Globant SA (GLOB) 2018 Q3 法說會逐字稿

Good afternoon, and welcome to the Globant Third Quarter 2018 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Paula Conde, Investor Relations Officer. Please go ahead.

Thanks, operator, and thank you all for joining us today on our call to review our 2018 third quarter financial results.

By now, you should have received a copy of the earnings release. If you have not, a copy is available on our website, investors.globant.com.

Our speakers today are Martín Migoya, Chief Executive Officer; Juan Urthiague, Chief Financial Officer; and Alejandro Scannapieco, Globant's EVP and General Manager of U.S. East region.

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 risks 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 Globant to our peers in the industry. You will find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published on our Investor Relations website announcing this quarter results.

I'd like now to turn the call over to Martín Migoya, our CEO.

Thank you, Paula. Hi, everybody, and thanks for joining us today.

I'm pleased to be here to share with you some updates on our business and financial performance for the 3 months ended September 30, 2018. At the end of the call, Juan will share with you our outlook for Q4 2018. Later on, we will open up to questions with Alejandro as well.

Q3 2018 was another record quarter for Globant, closing at $134.6 million in revenue and a robust 22.7% year-over-year growth. This solid growth was mainly driven by our top 10 accounts. They delivered revenue growth of 37.8% over the third quarter of 2017 and 7.9% sequentially.

As in previous periods, we continue to enlarge our relationship with our key customers. We now have 90 accounts over $1 million in annual revenues compared to 78 one year ago. Additionally, during the last 12 months, we have 9 accounts about $10 million in annual revenues compared to 7 accounts for the same period last year.

Finally, I'm proud to announce that we have reached our first $50 million account on the last 12-month basis. Later, during the call, Juan will share more details on our financial performance.

Now let me go over some of the news and highlights of the past quarter. Q3 has seen an amazing period in regards to our performance, deeply correlated to the market opportunity we continue to see. As IDC points out, by 2022, over 60% of the global GDP will be digitalized, with growth in every industry driven by digital-enhanced offerings, operations and relationships. It will drive almost $7 trillion in IT-related spending from 2019 through 2022.

On top of that, by 2024, AI-enabled user interfaces and process automation will replace 1/3 of today's screen-based apps. By 2022, 30% of enterprises will use conversational speech technology for customer engagement. This means that to succeed in this era, organizations need to completely transform. This transformation should start with their culture and business strategy up to their processes and go-to-market approach.

As a pure play in the digital and cognitive arena, we are consistently showing that we are the right partner to help our customers drive their transformations. We do this with a model that includes innovation, entrepreneurship, digital technologies, AI and agility.

To help our customers stay relevant in front of this digital and cognitive era, during the past months, we conducted several thought leadership initiatives. In September, we organized CONVERGE in Colombia focused on augmented intelligence. Speakers from Google, Amazon, Microsoft and WorkFusion, among others, shared their innovation and views with our Latin American customer base.

In October, we hosted CONVERGE in New York. It was an amazing event to go deeper into the cognitive revolution, analyzing the ethics implications of some real case implementations. Speakers included Scott McNealy, Co-Founder of Sun Microsystems; Prakash Kota, CIO of Autodesk; and Jeff Ma from the famous MIT Blackjack Team.

We also launched our 2018 Artificial Intelligence Technology Business Guide, a playbook for organizations considering investing in AI. We surveyed more than 650 U.S. senior-level decision-makers about current AI beliefs and goals and how ready they are to implement the technology. The report debunked common AI myths to offer a modern perspective for how the technology can be effective for businesses. To read it, download it from aireport.globant.com.

Complementing this, we published a new edition of the Sentinel Report. This market trend study analyzes several groundbreaking technologies, including hyperconnectivity, extended reality and robotics. It describes the implications, potential uses and their future evolution. For more information, visit sentinel.globant.com.

We are happy to share with you a new partnership that will help us deliver better solutions to our customers. We have started to work with Wayin, a real-time digital marketing software company, cofounded by Scott McNealy, former CEO of Sun Microsystems. Globant will help Wayin create enhanced services for large companies. In turn, Wayin will provide Globant with a robust marketing platform to strengthen digital strategy capabilities and marketing efforts. Together, both organizations will be able to create improved marketing campaigns for customers across digital environment.

