solutions
closer to our clients so that they
can provide a more inclusive
service to their
consumers thank you for being
with us again with that I will
hand it over to Juan to share our
financials thank you P
we are very proud of our results
today first our second quarter
results are
aligned with the guidance
showing strong growth and
profitability second we see
positive
Trends in the business pipeline
and bookings have been solid in
the first half while gen AI related
projects are
tractioning strongly providing
optimism about future demand
opportunities third
we are maintaining a strong
outlook for the year and we are
raising our adjusted margin and
EPS guide let me provide more
color second quarter results
were strong across the board
our Q2 revenues reached
$587.5 million up 18.1% year-
over-year in line with our
guidance excluding the
negative impact of Foreign
Exchange growth stood at 18.8
8% year-over-year we saw a 10%
year-on-year Revenue growth
in organic constant currency
terms in Q2 also from a
quarteron quarter growth
perspective the company posted
accelerating Trends from both a
geographic and vertical split our
pipeline remains at record highs
and booking Trends reinforce our
outlook for the year bookings in
the first half are
up 177% compared to the
second half of 2023 we closed
Q2 with an adjusted gross
profit margin of 38.1% and an
adjusted operating margin of
15.1% both of them up 10 basis
points quarter over quarter this
reflects our
ability to maintain high
profitability levels despite the
current context and currency
fluctuations our effective tax
rate stood at 20.2% for the
quarter resulting in an adjusted
net income of $
66.9 million with an 11.4%
adjusted net profit margin
adjusted diluted EPS was $151
up 11% year-over-year our
balance
sheet remains strong ending the
quarter with $180.4 million in
cash and
short-term Investments or 54.8
million in net cash with 125
million drawn from
our $725 million revolving credit
facility we have ample funding
for our
growth initiatives also as usual
given the seasonality of our
business we
expect to generate a substantial
amount of free cash flow in the
second half of 2024 looking
ahead for the remainder of
2024 we are reiterating our
guide on a constant currency
basis and raising our
margin and EPS Outlook in
organic constant currency terms
we continue to
expect approximately 10.1%
year-on-year growth for 2024
recent FX Trends
especially in latam imply a slight
increas mental FX headwind on
our Top Line however we will be
able to capture
some of this cost benefit over
the following quarters we
project Q3 2024
revenues of 611 million to $617
million with adjusted operating
margins between
15 and 16% IFRS effective
income tax rate is expected to
be in the 22 to 24%
range adjusted EPS for the third
quarter is now expected to be in
the range of
$160 to $164 assuming 44.4
million average
diluted shares for the full year
our Revenue guidance is 2 b47
million to2
b421 million unchanged at the
midpoint when adjusting for
foreign exchange
fluctuations we are forecasting
70 basis points of FX headwind
in our full year
guidance we anticipate adjusted
operating margins in the range
of 15 to
15.5% 2024 IFRS effective
income tax rate is expected to
be in the 22 to 24%
range finally our adjusted EPS is
expected to be between
$630 to $6.50 assuming 44.3
million average
diluted shares outstanding for
the year improving relative to
our previous guide
in summary we remain
encouraged for the business
with solid booking a strong
pipeline progress in AI
adoption and an improving
margin Outlook while reiterating
resilient Topline
growth thank you for your
continued support we look
forward to updating you on our
progress throughout the
[Music]
year thank you f and hi everyone
it's good to so as we go through
the question and answer section
of this call I will
first announce your name at this
point please unmute your line
and ask your question and then
please mute your line
after your question is done and
also will you kindly ask you to
limit yourself to one question
please uh with
that in mind we'll take the first
question from today from the
line of tin sing hang from JP
Morgan and please
goad thanks thank you so much
just maybe on the um I I'll start
on the Outlook
just with the uh reiteration of
the conent currency guide but
the raise it in the margin just
wanted to check the
confidence level now that we're
through the first half I know the
bookings have are explaining or
informing some of the
revenue Outlook um but how has
that changed versus uh versus
90 days ago can
you just also rehash was was
driving up the the margins as
well thank
you sure sure thank you pin for
the question um so as you said
you know we
are reiterating our costom
currency growth for the year um
at 15.9% in
dollar terms it's going to be
15.2% 15.2% the reason for that
was uh the
depreciation in Colombia and
Mexico primarily and a little bit
in Brazil as well um in terms of I
mean at the same
time that this has impacted our
Revenue guidance from last
quarter uh it has
also benefited us for for from
the cost side so on the margins
so basically part
of the increase that we are
seeing in our operating margin
