Globant SA (GLOB) 2021 Q4 法說會逐字稿

Good day, and welcome to Globant's Fourth Quarter 2021 Earnings Conference Call. I'm Amit Singh, Head of Finance for the U.S. and Global Head of Investor Relations. (Operator Instructions) Please note, this event is being recorded and stream live 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.globant.com.

Our speakers today are Martin Migoya, Co-Founder and Chief Executive Officer; Juan Urthiague, Chief Financial Officer; Patricia Pomies, 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 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's results.

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

Thanks, Amit, and hello, everyone. I'm happy to be back after another strong quarter and full year. Globant continues to deliver solid performance and we aim to surpass expectations of our stakeholders and clients.

As we look back over the past 19 years, since we started the company, 2021 stands out. This was one of our most transformative years ever. Our Q4 2021 revenue reached $379.8 million. This represents 63.3% year-over-year growth and 11.1% growth over Q3. For 2021, we became a $1 billion revenue company for the first time ever. The top line reached nearly $1.3 billion, representing 59.3% year-over-year growth. This is the strongest annual revenue growth since our IPO. Our CFO, Juan Urthiague, will go into detail later in the call.

This strong result have been made possible by the team of talent we have cultivated. I've never been more proud of our Globers. They are creative and adaptable. They work together as one team throughout 18 countries.

Our business fundamentals are stronger than ever. We are in a position to capture the significant market opportunity in front of us. As we know, reinvention and transformation is not an end-to-end process. It is a constant state of adaptability to grow in the face of challenges. This time, a full adoption of digital transformation is here. The IDC has forecasted global spending in the sector to exceed $10 trillion over a 5-year period. We aim to be the partner of choice of our clients and to help them bridge the gap between the innovation opportunities and actionable transformation.

We are executing this strategy through the pillars of growth that [I] laid out in 2021: our geographic expansion, our invention studios and our growing platforms. First, our geographic expansion. Globant footprint continues to grow throughout the regions where we work. Lately, we added 2 new countries to our Latin America operations: Costa Rica and Ecuador. This solidifies our already strong presence in the region. In Europe, we have recently announced our expansion to Germany, Austria and Switzerland. In North America, we continue to expand our local presence throughout the United States and Canada.

We are reaching new clients and hiring more talent in all those regions to lead this growth. We have also brought on new talent and expertise through strategic M&A. In 2021, we incorporated 5 new companies to the Globant family. These companies have combined operations in 12 countries. Their talent has reinforced our capabilities in multiple spaces from blockchain to digital sales and marketing, AI, Salesforce and more.

As we look to the major trends of the near future, we are already working on consolidating our capabilities in these spaces. A major transformation for how brands relate to consumers will be brought on by Web 3.0. Web users in the first generation of the Internet were exclusively on the receiving end of information. They later became content creators, active consumers and participants in the second phase.

In this new phase, they will become owners. Through blockchain technology and decentralization, Web 3.0 puts the user in the driver's seat. They will have more autonomy in their consumption, creation and interface with the Internet. This is actually part of a larger change. Throughout the digital and cognitive revolutions, focus has shifted towards the consumer. This is a huge opportunity for Globant. Since we have built our core business around these revolutions for the past 2 decades, in this era, the most successful brands are the ones that can apply the right technology to improve relationships with their stakeholders.

A major way that people will experience this new phase of the web will be the metaverse. Organizations will have new spaces and platforms where they can extend their presence, offering and creativity. They will be able to maximize engagement with their customers and employees. Last year, Globant launched the Metaverse Studio to guide companies in taking advantage of these opportunities. Although many will see the potential, they need a partner with the technology and the expertise for best-in-class execution. Globant believes that these and other trends in AI, machine learning and timber agility will have a strong influence on our world in 2022 and beyond.

We have done a deep dive on many of them on our Trend Report 2022. I encourage you to check it out at trends.globant.com.