All these initiatives are combining our strong positioning as leaders in the digital and cognitive transformation. Let me share with you some of our customers' updates per region.

In Latin America, we continued to see strong growth in our business coverage, focusing on countries like Argentina, Chile, Colombia and Mexico. Let me share some of our projects. During Q3, we released the mobile and digital platform from the Youth Olympic Games 2018. We worked on the official platform of the games to include personalized and interactive content, adding gamification to boost attendance engagement.

Also for a leading financial organization, Globant has worked on a series of AI solutions to improve internal processes. Lastly, we are helping a leading pharmaceutical company in its digital strategy applied to dermatology. Our AI and UX studios are working on the development of the diagnostic tool that leverage artificial intelligence and image processing to identify different skin conditions accurately.

In Europe, we're working on a wide variety of strategic programs. We're helping one of the leading retailers in the world to build a more scalable API platform. Also for a global leading financial institution, we're working on the evolution of a mobile product that can scale to millions of consumers while being used across several countries, regulatory environments and client journeys.

In the U.S., we have engaged in a major long-term deal with some of our key accounts. As an example, we have been working for MTA for more than 1 year in one of its most strategic digital projects. We have also started to work with a multinational professional services firm in several data initiatives as part of the data transformation agenda. Additionally, we have incorporated some important logos to our portfolio. Globant is now working with Uber, supporting the deployment and integration of Uber Eats. We're also proud to have added FanDuel to our roster of industry-leading clients. Owned by Paddy Power Betfair, FanDuel is the leader among daily fantasy sports providers and an important brand in the recently legalized sport betting market in the U.S.

In regards to Services over Platforms, I'm proud to share that we have won 2 W3 Gold Star Awards for our StarMeUp operating system and platform. These recognitions were given in the Mobile Apps/Sites for Business and Mobile Apps/Sites for Productivity categories. The world recognized StarMeUp for empowering employees to engage in meaningful, timely social interactions with each other through a robust application.

In summary, it emphasized how StarMeUp is on the cutting edge of transforming organizational culture. As a reflection of the platform power, we continue to see strong demand for it. During the past month, our portfolio kept expanding, including several new logos such as British American Tobacco, Savvant and Danone's Early Life Nutrition and Advanced Medical Nutrition departments.

Today, I'm proud to introduce to you Globant Minds, a new revolutionary product that comes to complement our Services over Platforms offering. Globant Minds is a new way to deliver cognitive transformation. It works on top of the massive amount of existing AI algorithms and RPA solutions and complement them, providing to our customers a simplified path to leverage AI.

Globant Minds will help us provide value-added solutions for our customers by maintaining our platform up-to-date with every new algorithm and AI system out there. We're really excited about the potential of this platform, and it will help deliver cognitive solutions in a rapid and efficient manner.

To conclude, the demand environment continues to be healthy and our pipeline strong. Companies all over the world need to change and rethink their strategies, their businesses and their go-to-market approach at a faster pace. As a pure play in the digital and cognitive fields, we are in the best position to help them go through these processes in a successful manner. We remain optimistic about our ability to deliver sustainable growth in the future. Our unique model and organizational seamless life cycle, together with our studios, Service over Platforms and 50-Squared program deeply differentiates us and makes us an ideal partner.

With that, I'll turn the call over to Juan Urthiague, our CFO, for further detail financial review on the third quarter 2018 and also to provide guidance for Q4 2018.

Juan, please. Thank you very much.

Thanks, Martín, and good afternoon, everyone. Let me start by summarizing the results of our third quarter and 9 months ended September 30, 2018.

I will then discuss our guidance for the fourth quarter of 2018. I am very pleased with our third quarter financial performance. During this quarter, we delivered strong revenue growth, improved gross and operating margins and generated significant cash. Our revenues came in at a new record level of $134.6 million, 22.7% over third quarter of last year and 5.2% over Q2 2018.

During Q3 2018, Disney was once again our largest customer. Our relationship with them continues to be strong and healthy, with several opportunities in different business lines. Revenues for top 10 customers increased 37.8% over third quarter of 2017 and 7.9% sequentially.

We are excited with the fact that high potential accounts are scaling up and becoming large and meaningful within our customer portfolio. During the last 12 months ended September 30, 2018, we rendered services to 344 customers, 90 of which accounted for more than $1 million in annual revenue compared to 78 customers 1 year ago.