and our gross
margin as well for the second
half of the year comes from
effects it also comes from a
slightly better than than
expected Revenue per head
which has grown quite nicely
this quarter H but
the back side uh of this is on on
the revenue front as we said we
are we have
to increase 40 bips the the
impact of effects for the year
yeah and regarding pipeline um
is
it remains qu quite strong and
bookings too so um we are um in
good confidence
of of the of the guidance that we
uh that we provided
teaching thank you tinan the
next question com from the line
of Jim Schneider from Goldman
Sachs Jim please
go ahead your line is open good
evening thanks for taking my
question I was wondering if you
can
maybe expand Martine on your
comments about gen projects
about among
corporates are taking longer to
scale into large scale uh Beyond
proof of
concept is that uh more a
function of the lack of clarity
about how to scale
uh or maybe the the lack of uh
data stack uh comparability or
or other uh
issues in terms of things that
need to be resolved on the back
end before bigger
Transformations can be
undertaken
and can maybe talk about any of
the larger projects you've seen
in generative Ai and to what
extent uh you
know how many of those are
there and what is the magnitude
in terms of scale Revenue thank
you Jim thank you so much for
the question um I will answer
the first part
and then I will let it to Diego to
answer um we have a we have
seen a a
pretty good growth in terms of
our AI related projects uh as I
mentioned uh
like a 130% growth both
approximately uh year over year
and um the thing about
the projects and many of them
are still on on their you know
they're they're still analyzing
them are still trying to
kind of generate the lab around
AI um to understand use cases
and many
of the companies and many of
our customers are still in that
stage um the thing is when you
are implementing an AI
project uh for a demo it really
looks great I mean for demo on
social media it
really looks great and it's very
easy now when you want to take
it to Enterprise class as I
mentioned is
disappointingly much more
complex and and that requires
as you mentioned data
projects on the back uh it
requires a lot of supervision and
after training
because the models tends to be
hable tends to be a lot of you
know a lot of
the answers that the models
give can uh be very misleading if
if if they are not
well curated so those process
those processes are long H by by
definition so
um we need to remember when
when the first
um the Apple the the first App
Store uh for from Apple uh born
in 2005 and then
only in 200 N or 10 the big you
know um
um digital transformation
projects started to happen that
was very long
compared to what I think is
going to be this time but
remember this new technology
has only a year and a half in
the in the in the state that you
are seeing it right now um so I
believe um
there's still time for corporations
to understand the use cases of
course we
are helping them in many of the
in many of the situations and of
course we are starting to to see
some of them starting
to ramp up plans for doing uh
much longer term investments
on that um but I
don't think it will be an easy
process uh and I think it will
take a lot of
time and understanding on
where to apply it before they go
they go you know full
into the into the investment but
Diego do you want to
complement on that yeah
sure um so uh one of the things
uh we being seen is I want to
separate things
between gen AI which is the new
uh kingom the block and the
traditional AI
or marchine learning uh we've
seen an increase on the projects
of course on both sides there
there's a positive
trend in terms of how we are
being approached from our
clients we're now implementing
on both sides of course uh
projects that are meant to be
you know live and productive
this is not an approach I want to
experiment with this
and uh we've done a ton of
things from uh dealing with data
uh for example
pharmaceutical uh companies uh
to curate and label that data
with AI and
especially with geni this is
actually productive a lot of
studies are being conducted on
top of that uh to
streamline uh operations on uh
uh copper and uh gold mining uh
uh company and now
we're doing a 360 sustainability
calculator and Optimizer with AI
models
for it so we're doing a ton of
things that are actually
productive I would like to see a
lot more ah in fact I
didn't mention this which I think
it's great um we mentioned that
we're working with agents for uh
software development
we have also implemented
agents for two major real estate
companies to streamline all their
operations so and
this is this is not PC this is
actually uh live so again uh
maybe in terms of uh
the sheer volume of this uh I
would like to see much more but
the trend in terms
of what we are doing and how
we are approach for our clients I
see a super positive uh
scenario also I think that you
mentioned something about the
talent and I I want
to I mean you do you remember
that in the last turning call we
also explained
is that we have been upskilling
and reskilling most of the
globers and in 2023 we start ify
all the globers in the