We also continue to develop our product and platforms offering under Globant X. The goal is to keep expanding our existing products such as StarMeUp, Augmented Testing and Augmented Coding, among others. At the same time, we will continue to add new offerings to our product portfolio. For example, Globant X is developing an MVP of a new platform, Project [Yard]. Yard is a diagnostic tool that aims to reduce the carbon emissions and operational costs of digital products and services. It identifies solutions by designing leaner digital services as it measures energy consumption of software. It pinpoints areas where energy emissions and costs can be optimized by up to 25%.

We believe that technological innovation is a force for good. However, we are mindful of the potential side effects that come from misuse or excess. We see several concerning examples in our society from texting and driving to cyberbullying to Internet security to privacy just to mention some. So as you may remember, last quarter, we launched our Be Kind tech fund. We will support and fund start-ups that develop apps that bring solutions to these challenges.

Today, we are proud to announce 3 world-renowned ecosystem partners, Endeavor, NewLab and [Lavka]. Thanks to their extensive networks, we will be able to engage with a greater number of high-quality entrepreneurs and startups. We already have dozens of submissions and we continue open to receiving applications from startups at bekindtechfund.com. I've been happy to see our team's efforts generating greater recognition of Globant's brand identity.

For the first time in 2022, Prime Finance has ranked Globant on its list of the top 10 Strongest IT Service Brands in the world. The report studies marketing investment, stakeholder equity and business performance. It showed an estimated 31% growth in Globant's brand value in the last year. This is great news for us, and we hope to continue improving our positioning moving forward.

With that, I pass it over to Diego Tartara, our CTO, to comment on our studios and clients. Thank you very much, and looking forward to see you soon.

Thank you, Martin, and hello, again, everyone. It's good to be back. .

As Martin mentioned, a major pillar of our growth strategy is the new industry reinvention studios, which we announced last year. This is the next step in the evolution of our signature studio model. Instead of focusing on a specific technology or trend, this new studio seek to transform the industries themselves.

This widens the scope of our work and increase the potential upside. Each reinvention studio is supported by the expertise of our digital studios in areas such as the metaverse, , blockchain and much more. I'd like to double click today on the Life Sciences industry reinvention studio.

Its goal is to provide organizations with technology-driven solutions to face challenges in the health care value chain. These stakeholders include patients and relatives, health care professionals, public/private players and institutions, academia, pharmaceutical and medical device companies, among many others. Globant has appointed Agustin Lamas as this new studio Globant Managing Director. Building on his experience as a pharmaceutical executive at AstraZeneca and GSK, we're happy to have Agustin on board as we reinvent this industry. The Life Sciences studio will be a hub of modern design thinking, combining bioscience talent with our digital expertise across other industries.

Now some remarks on the ongoing work with our clients. Continuing the focus on Life Sciences, last quarter, we started partnering with Abbott, a leading multinational health care and medical device company. Our teams integrated with theirs to understand their challenges and we are redesigning their analytics platform solution. The new data platform will allow for faster, more efficient data processing, enabling more intuitive decision-making.

In the same industry, we're also working with Bayer Medical to help with modernizing and redesigning their ventilator interface design. Bayer is a global leader in the respiratory diagnostics, ventilation, anesthesia delivery and patient monitoring segments. We're also working with them on redesigning their UX and their medical incubator screen interfaces.

As Martin explained, the metaverse is a concept that is quickly becoming reality and one of the reasons why we created our Metaverse Studio. In December 2021, we formed a partnership with Pixelynx, a leading music metaverse gaming platform. Pixelynx is developing a new virtual world ecosystem that will allow artist to launch their own interactive environment and monetize them through NFTs, social music experience and virtual performances. Our expertise in metaverse, blockchain and gaming, along with their deep knowledge of the industry, are allowing us to accelerate the reinvention of the music industry together.

We're also proud to be working with Dapper Labs, the creator of the world's most successful digital collectible blockchain apps, including NBA Top Shot and . We're helping them optimize their processes as we automate the creation of NFTs.