During the last 12 months, we also had 9 accounts over $10 million in annual revenues compared to just 7 accounts for the same period last year and 5 accounts above $20 million in annual revenues compared to 3 for the same period last year. We continue to grow the size of our accounts, aligned with our 50-Squared strategy.

In terms of industry diversification, we remain pretty much balanced among the different verticals that we serve. Our top 3 verticals for this quarter were media and entertainment with 26.2% of revenues; banks, financial services and insurance with 22.3% of revenues; and travel and hospitality with 17% of revenues.

Our exposure to consumer, retail and manufacturing space keeps growing from 8.4% of revenues in the third quarter of 2017 to 11.4% of total revenues in the third quarter of 2018. This signals that digitalization has expanded into an expected industries such as manufacturing, which opens new opportunities for companies like us. Our customer concentration numbers for Q3 2018 show the slight increase, although remain healthy and consistent with past quarters, with our top 1, top 5 and top 10 accounts representing 11.9%, 33.4% and 45.8% of revenues compared to 10.3%, 26.8% and 40.7% of revenues, respectively, for the third quarter of 2017.

During the third quarter of 2018, average quarterly revenue per our top 5 customers increased 53.2% to $9 million, and average revenue per top 10 customer increased 37.8% to $6.2 million compared to $5.9 million and $4.5 million, respectively, for the third quarter of 2017. As has been the case in previous quarters, the vast majority of our revenue was generated from customers that were already working with us in the prior year, a clear sign of our ability to fund and expand existing relationships.

In terms of regions, during the third quarter of 2018, 77.5% of our revenues were in North America, the U.S. as our top country; 12.5% in Latin America and others, Argentina being the top country; and 10% were in Europe, Spain as our top country. Europe has resumed growth after a few quarters of investments in the team.

During the third quarter of 2018, 85.1% of our revenues were denominated in U.S. dollars, protecting our top line against currency fluctuations.

Turning now to profitability. Our adjusted gross profit for the period increased to $55.5 million, 41.2% adjusted gross margin compared to $42.8 million, 39% adjusted gross margin in the third quarter of 2017, an improvement of 220 basis points. The increase in adjusted gross margin was primarily driven by a more favorable FX environment in Latin America and an improvement in our utilization rates.

In order to cope with the current demand environment, we increased our IT headcount by 510 Globers, reaching a new record level of quarterly net hirings for the company. We finished the quarter with 7,807 total Globers, 7,285 of which were IT professionals. Attrition for the past 12 months was 19.2% compared to 20.7% in Q2 2018, showing a sequential improvement of 150 basis points.

Adjusted SG&A decreased to 19.7%, 80 basis points less than Q3 2018 and 60 basis points less sequentially. This year-over-year dilution contributes further to our operating leverage expansion. We have been very disciplined in managing our costs as we gain scale, while we continue investing for the future, primarily to strategically expand our sales coverage in the U.S., Europe and Latin America. As a result, our adjusted operating income for the quarter amounted to $23.2 million or 17.3% of revenues compared to $16.4 million or 15% of revenues for the third quarter of 2017.

The improvement in adjusted gross margin combined with adjusted SG&A dilution were the 2 main drivers for the significant operating margin expansion in the quarter. Share-based compensation expense for the third quarter of 2018 amounted to $3.3 million, representing 2.5% of total revenues for the period compared to $4.5 million or 4.1% of total revenues for the same quarter last year. This expense is mainly related to the plan of restricted stock units granted to certain key employees and directors of the company as part of our long-term retention program.

Financial income and expense net amounted to a loss of $1.1 million. This net result is composed of FX gains and losses resulting from monetary assets and liabilities in local currencies, results of our hedging strategies and interest income from our portfolio of investments.

Other income and expenses accounted for a gain of $3.1 million, mainly resulting from the change in fair value of contingent considerations related to our acquisitions. We adjust our non-IFRS net income to exclude this effect.

Our IFRS effective tax for the quarter was 26%. This increase was mainly driven by the large depreciation of the Argentine peso, which increased the taxable base for the period, resulting in a higher income tax expense. Adjusted net income for the third quarter of the year totaled $16.8 million, 12.5% adjusted net income margin compared to $13.6 million, 12.4% adjusted net income margin for the third quarter of 2017.