AI so I think that is really
important we are more than
prepared for for what is coming
in terms of the talent and in
terms of the recruiting and
where we are where we're
looking that Talent so I think this
really important is for us is
that all the companies having
this AI mindset and we are
following what the clients are
needing thank you Jim and thank
you batt uh the next question
comes from the line of Maggie
Nolan from William Blair
Maggie please go ahead Hi how
are you thank you for taking my
question so you mentioned that
Revenue per head is improving
or had grown maybe year-over-
year is pricing power strong
right now or are you
experiencing any competitive
Dynamics um in the pricing
environment maybe just
overall how would you
characterize the environment
compared to
historical stff these days but we
were able to achieve you know
some low single digit pricing
growth com and we combine
that with uh you know um a
different mix in terms of services
we've been growing
nicely our gut creative network
uh which has a higher Revenue
per head as well
and also you know with some of
the deals that we are delivering
in Europe we were able to also
increase our on-site
presence so the combination of
those factors is giving you you
almost 9% uh
year byye Revenue perhe head
growth it's a tough Market but
we're
still show being able to get some
positive pricing in some of our
customers and
relationships thank you Maggie
the next question comes from
the line of Brian Bergen from TD
Cohen Brian please go
ahead hey guys thanks I appre
me um I want to ask about gen
and delivery can
you comment on the latest
impacts you're seeing on
engineering productivity and
really how client discussions are
evolving and the appetite
around that um particularly if
you could include how AI agents
and the Contracting Dynamics
around those work uh sure hi um
so uh separate uh
again uh I want to separate
things uh on the co-pilot side of
things I think
there's a a ton of public
information about that the result
the actual result what you see
on on the field in
productive teams large teams
with large codebase is actually
the impact is uh a lot less than
what it's being uh
communicated at the very very
beginning like 50% of the code is
being generated by AI but the
impact definitely is there
um the second aspect which is
uh Asian this is actually uh super
new um and uh
and uh it has different type of
impacts depending on the task
you're wanting to
automate remember that agents
fully automates flows so it's not
about uh
helping uh one individual and
and making that individual uh
more efficient on the
agent of of things uh we're
seeing with super early test uh
that we've uh been
conducting pretty amazing
results like uh what we've been
developing we're seeing uh
results that are above the
benchmarks uh we seeing in the
market uh so we are super super
confident that
this will this will bring a a very
very nice results for team
especially for
some time uh type of tasks like
uh bu fixing as an example uh
too early to to
commit to a number but uh so
far it looks uh very
promising thank you Brian for
the question uh the next
question comes from the lines of
Jason C cerber from the
from Bank of America Jason
please go ahead thanks guys um
I just had a two-part question on
head count um the
first part is do you expect uh
positive growth in billable heads
in the second half of the year I
think first half was
kind of flattish and then the
second part is just on the second
quarter headcount numbers just
looking quarter
over quarter I think India was up
quite a bit High single digits us
was actually down about 10% so
it was just curious if
there were any call outs um for
those
regions so yes we are expecting
to continue with sequential
growth in terms
of headcount you know in
second quarter uh it
professionals grew by about 200
uh
you know net additions and we
expect you know to continue
having positive net
additions for for the rest of the
year in terms of regions uh we
have seen uh
we are seeing uh Argentina
Colombia and and and um India
as well
showing good growth and it's a
reflection you know of our
positioning
in those markets and you know
us being the the you know the
most relevant player in Latin
America and with all the
geopolitical noise that is
happening around the world
Latin America continues to be a
great place to be and you know
we are uh you know the
company that somehow leads in
that market
um The Case of the US uh you
know it it's out of a small base
and it buries
you know by quarter but there's
nothing really too call out thank
you thank you Jason the next
question comes from the line of
Jonathan Lee from Guggenheim
Jonathan please go ahead your
line is open great thanks for
taking my question can you help
unpack what you're seeing
in the top five customer cohort
given some of the sequential
softness in the quarter and how
are you thinking about the
trajectory of that customer
basee
for the remainder of the year
and perhaps into 25 which was
the cohort Jonathan that
you were talking about top five
top five top okay so when you
look at the top one which is
Disney it showed really good
numbers I mean sequential
growth uh also like 11% year by-
ear growth and actually