We have a long track record working with companies as we bring our technological expertise to education. We have recently been working with EVERFI. EVERFI enables private, public and social sector organizations to respond to some of today's most pressing challenges through education, activating community engagement at scales delivered as a service. Through its technology and learning platform, EVERFI has reached more than 45 million learners globally, while also delivering critical insights to its corporate partners so they can measure and amplify impact on the educational programs.

We partner with them to build their brand new [boarding] and enrollment platform. We're building a more robust, scalable foundation that integrates with third-party sources of information and eliminates data mismatch and keeps rostering as a core service.

It is extremely important for companies to remain human-centric as they embrace technology to improve their own processes and services. The implementation of conversational interfaces is a great example of this. This past year, we began an exciting engagement with Tavisca, a CX loyalty technology platform, which is a division of JPMorgan Chase. Tavisca CX Loyalty build products and solutions that empower some of the world's leading customer engagement and loyalty programs, and they are constantly transforming the way brands engage and reward their most loyal customers.

The first project called Chatbot recently went live. It helps them improve their service offering and relationship with customers to meet business goals. In the food and beverage space, Danone has partnered with Globant for its transformation to a data-driven company. By applying AI, we're empowering them to have a higher and more insightful level of understanding of their shoppers and consumers and improve the route-to-market. We are working with agile methodologies and modernization of their platforms, improving the capacity to respond to context changes and to capture the new opportunities that the market generates from changes in consumer behavior.

Thank you, everyone, for your time again. I look forward to Globant's continuous expansion of the array of expertise to keep delivering superb 360 digital transformation. With that, I'll hand it over to Pato, our COO.

Thanks, Diego. Hello, again, everyone. Before I get into discussing our talented Globers, a few notes to reflect the strength of our operations and our performance with our clients.

The Walt Disney Company continues to be our largest client, growing this quarter at 69.1% year-over-year and 7.1% quarter-over-quarter. We continue to be very well diversified within Disney, and serve a multitude of its business verticals. The rest of our accounts collectively grew by 62.6% year-over-year and 11.6% quarter-over-quarter.

Our 100 squared strategy continues to advance. Over the last 12 months, we had 12 accounts that brought in more than $20 million of revenue compared to 7 from last year. We also had 185 customers with more than $1 million of annual revenue compared to 129, 1 year ago. In Q4, 63.9% of our revenues were from North America, 23.5% in Latin America and others, 10.7% in Europe and 1.9% in Asia.

As you know, we think of our clients as our partners, and having long-standing and strong relationship is directly tied to our focus on quality. The Net Promoter Score is a value that we have been measuring for quite some time to keep a close eye on how our customers perceive our quality of service. There is no official benchmark for the score, but most available benchmarks position scores generally between 30 and 40 for our industry. I am very pleased to share with you that our scores have been consistently above 60, well over the existing benchmarks. Our score was 64 for the last 12 months.

As Martin said, 2021 was a major year of growth and achievements for Globant. We are now a worldwide team of 23,526 Globers with 22,167 being technology, design and innovation professionals. 1,594 of the new hires in the quarter were IT professionals, up 45% year-over-year.

Every year, we have more geographical diversity. This offers our clients a truly global delivery structure as we now have Globers in 18 countries. Colombia and Argentina are nearly tied as our largest talent markets, with a bit over 5,300 Globers each. In 2021, India saw the highest growth with headcount up 94% year-over-year. We remain confident that we can continue bringing strong talent and we envision a strong hiring process moving forward.

Globant's attrition rate is currently 18.7%. As you know, our talent market remains competitive, and there has never been a better time to work in the IT sector. For us, this is an opportunity. It drives us to continuously work on our employees' experience, benefits and opportunities to make Globant their place to work in the industry.