Adjusted diluted EPS for the quarter was $0.46, based on $36.8 million average diluted shares for the quarter compared to $0.37 for the third quarter of 2017.

Moving on to the balance sheet. Our cash and investments as of September 30, 2018, were $79.2 million compared to $60.7 million as of December 31, 2017. Sequentially, we generated significant cash, increasing $22 million our cash and investment position as of September 30, 2018, compared to June 30, 2018.

During Q3 2018, we repaid $6 million in financial debt. We mainly use cash to pay for M&A transactions, including earn-outs and CapEx aimed to expand our offices in Latin America, U.S. and Europe. Our balance sheet remains strong with current assets of $196.5 million accounting for 8% of the company's total assets.

Total common shares outstanding as of September 30, 2018, were 35.9 million. Last November 2, we amended and expanded our previous financing agreement. We entered into a 5-year trade agreement with HSBC, Citi and BNP Paribas. Under the facility, we may now borrow up to $50 million on or prior to May 1, 2019, under our delayed-draw term loan facility and up to $150 million under our revolving credit facility.

Interest on the loan shall accrue at LIBOR plus 175 basis points, and there are 20 basis points of commitment fee for unused amounts. The credit agreement also contains certain customary negative and affirmative covenants. We are proud of closing this financing to support our continuous growth under very competitive terms.

Now let's talk about the 9 months ended September 30, 2018. Revenue for the 9 months ended September 2018 -- 2008 (sic) [September 30, 2018], amounted to $382.2 million, implying a robust 28.2% year-over-year growth. Growth was mainly boosted by top accounts and new customer wins, as our portfolio of high-potential customers continues to grow at a very healthy pace.

Adjusted gross profit for the 9-month period was $153.6 million, 40.2% adjusted gross margin compared to $115.3 million, 38.7% adjusted gross margin for the same period last year, an increase of 150 basis points.

On a year-to-date basis, we continued to see the positive tailwinds of the FX market corrections in Argentina and some other Latin American countries, coupled with an improvement in utilization. Adjusted SG&A is also showing a healthy dilution of 190 basis points, currently accounting for 20.3% of our revenues for the 9 months ended September 30, 2018.

Adjusted profit from operations for the 9-month period ended September 30, 2018, was $61 million, 15.9% adjusted profit from operations margin compared to $38.9 million, 13% adjusted profit from operations margin for the same period last year, representing an improvement of 290 basis points. Adjusted net income for the 9-month period ended September 30, 2018, was $45.2 million, 11.8% adjusted net income margin compared to $31.9 million, 10.7% adjusted net income margin for the same period last year, representing an improvement of 110 basis points.

Adjusted diluted EPS for the 9-month period ended September 30, 2018, was $1.24 based on 36.6 million average diluted shares for the period compared to $0.89 for the same period last year based on 36.1 million average diluted shares for the same period last year. This represents a 39.5% year-over-year growth.

To wrap up, let me provide you with our guidance for Q4 2018. We continue to experience sustained demand for our digital offerings, and we also see traction from our strategic accounts. The continuity of the FX volatility around the globe, but primarily in the different regions where we operate, combined with still high levels of wage inflation, particularly in Argentina, require us to take a conservative approach in our guidance for EPS.

In terms of gross margin, we expect to close the year in the 39% to 41% range, slightly above our historical target of 38% to 40%. Diversification of our talent base will continue to be part of our long-term strategy, and that should enable us to have a more balanced cost structure, while we continue investing in our 50-Squared strategy and training our Globers in cutting-edge technologies.

As for adjusted SG&A, we expect additional sales coverage expansion, though we will continue gaining dilution compared to last year. Finally, we expect effective income tax rates to normalize within the 21% to 23% range for the quarter.

Based on current visibility, we expect Q4 2018 revenues to be between $138 million and $140 million, implying a 20.4% year-over-year growth at the midpoint of the range. Adjusted EPS is expected to be between $0.45 and $0.49, assuming 37 million average diluted shares outstanding for the quarter.

Regarding the full year 2018, we are increasing our guidance by $5 million at the midpoint of the range. We now expect revenues of $520 million to $522 million, an implied 26% year-over-year of revenue growth at the midpoint of the range. In terms of adjusted EPS, we are expecting a range of $1.69 to $1.73, assuming 36.8 million average diluted shares outstanding for the full year.