we are expecting a strong
second half of the year so on the
top one definitely you know a
good news uh when you look at
225 there's actually one
customer in the Professional
Services sector that uh you
know as as we spoke several
times over the last few quarters
professional sectors uh Prof
Professional Services
sector was one of the lards
among the different industries
that we have and
what you see in that cohort of 2
to5 is actually explained by that
but then if you look at 6 to 10 if
you look at 11 to
the end uh you are also going to
see you know a better better
numbers over there
so nothing in particular uh to to
be really concerned it's just one
customer within one industry
that we have been
saying for quite a while that it's
still not recovering as we would
like thank you Jonathan the next
question come comes from line
of Divia goyal from Scotia Bank
Divia please go
ahead your line is open good
evening everyone uh Patricia
you provided some color on
different verticals and the
growth across different regions
could you provide a
little bit more color as to how do
you see the travel and
Hospitality segment broadly
transitioning and which are
some
of the verticals where you
anticipate growth in a go
forward basis thank you hi thank
you for your question yes we
are seeing the mean many of the
verticals that we have in Globe
and are growing really fast and
of course
hospitality and and travel has
been one of the of the biggest
one that is growing also we are
seeing in media and
entertainment a a growth there
also and many others but the
most interesting thing is that
what we are having um it's
it's cutting all you hear me okay
okay sorry um what we are
seeing probably is
that in many of the industry the
clients that we have there we
have been a
relationship with them with the
main top customers for more
than 10 years in many of the
industries so what we are
building with there is a is a
travel and is um it's an
experience together on how
they want to change the the
contact with their customers and
experience so we are getting
very deep in that in that
expertise and in with the studios
that we have the reinvention
and Studios we have been
working very closely with the
clients in terms of identifying
what are their needs and what
how we can help
them so um as we were
mentioning before I mean the
seven Industries where we are
we are seeing many change
going on and growing and we
contines growing in in in most of
the industry the where we are if
I may add a a couple of
comments um we are growing
strongly on the specifically
on the travel and Hospitality uh
vertical that you mentioned uh
because
of uh mainly two things uh uh
one is uh you know we close and
we be mentioning
this a big uh transformational
deal for a large Airline uh in
Europe uh that's
uh that's one of the key uh
drivers our Airline studio is uh is
actually super
super solid in the segment and
the second one has to do with
connected experiences that's in
latest uh AI
renion Studio that we launch uh
and and a lot of the business we
have in Mena uh
is actually from uh the
hospitality vertical so that
explains uh uh the
growth but it's super tied to how
solid glob glob in those specific
vertical then maybe to
compliment on on media
entertainment your we also
going to see uh you know
further growth as
Disney continues to perform as
well as our uh you know
business within Sports
uh we are also seeing good
momentum in uh consumer and
Retail uh that that has
been also uh delivering good
growth and on the bfsi you're
also going to see
some growth the two only
industries that I mean
Professional Services as we said
before that's not showing
growth and and technology and
Telecommunications has actually
stabilized I mean we we did
show some growth in kitu but
basically coming out of several
quarters of
underperformance uh we can say
you know this is the second
quarter that we see some
positive news there so
technology
and Telecommunications have
stabilized
Diva thank you diaa the next
question comes from the line of
Arvin ramani from Piper Sandler
Arvin please go
ahead hey so takeing my
question you know just one
quick discrete question I wanted
to ask was um um you know
organic
constant currency um target for
the year uh that you have now
versus organic constant
currency you had three months
back but just just a discrete
question but the bigger question
I have is also on the um
you know overall market right I
mean now it's been you know
two three years now where Lan's
you know been able to grow
in idiosyncratic way right like in
the rest of the industry is kind of
languished vibrating
at like plus 3 4% minus 3 4% but
you Global it's been like three
years now where you've been
able to clearly
outpace that that growth um
and while I'm not looking for any
kind of guidance in 2025 you
know what is the view of the
industry growth rates starting to
improve right or are we going to
be in this permanent um sort of
zero to five
for the broader industry so I'll
take the first part and then I'll
ask Martin to to complement
you know uh basically the
number organic constant the the
growth you know in terms of
organic constant currency
growth for uh that we
[Music]