We have seen that our efforts and the value proposition we provide to employees is leading to a [stabilization] of the attrition rate. Our structure has always respected a work-life balance and family support. Now we are going further. We want to enable our talent to feel in control of their own career path and their life. And we have taken the steps to provide that through 3 unique initiatives.

The first one is ensuring that every Glober has a clear path to leadership, advancing in one's career is a highly sought-after goal and providing a consistent structure that allows for that to become a reality within the same company, foster a stronger commitment to our vision and our future. Secondly, we are now offering Glober's flexibility to work from anywhere in the world for up to 30 days out of the year. This includes places where we don't have an office. For Globers who choose locations with Globant offices, they are encouraged to interact with local Globers and experience our revamped office experience. It's a win-win because we grant employees the flexibility they seek, and we also ensure a globally cohesive team.

And finally, we have a new platform, Open Career, that gives Globers the keys to their own career path. This platform act as a career marketplace and talent placement accelerator within the company itself. Globers can apply to any of our open position in any project that we have. We want to allow them to find more exciting challenges within the company without needing to look elsewhere. It is our way to promote autonomy, flexibility and opportunities worldwide.

And finally, some exciting new updates to our Be Kind initiative. This is now an enduring part of Globant's identity. Our Globers have taken ownership of it and have made it their own. Not only are we fulfilling its promise, we are expanding it so we can have an even great impact. As you know, Be Kind has 4 pillars: be kind to your peers, to the planet, to humanity and to yourself.

In Be Kind to your peers, we are reaffirming our commitment to diversity, equality and inclusion. We recognize that we work in the most dynamic and promising job sector in the world. So by promoting inclusion in the sector at large, we are building a brighter future for the industry. On top of our goal to achieve gender parity, we are setting a new one. We will grant 15,000 technology scholarships by 2025. Through thought leadership, community involvement and mentorship, we want to inspire up to 2 million young people to enter the [10 fields].

For Be Kind to the planet, we became carbon-neutral in 2021. We are also following reduction trajectories in line with science-based targeted standard aligned with the race to zero initiative. Now we are incorporating a new objective. We aim to save 10 million tons of CO2 emissions through a digital sovereignty strategy. We want to train our Globers on digital sovereignty to be able to educate our world-class clients while designing their digital services and products.

Our Be Kind to humanity pillar was what inspired the Be Kind tech fund described earlier by Martin. We will seed and support the startups that tackle the misuse of technology. Within the company, we have the initiative of Be Kind labs to help Globers with inspiring ideas and transform them into real projects. For Be Kind to yourself, we have launched a new company wellness plan partnering with experts in mindfulness and mental health. Our objective is for the program to reach an influence of 100% of our Globers.

I am proud to see that this impact in ESG are getting noticed. For 2022, Globant has been included in the S&P Global Sustainability Yearbook. To be included, companies must be ranked within the top 15% of their industry in the key ESG metrics. As the awareness of our efforts to improve our own company and our sectors community, we look forward to see more of this inclusion as we grow.

With that, I'll turn it over to Juan to discuss our financials.

Thank you, and good afternoon, everyone. I hope you are all doing well.

Let me start by summarizing the results of our fourth quarter and full year 2021. I will then discuss our guidance for the first quarter and the full year 2022. We are delighted with our overall results for the fourth quarter of 2021 as our business continued to show robust momentum. Revenues for Q4 were $379.8 million, representing 63.3% year-over-year growth and 11.1% sequential growth. Globant continues to deliver industry-leading growth and we expect this trend to continue for the foreseeable future. We estimate organic revenue growth for Q4 was around 54.5% year-over-year.

As discussed earlier, the demand for our end-to-end digital service and platforms is much stronger now than what it was before the start of the COVID-19 pandemic. And at this time, we are not witnessing any material impact from COVID-19 to our business. We feel confident in delivering robust levels of growth in the upcoming years.