Thanks, everyone, for participating on the call and for your coverage and support. Operator, can you please queue questions? Thank you.

(Operator Instructions) The first question comes from Tien-tsin Huang with JP Morgan.

I wanted to -- I think what stood out to me was you guys did quite a bit of hiring this quarter, which is a good leading indicator. I'm curious where are you hiring geographically and what areas and any potential forward implications to your expense or margin base, given the hiring?

Thanks for the welcome back. Yes -- I mean, Q3 was really good in terms of net hiring. We added a little bit more than 500 IT professionals during this quarter. As it has been the case in the last few quarters, the locations where we're growing the fastest are Colombia, Mexico and India. We continue to see those locations outpacing the rest of the locations where we are. We think that at the end of the day, that will help us to have a more diversified strategy, which is what we have been implementing since the IPO, and will also allow us to tap into talent pools in every region. Also, we have a small operation in Belarus that has also been growing, but the numbers are still small.

Okay. That's good for all outside of Argentina. I guess, as my follow-up, I'll ask, the guidance for this year all makes sense. Is there -- can you give us a little bit of hint or direction maybe on margins for 2019, given what you've seen? I know there's a lot of moving pieces, but I think it would be helpful.

Yes, yes. As of now, of course, we are working on next year's numbers. On -- what we're seeing as of now is that there's, as you said, a lot of moving pieces. We have strong margins right now, and we are seeing also good margins for Q4. For next quarter -- sorry, for the next year, the combination between inflation and FX in all the different currencies where we are operating create some noise, but we continue back to the same target that we set up some years ago. I mean, we always target 38% to 40% gross margin. And we also -- we will also work hard to keep a little bit of dilution on SG&A. But as of now, we would still say 38% to 40% in terms of gross margin.

The next question comes from Maggie Nolan with William Blair.

I'm hoping you can give us your updated thoughts on tax rates, particularly into 2019, especially as we start to think about how tax rates in some of your geographies may change?

Yes. Maggie, how are you doing? In terms of tax, typically, tax rates are stable in the 21% to 23% range. However, when -- we have quarters where there is a significant depreciation of currency, and especially in the case of Argentina, that puts some noise in the income tax for the specific quarter. But assuming that the peso will depreciate, but at a stable rate, we continue to think that 21% to 23% is a rational tax rate for next year.

Okay. Understood. And then can you give us an understanding of if you're seeing any early traction from clients with your enhanced marketing offering kind of in the context of that partnership with Wayin?

Yes. Maggie, this is Ale. We're seeing good traction in several different angles and several different industries. We are, as you know -- and this is not only related to our CONVERGE event, we're executing several different initiatives in terms of market lead generation initiatives. I think that combined with the farm-in of existing relationships is definitely yielding very good results. We see a lot of traction, particularly in the financial services vertical, in the media and entertainment vertical, in the professionals and services industry. I think what's -- something that is happening in the marketplace and we have seen lately that a combination of the acceleration of some digital projects and digital integrations in some of the accounts also combined with some early initiatives on the AI and cognitive space. So all of them together, they're definitely gaining traction. So we're at the sweetest part of what is happening in the marketplace in terms of demand and very well positioned with our customers.

The next question comes from Avishai Kantor with Cowen.

The first question on Disney, which remains very strong growing 42% year-over-year and 30% sequentially. Can you give us a sense where the growth is coming from between parks and the media divisions to as much as you can elaborate on that?

Yes, sure. How are you doing, Avishai? I think the opportunity at Disney remains very large. As you probably are aware, Disney just restructured their divisions between consumer interactive and international. We're very well positioned in those places. Of course, the big traction continues to be the theme park division, the division that is within this environment. But having said so, we have also made progress on media. We have also made progress with ESPN. I think the overall relationship with Disney is very healthy. This whole thing about the restructuring is even playing as a tailwind for us. You know that some already existing accounts like Nat Geo are also part of Century Fox. So that's also going to yield another opportunity. And hopefully, Disney this year volume growth is going to become the first 50-Squared customer for real for Globant. So overall, I can say that still the big and core division is the theme park division. We're also seeing traction from other divisions at Disney. That was our plan since inception.