just give us a second okay we
are back
um one if if you don't mind
starting from think I wasn't able
to hear any of it yeah I I will I
will start again so
when you look at our constant
currency growth uh for the
quarter sorry for the
year uh we we are at 10.1%
constant currency growth
organic growth which is
the same number that we
provided back in May when you
look at the total the total
growth number uh this quarter
for the year we are guiding
15.2% with 70 basis point uh of
impact
back so 15.9 constant currency
uh growth back in in in may we
guided
15.6% with uh 30 basis points of
impact so basically the change is
40 basis
points of additional effect effect
impact which is aligned with
what is
happening in Mexico Colombia
and a little bit in Brazil the good
part of
that impact is that we were able
to increase our operating income
guidance
for the year you know we moved
out of 14 and a half to 15 and a
half we're now at
15 to 15.5% for the year and
also the guidance for the third
quarter and and and
basically the same one for for
the fourth quarter the implied
guidance there is 15 to 16% so
uh that's the
overall uh picture in terms of
effects impacts in this quarter
and Martin if you want to talk a
little bit no the the
the main reason I think why the
industry is let's say plus 2 minus
2 or minus five and uh
we're still growing you know at
very healthy rates is that the
decisions that we took in the
past I mean when when we
say that the vision we have is to
try to leverage our relationships
and being
able to sell every every day
more things to our beloved
customers um is is uh
this is extremely powerful when
you when you take it in the long
run and we have been executing
that in a pretty
consistent manner this the
second reason is that we have
been expanding into markets in
which uh we were not present
before so U now we are entering
you know a big time into the
Middle East uh into
some other countries in in
Oceania in in Asia and that is
providing us like an
additional you know uh fuel for
growth that we didn't have
before so when you
add up those two things plus the
organic growth of our largest
customers uh which
is still very healthy uh then you
have a performance which is
pretty different
from the rest another way to
understand that could be to say
that gloan is uh
gaining market share well the
market is not growing and you're
still growing then you're winning
market share and
this is extremely important uh
for us uh and also the revenue
per head when you see the
revenue per head that gloan
that
Juan explained before you see it
increasing to to very good and
very healthy levels that it's a
testimony of
the value that we are delivering
to our customers on top of all
that a very
strong growth on the AI space
that we have been preparing for
the last uh 10 years so I think
that's a good summary
of of the reasons why globan is
growing fueled by a very
powerful Culture by uh
an an a very high ambition of
reinvent the way that
technology is being created
uh reent the way that we
connect with our globers with
our customers with our all our
stakeholders so we are
extremely
happy with the performance and
we will keep on um you know
hopefully um driving
that kind of performance for
next year too perfect thank you
and uh just just
one quick one if I can is um is
also you had bookings growth of
17% which is faster than than
kind of organic
constant currency Revenue
growth um and I know bookings
comes with various duration but
but the the faster sort of
booking does that suggest that
that um kind of next year you
should be seeing acceleration in
the business on the on
the revenue side I think uh it's
still early uh you know to talk
about
2025 in in detail I mean there's a
lot of things going on around the
world elections rates and and a
lot of things
that will have somehow an
impact I think that it's good to
see sequential growth
into Q3 into Q4 uh and also of
course during Q2 as well so I
think it's a we
need to focus on that while we
continue to comp to to increase
to strengthen our service
offering to keep on expanding
globally to be able to tap into
new markets and and and I think
that will help us to continue
delivering
industry-leading growth but you
know let's wait a little bit to put
numbers for next
year thank you Arvin uh just as a
reminder please uh limit yourself
to one question please um the
next question
come from the line of Sean
Kennedy from mitso Sean please
go ahead hi everyone thanks for
taking my
question so there were reports
that a large Sports organization
was looking to raise a significant
amount of money to
enhance and expand its direct to
Consumer streaming service so
my question is broadly speaking
is that a a
theme that you're seeing in
digital experiences across your
customers a second investment
wave in TTC
streaming um I we we are seeing
um like
a lot of things happening on the
entertainment space there's a
lot of companies trying to reent
the way they
connect with their consumers uh
and we're seeing that um
specifically on the
on the subject that you
mentioned I have no specific
answer to give you but yes
uh in General on the media and
entertainment space a lot of
things are happening I know