Turning now to profitability. Our adjusted gross profit for the period increased to $149.7 million, representing 39.4% adjusted gross margin compared to $92 million, representing 39.6% adjusted gross margin in the fourth quarter of 2020. Adjusted operating income for the quarter amounted to $63.6 million or 16.7% of revenues compared to $37.9 million or 16.3% of revenues for the fourth quarter of 2020.

Demand and pricing environment continues to be strong, offsetting the ongoing inflation in the labor market and we also continue to drive SG&A efficiencies with our increasing size. In addition, we continued to drive an increasing amount of revenues from services, products and platforms that support breaking revenue and employee growth linearity. Together, this will help us maintain a healthy adjusted operating margin profile and continue making the required investments in the company to seize the attractive market opportunity in front of us.

Our IFRS effective tax rate for the quarter was 23.4%, largely in line with our guidance. Adjusted net income for the fourth quarter of the year totaled $45.8 million, representing 12.1% adjusted net income margin compared to $27.6 million representing 11.9% adjusted net income margin for the fourth quarter of 2020. Adjusted net income for the Q4 implies 65.7% year-over-year growth above our Q4 revenue growth rate. Adjusted diluted EPS for this quarter was $1.07 based on 42.8 million average diluted shares for the quarter compared to $0.68 for the fourth quarter of 2020 based on 40.9 million average diluted shares for the quarter. Adjusted EPS for the Q4 implies a solid 58.3% year-over-year growth.

Moving on to the balance sheet. Our cash and cash equivalents and short-term investments as of December 31, 2021 amounted to $460.4 million. During the fourth quarter, we generated strong free cash flow of $47.9 million versus $20.7 million in the fourth quarter of the last year. During this quarter, we paid $64.2 million for acquisitions. Currently, our credit facility is fully undrawn. We also continue to successfully execute on our capital allocation strategy with integrations of recently acquired companies going as planned.

Now let's look at the full year 2021 performance. Revenues for 2021 were $1.2971 billion, implying a solid 59.3% year-over-year growth. This represents by far our strongest year-over-year revenue growth since we are a public company. We estimate our 2021 organic revenue growth to be above 45% year-over-year. Our M&A deals from 2021 also continued to perform strongly with cross-selling of services creating synergies.

Adjusted gross profit for 2021 was $512.7 million or 39.5%, an increase of 40 basis points year-over-year. Adjusted profit from operations for 2021 was $214.3 million or 16.5% adjusted profit from operations margin compared to $124 million or 15.2% adjusted profit from operations margin for the last year. This represents an increase of 130 basis points and is driven primarily by the improvement in gross margins and the SG&A efficiencies achieved during 2021.

During 2021, we also continued to strongly invest to capture the significant opportunities in front of us. Adjusted net income for 2021 was $158.4 million or 12.2% adjusted net income margin compared to $90.6 million or 11.1% adjusted net income margin for the last year. Adjusted net income increased 74.9% year-over-year, solidly above our 2021 revenue growth rate. Adjusted diluted EPS for 2021 was $3.76 based on 42.1 million average diluted shares for the year compared to $2.28 for the last year based on 39.7 million average diluted shares. During 2021, we generated strong free cash flow of $102.6 million versus $47.4 million during 2020, an increase of 116.6% year-over-year and implying free cash flow to adjusted net income of 65%. During the year, we paid $144.5 million for acquisitions.

Now I would like to talk about our guidance for Q1 2022 and the full year 2022. As discussed, the demand environment remains robust. Based on current [visibility], we expect Q1 2022 revenues to be at least $395 million or 46.2% year-over-year growth. At this point, we do not expect any FX impact to our first quarter revenues. Q1 adjusted operating margin is expected to be in the 16% to 17% range. IFRS effective tax rate is expected to be in the 22% to 24% range for Q1 2022. Adjusted diluted EPS is expected to be at least $1.16, assuming 42.9 million average diluted shares outstanding for the quarter.

