Globant S.A. (NYSE:GLOB) Q2 2023 Earnings Call Transcript

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Patricia Pomies: Okay. Thank you for your question. Well, headcount in the first half of the year has been a little down, but now the second half has appeared like we are going to keep growing. Utilization has been — we have been working a lot on that in terms of keeping it up in the last in the last couple of months. So, I think that what we are going to expect for the next half of the year is that we are going to rise the headcount. We have very strong pipeline — pipeline as Martin was mentioning. The partnership that we are achieving with our main customers are longer, so I think that we can be confident that we are going to keep the — the attrition is the lowest in the history in Globant, so I think that, that is also another very good indicator that we are going to the correct path for the second half. Thank you.

Martin Migoya: Thank you, Tien-Tsin.

Juan Urthiague: Thank you.

Arturo Langa: Thank you, Tien-Tsin. The next question comes from Ashwin Shirvaikar from Citi. Ashwin, please go ahead. Your line is open.

Ashwin Shirvaikar: Thank you, and yeah, good morning.

Martin Migoya: Good morning.

Ashwin Shirvaikar: Yeah, yeah. I wanted to ask about — I mean, obviously, good results and good use of balance sheet as well. Could you help separate out organic versus inorganic sort of the contribution that you expect from Pentalog? And just beyond also the numerical contribution, if you could talk a little bit about the specific capabilities that you can layer on because of Pentalog? Maybe just get a little bit deeper into that as well, remind us.

Juan Urthiague: So, thank you, Ashwin. Yes, look for the year, the new guidance is 17.6% year-over-year growth, which is again extremely strong when you look into our peers, most of our peers were from minus 12% to about 4% positive. So we are talking a significant higher-growth for Globant. If we want to decompose that, we estimated that organic growth is about 11.3%, 11.4% for the year, and the rest comes from the acquisitions that we did early this year and late last year. And then specifically talking about Pentalog, we are estimating the full year impact of Pentalog at about 180 basis points of growth year-over-year. which is about $33 million, $34 million, $35 million of revenues at this point in time. So that’s what we are including for the rest of the year.

Martin Migoya: Yeah. And regarding the second part of the question, we’re seeing Pentalog in two different dimensions. The first one is geography, and we’re expanding into — with much bigger operations now in France, in Germany and also expanding into other delivery locations like we didn’t have before or we have it smaller, like Poland, and now we have about — sorry, Romania, like we have now more than 1,000 people in Romania. We are expanded now into Vietnam, into Morocco into other destinations we were not there. And I will let Diego to explain the technological things that Pentalog are bringing to the table.

Diego Tartara: So Pentalog, actually, in terms of their delivery, I think the key aspect they have and they bring to the table for Globant, it has to do with the use of their talent. They have tooling in an approach to the delivery model that is super interesting and very innovative that we are working together now to incorporate at a full scale in Globant. In terms of capabilities, I think the most important aspect, like Martin said, is reaching out to their client base and opening up new regions, not only in terms of delivery, but in terms of clients to bring our expertise, and that’s already happening.

Ashwin Shirvaikar: Got it. Sorry, go ahead.

Patricia Pomies: No, that’s okay. The integration has been really great with Pentalog and was really smooth. So we have been able to start working with their clients and cross-selling their — all the capabilities that Globant has. So I think that is a really important thing that about this acquisition, this was really smooth and was past. So we can see the results very, very shortly.

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