Diego if you want to to
add up on that sure the director
consumer within the media and
entertainment uh you know it's
it's a
it's a trend Disney is uh doing
exactly exactly that uh even
though they are
also consolidating uh different
channels within the sports yes
direct to Consumer
it is a trend uh it's some this is
actually uh a public uh many uh
different uh Sports organizations
are exploring that uh FIFA of
course being one of them and
it's uh one of our
clients so Formula 1 Formula
Formula One to so yes director
consor is that my my
only question mark on that and
this is actually I it's uh uh we
still have to
see is that the month looks for
consolidation uh and uh so so
we'll see
how those things uh play
together great thank you nice
job on the
quarter thank you very much the
next question comes from the
line of surrender th from jeffre s
please go ahead your line is
open um thank you uh Diego this
question
is for you actually just following
up on earlier commentary about
just kind of the productivity
improvements and some
of your internal AI initiatives you
mentioned the disconnect
between what's kind of in the
public space between what
you're seeing um can you
provide any incremental color
there in terms of what
benchmarks or measurements
that you've done I mean I
remember when we talked about
it last year you talked about
potentially getting to about a
15% productivity Improvement
so just any color
would yes that is correct so so
but but actually uh when I say
those numbers I
was uh like everyone was
looking for like everyone else is
saying 50% now
everyone is uh talking about
around those numbers uh for
productive environment so there
I don't want to be
super technical and and bore
everyone but uh there's there's
there's not only
it's not only a measurement of
performance of the individual
increased performance of the
individual is like
Collective performance and what
it means uh uh for the teams uh
we seen Improvement uh major
Improvement in uh
more Junior uh type of
developers and uh more senior
type of developers not quite
relying on on those tools uh so
heavily but the problem with
Junior developers
is that it brings very good
quality code compared to what
they would have done
without those tools but if you
see it uh as a unit like it's like a
car spare
part it looks super good but it
doesn't Feit the car um so so it's
kind of a
it's kind of tricky what's
important to us it's overall team
performance it's not individual
and uh we're measuring
like uh things that when you put
all of that together they don't
necessarily add up uh I think uh
with regards to that
agents play uh play better as
they fully
optimize uh complete flows and
and which is what we're actually
trying to do and what's
interesting um numbers like I
said I can confirm that it's uh for
developers which is uh typically
uh what
you what you're trying to
explore in for for code
generation uh the tooling will
give you an improve around uh
it's actually even lower than 15%
uh tools such as uh uh co-pilots
but for some
individual tasks such as uh unit
testing is super high like 40%
Improvement but
for that specific type of task so
yes I can I can confirm uh what
we started
talking uh a few quarters back
um and uh still uh I think there's
a there's a lot
of uh room uh for improvement
uh towards the future we'll see
how it develops
we're pretty confident that we're
headed in the right way in the
right direction
sorry thank you very much
serender the next question
comes from the line of lardos
from UBS Lardo please go
ahead I haveone congrats on the
great results so my question is
regarding the
utilization rate we saw another
Improvement quarter on quarter
uh and also an impressive uh
reduction on the
attrition rate right what we've
been seen with several of our
the companies
we cover here such as is an
improvement overall in N
Services uh do you do you
think there could be a at some
point could be a an increase
back again on the
attrition rate or the demand for
for developers how is your idol
capacity
regarding that what do you
expect for for the second half of
25 in that sense
thank you yes sorry um well
what we are seeing
right now in terms of the region
is as you you were mention is is
pretty low right now of of course
it has been
raising a little from the last
quarter but we are still in in in
very low rates
um what we are seeing is that
the demand is still very very
high for us so we continues
hiring in many of the
countries that ju explained
before uh we are very strong in
latam as we have been in the
last uh couple of years and of
course uh India is another of the
of the places that where we're
growing in terms of the the
people even what we are
seeing for for the rest of the
year is much pretty stable
numbers and probably I mean
we we of course the the market
is
still growing as you mentioned
but we have a great culture the
people is staying with uh very
happy in in all the
the the the polls and the
interviews that we are making
with our Glovers and the culture
that we have is really
appealing for the new
generations and the engineers
and talent and designers so I
think that From globan
perspective
I mean these numbers I mean