Regarding the full year 2022, we expect revenues to be at least $1.751 billion or 35% year-over-year growth. We currently assume no FX impact to our full year 2022 revenues. For 2022, we expect our adjusted operating margins to be in the 16% to 17% range while we continue to strongly invest in turning programs in cutting-edge technologies and expand our sales coverage to further develop our business. IFRS effective tax rate is expected to be in the 22% to 24% range for the full year 2022. Finally, we expect our adjusted diluted EPS to be at least $4.86 for the full year 2022, assuming 43.1 million average diluted shares outstanding for the full year.

Thanks, everyone, for participating in the call, for your coverage and support.

(Operator Instructions) So the first question today comes from the line of Tien-Tsin Huang from JPMorgan.

Nice results again here. I'll ask maybe if you don't mind, just on visibility. I know I've asked that in the past, but I think it's appropriate year since you're giving '22 guidance for the first time. Just curious on visibility, how it stands, how does it compare to this time last year and especially in the second half of '22 and your ability to replenish your backlog and whatnot. Any thoughts there would be great.

Okay. Good. Thank you, Tien-Tsin. Thank you for the question. Look, there's a pretty good visibility, as always, on our numbers for the quarter and the year looks great in terms of the quality of the relationships we have with our customers. And I believe as compared to the first quarter last year, we're seeing a pretty solid demand on the table. We're seeing a pretty much the same strength as we were seeing last year.

But there's always caveats in terms of how the world is going to be evolving in terms of amount of investments, so on and so forth. But we are not feeling that yet in the demand. So in terms of visibility and expansion of the business, this is what we are seeing. In terms of being able to fulfill the demand and concrete backlog is still extremely healthy. And we are seeing our ability to recruit still intact, attrition under control and going down, the growth is going down a little bit.

And I believe that we won't have any problem moving forward neither challenges. Of course, there's always challenges, but we won't have any issue, I feel with fulfilling the backlog and the demand we are seeing ahead.

Okay. That's great. Just my quick follow-up then for Juan. I know we've talked about margins a lot. And of course, everyone is aware of all the supply issues on the labor front. So you gave a pretty wide range, 16% to 17%. You did the midpoint of that in '21. Which way might it lean? What factors should we be considering in terms of where you might land in that range?

Thank you, Tien-Tsin. Also, I just wanted to add to Martin's answer on the previous question. If you remember, over the last 2 quarters, we've been talking about 2022 and we were more like in the 25% plus 2.5% guidance for initial guidance for 2022. Now we have significantly raised that number to 35%, which is roughly 32.5% organic, plus 2.5% coming from the acquisitions that we have already done. So in a way, I think that is a result of the level of confidence and the visibility that we are having into 2022.

Now moving into where operating margin is going to land, I think -- and our expectation is, like it happened during 2021, being able to offset cost inflation, cost increases, which are happening and are going to happen with pricing, with utilization. As we have done during 2021, where we're able to increase our gross margin for the year around 40 basis points. So we do expect at this point to land hopefully, between the middle and the upper part of the operating income guidance.

Good. And thanks for pointing it out, right? I mean anything north of 30 is -- has a big upgrade, but that speak to the confidence in the visibility.

So the next question comes from the line of Ashwin Shirvaikar from Citi.

Congratulations on the solid print and equally solid outlook. I guess I just wanted to start perhaps with the question one on your point that you just made, that the sharp increase in outlook from what you said the last time. And maybe to delve into that, is that driven by just bringing on new clients? Is that driven by sharp ramps in sort of your order book that you're sort of seeing? What has led to the sharp increase that you're seeing?

Thank you, Ashwin, for the question. It's a combination of factors. One is that we have completely removed the cautiousness that we used to have in our guidance over the last 2 years. We believe that COVID is pretty much behind us. And we have to guide where we feel very -- where we feel that we're going to be able to land and hopefully exceed by a little bit. So we remove a little bit of the conservatism that maybe was embedded over the last 2 years, I think not just by us, but for many companies in the market. It's the right time to get rid of that.