And my next question on Uber Eats. Is that global or that's just in Latin America?

For the time being, it's only Latin America, Avishai.

So could you see -- is there a potential to expand into other regions, you think that's possible?

We think so. It's the first deal and the first project that we are running with Uber. I think it's very experimental in Latin America. So we're very happy with the nature of the project. So definitely, this could be the beginning of a very large relationship.

And I'm very happy to see that you guys all survived the first leg of the Superclásico.

There you go.

Thank you, Avishai.

(Operator Instructions) The next question comes from Joseph Foresi with Cantor Fitzgerald.

I guess, the old team is back together, Juan. I think you've covered most of 2019 or some of the early stuff around 2019. Maybe you could talk a little bit about the top line? And even if it's in general terms, what do you think growth is going to be like? And also this quarter, it seemed like Disney was back at it, but maybe the accounts outside of the top accounts didn't grow at that pace. Maybe you could break down growth for us from Disney versus non-Disney to the extent you can on the long-term side?

Yes. So -- yes, I mean, in general, as you can see from our hirings, we feel very confident about opportunities that we are facing. When we look at the revenue growth in our top accounts, yes, Disney did extremely well, growing 41% year-on-year. But when we look at the top 5, we see 53%. We look at the top 10, 37%. And even when we look at the rest of the accounts, the growth is still there. So we are very, very happy with how most of our top accounts are performing. And also we have some new names that are not yet top 10 accounts, but we are already working with them. Some, we can name, as Ale just mentioned, Uber. Some, we cannot name as of now, but we know that those are great opportunities for 2019. We are working on some interesting projects that if we continue to be successful, that will bring a lot of revenue going forward. As for the future, we always like to -- we remain with the same targets that we always have of around 20% organic growth. That's what we have been saying since the IPO. I was just looking at the numbers earlier today, and our guidance for 2018 is at around 26% for the year. It's the fifth year in a row above 26% or at least 26%. So we feel very confident about the opportunity we are seeing, very good traction not only from Disney, but also from other very large accounts. And also we have some of the names that also make us feel comfortable about 2019. And that's pretty much what we are seeing in terms of markets.

And then on the margins, I know you gave some rough ideas around the 38%, I think, to 40% range. What's the expectation for FX built into the margin guidance?

Yes. So I mean, when we look at Q4, I mentioned during the call, between 39% and 41%. Basically, we expect the peso to remain stable where it is right now, at least until the end of the year. And then for the future, it will depend, of course, on how the economy is doing here. There is a lot of moving pieces in terms of the macro economy at this point. But we think that according to what the government put up in the economic plan, the peso will follow or the position of the peso will follow the inflation of the country. At least that is what has been stated by the Minister of Economy. If that's the case, that's good for us.

Got it. And then just the last one from me on the Argentinian economy. Any concerns around wage inflation in the country? And maybe you could talk about how the economy is affecting day-to-day business and maybe labor supply as we head into next year.

Yes, Joe, look, unfortunately, inflation in Argentina has been between 20% and 30% for the last 10 years, and we have been managing the company very successfully in that environment. Of course, it will be better if inflation goes down. And hopefully, now today, the House -- the Senate passed the budget law for next year, and it has a lot of fiscal cuts, a lot of fiscal decisions that should eventually take inflation down. So we have been dealing with inflation. We are used to that. We think that we have been able to manage it successfully in the last 10 years, and we expect to continue doing so. So we believe we understand how to manage it.

Yes. If I may add to that, Joe, I think the government now is trying to articulate through the Central Bank a very tight monetary policy. Interest rates are up to the sky. So I'm not saying that, that is going to dramatically reduce inflation in the short run, but it should have some impact probably 3, 4 months from now. So our expectation is that at certain point, that inflation is going to ease up a little bit. Still we're talking about high levels of inflation, as Juan pointed out.

So to summarize on that, if you read about the Argentinian economy, you will see that the government talks about, like, a moving range for the peso and that, that range will be increased by 3% per month. So basically, what that means is that the government expects the Argentinian peso to move in line with inflation.

This concludes our question-and-answer session. I would like to turn the conference back over to Martín Migoya for any closing remarks.

Okay. Thank you very much, everyone. Looking forward to see you on the next earnings release. And thank you very much for participate and for your continued support on every quarter. Thank you. See you next.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.