are pretty stable and and and
we continues doing different
kind of things in order to to
have the same kind of of
numbers that you are seeing
now thank you Le the next
question come from the line of T
capis from tho please
go ahead hi guys uh thanks a lot
for for the question I have a
followup on the on
the AI part uh just to get it clear
uh I my guess from what you
guys said is that
it's it's a long cycle right so you
have data Migra migration you
have uh test
approving Etc just want to
understand a little bit better
how you envision the the cycle is
it like a threee it's a
fiveyear cycle how what needs
to happen for um the budgets to
ramp up is it just
about testing and getting a
concept of hypothesis proven
and then there's a
ramp up is it a data like kind of
bottleneck NE like the data
bottleneck
is as bad as it was in the
previous cycle I don't know if
you could um provide us some
details there just to
get a little bit better framework
of the cycle there it would be
great yeah I
would take the first part and
then it will let you go um look
these projects I
think the most time now is being
spent on on finding the use
cases and finding
and validating the use cases
once the Thea the use cases are
validated then it
takes a little bit longer than
than what everybody expects
using you know
regularly using chpt right I mean
but it takes much longer to to to
have an
Enterprise grade uh application
based on on that information
also data projects
are are projects that um for
many years has been delayed
and everybody was
talking about AI but really not
getting real effects on that so I
think data
projects are being accelerated
these days um I don't think
they're a bottleneck I think it's
more like a
maturity process that needs to
go through the corporation until
the use case is detected uh the
use case is
proven and then the use case is
scaled and and that may take
you know maybe one
year two years we don't know
exactly um following other other
Cycles it has take
much longer but I think these
Cycles will be much much
shorter than that but still it's
unclear when those things
going to start to happen at a
larger scale now uh we are
ended up using AI in
pretty much everything we do
and is is we have been using it
in the past and now even more
with the agents with the
acceleration platforms that we
have with the automation of
many of the of the
stuffing processes that we have
at globan where to how to
connect people with projects so I
think in the same way
we are doing at global there
must be and by the way we
launched um AI reinvention
Studios for many of
the industries in which we
operate and the aim of these AI
reinvention Studios
is very simple and clear which is
we need to provide to our
customers
proactively a list of how to use
AI in every single area of that
specific
industry and that's a that's a
mandate we have in our
company that's a mandate that
Diego has as a CTO of the
company
to keep on creating those use
cases and to accelerate our
customers to be more productive
the sooner the better but
Diego do you want to expand on
that yeah sure um so so going
back to the original question
there's a there's a yes when it
comes to uh data not not as a
blocker but as a first step uh uh
towards uh uh
uh actually embracing more AI
uh related projects uh lots of our
clients are
actually taking care of that so
we've been seeing an increase
on the data architecture demand
and this is for
covering their their whole data
strategy uh I think it it was uh
lots of
companies did not take good
care uh of that aspect and they
are now identifying
the need so so that's uh that's a
first the first thing then uh also
lots of
customer engag and we've been
talking about that and when
when we used to say you know
the PC's exploratory work etc
etc is uh it had to do a lot with
the newer Technologies like gen
how do I use
this I see that it's super powerful
how do I make it a productive
tool an Enterprise grade tool and
that for that
we have uh a solution and an
approach and a goto Market
approach but the most
interesting thing is actually what
Martin said which is identifying
industry Solutions what are the
things I
mean given this technology
ology if I think on a certain ver
vertical
landscape what are the
opportunities there what can I
optimize how can I capture my
more clients how can I change
my loyalty program how how can
I optimize my uh marketing
campaigns how
can I change my acquisition
funnel so there's a lot of things
uh and every
single industry has a a ton of
problems right they spend a lot
of money I don't know
pharmaceutical companies
spend a a
lot of money in uh uh research
and attrition uh uh um for
experimentation
and we can now address those
industry pains with AI Solutions
this is a this
is a very powerful tool so that's
what uh we're doing excellent
thank you so much thank
you very much T so that will be
all for the Q&A section um today
thank you all
for joining and now I will hand it
off to from for some closing
remarks so thank you very much
thank you
very much everyone uh thank
you for support and coverage
and looking forward to see you
next quarter cheers bye-bye
thank you bye bye [Music]
[Music]
- Generated with https://kome.ai