On top of that, as Martin said at the beginning, we continue to see strong relationships, continuing and expanding for 2022. You know how Disney, for instance, performed during 2021, how the top 5, top 10, 11 to 20 and 11 to the end, accounts performed. We are seeing like multiple areas of growth. We closed the year with over 12 accounts above $10 million, which is a significant increase compared to last year. Actually, the number is higher.

Excuse me one second. I want to give you that number because I think it's an important number. And together with that, we continue to see our top accounts becoming larger and expanding those strategic relationships in line with the 100 squared program that we have in place. We -- sorry, we closed the year with 12 accounts over $20 million and with 22 accounts over $10 million. That is a significant increase compared to last year. And I think it's a clear proof of how we are able to penetrate those accounts, how we are able to become more strategic in the type of relationship that we have. And of course, at the end of the day, this is what is giving us the confidence to increase our guidance relative to what it was a couple of quarters ago.

That makes sense. My other question is with regards to sort of the expected cadence as we go through the quarters for growth, and margins. And maybe just a small clarification on what you said, does the caution comment translate from the fact that your clients now that, for example, the theme park side of Disney, you had travel clients, that traffic has now -- that volume has now come back basically?

When you look at how travel is performing, when you look at how Disney -- I mean the results reported recently by Disney, and -- but not just those 2 sectors, right? We are seeing strong growth. I mean if you look at the industry evolution, you're going to see that pretty much every industry has gone -- has grown significantly. So we do believe that there is multiple areas, multiple customers, multiple industries which are going to help us drive that growth.

We do see margins kind of stable over the year. We don't see big, big swings between the different quarters, at least at this point. Of course, we need to see then what happens with the different currencies, how they are going to move relative to the dollar. As you know, we are operating in 18 different countries, and they may have an impact on cost, right? But typically, a strong dollar is good news for Globant, we'll see what happens in the future. Martin, if you want to add anything there?

No, that's fine. That's great.

And on the cadence?

Well, I mean, the guidance for Q1, as you know, has been quite solid at 46% year-over-year. That is primarily -- it's about 41% organic coming from the acquisitions that -- and the rest is -- the remaining 5% comes from the acquisitions that we did during 2021. For the full year, at this point, we guided 35%. As I said before, 32.5%, we estimate to be organic. And of course, as the year progresses, hopefully, we are able to give good news, like always. But at this point, we feel that, that's the type of guidance that we feel comfortable to provide. And again, removing a lot of the conservation that was embedded in prior quarters.

Now let's go to Bryan Bergin from Cowen.

I wanted to dig into the global diversification efforts that you're making. So I'm curious how you're thinking about the on-site or the end market mix, how that might evolve? And whether that's an added lever for you that you may consider raising? Or should we expect this to remain relatively consistent? And what I'm talking about is kind of in market in U.S. and market in Western Europe.

I -- right now, we're at 95-5. So we are at 95% offshore, 5% on site. We are looking into expanding that relation and we have been decreasing for the massive amount of growth that has been led during the COVID. On the absence of request for a specific location, I mean people didn't pretty much be -- it was not a problem where those guys were located. And this is something that helped us to keep moving people of the operation around many of different countries.

Now on the on-site side, we're basically where our business is, we are seeing a trend of increasing demand and increasing now that things are going back to kind of normality, which is not true, but at some point, it's getting back to slowly, they are still not there. We are seeing like an increase on that demand and the amount of people that we are hiring for that.

And also, it could also have some effect on companies that we acquired or with local footprints, those are the changes -- the changing factors that we see moving forward. Indeed, the revenue per head from last year to this year grew about 12% in terms of -- but that without pushing down the mix. So it is a pretty good performance in terms of improving margin -- sorry, improving the revenue per head and the rates that we are seeing in front of our customers. And that's a [base] for us to say that we don't see a massive price pressure on the market. There's always competition, of course, but we see a healthy situation there.

Okay. And then just a follow-up on attrition. So it looks like it stabilized quarter-over-quarter. Just based on what you've seen here through January, do you think that's reached the plateau? Maybe just talk about how you see that progressing in 2022 and how that might compare as well across some of your key regions?

Well, I think that we are going to see something like quite similar like what we announced in this quarter. But I think that we have been growing fast. I mean, we are more than 23,000 Globers, and we have been hiring. I think that we are in a record of 6,000 -- more than 6,000 Globers in the last quarter, and I think that the incoming quarters are going to be quite [similar] or more. So we don't see any problem in the demand on how we are hiring so that is something that is really -- we feel really proud of that.

Of course, we are expanding our places. I mean we launched this Globant everywhere strategy that has to do with going to find the correct talent and help them achieve their career path growing in Globant. So I think of that, of course, we are still thinking that we're going to get into between [15] and [17]. But of course, we are working very closely. We are hiring teams there. And I think that we are right now, it's going to be normalizing probably in 2 or 3 quarters, you know, that the demand has been really, really hot.

Just for clarification, 6,800 people is [other] additions for the year, not for the quarter.

It's a big quarter.

Yes, yes. Great quarter.

Now the next question comes from Maggie Nolan from William Blair.

I wanted to ask about some of the conversation that's been had around pricing and the revenue guidance. Obviously, pricing is a contributor to that strong guidance there. And -- you've noted that the increase is more than offsetting the above-average wage inflation. So when we're looking on kind of a multiyear basis, should we think about some of those pricing increases having to kind of moderate in the coming years?

I think at the end of the day, pricing is also related to the value that and of course, with what is happening in the labor market, right? During 2021, we saw a strong labor market, and a lot of demand, and that enabled pricing discussions that, in our case, help us offset that cost pressure that we saw in 2021. Getting into 2022, the year starts again with strong demand. Also, there is a strong demand for talent that will imply cost pressure for most companies.

And our expectation at this point in time is that we will be able to offset again that increase on price negotiations and eventually with some utilization improvements. So what we do, we think that -- and we are targeting to maintain or to be able to offset cost increases with that. We are adding more value to our employees. We are -- to our -- to our customers, we are expanding our studio value proposition. We are becoming more strategic in many of the accounts that we are servicing, as shown by how we are growing with those accounts. And we believe all that combined should help us offset whatever happens on the labor market.

Okay. Great. That makes sense. And then it was great to hear some of the things you're doing on the talent side, and you can definitely see how that will help with retention at the organization. I was interested in kind of the dynamic of this creating a path to leadership and how you kind of balance that with the fact that an inherent differentiator for Globant has been the fact that you are kind of a horizontal organization and an agile organization compared to some IT incumbents. So can you kind of reconcile those 2 concepts for me?

Yes, of course, I mean I'm more than happy to go deeper there. Well, we launched this augmented leadership thing inside Globant that is in a strategy in order to help our leaders to be 360 leaders in the way we are living right now in the middle of this context. So I think that is a new thing where when you get into Globant, you just -- you are not going to stop your career, but you continue your career, and we are helping on that. I already mentioned about the Globant University many, many times, but that has been a very successful initiative.

And on the other side, we just launched this platform. In fact, we launched, I think, 2 years ago. That is the open career platform is the best, I think, that we have launched because each Glober can now decide in which project they can have their experience and they can change and they can move their career path as they want. And the leaders are going to help them in order to grow faster. So this is a unique platform, I mean, because that means that when you are inside Globant is that you are not going to stay forever in the same project, the same industry.

We are now doing this kind of thing that probably our competitors are looking for the Globers and now we are offering them to be inside the Globant to keep our talent inside the company and helping them go in different industry having different experiences. So that has a main impact in our organization. Also, as you know, the Be Kind to yourself initiative has helped a lot in terms of how we are helping our Globers develop their own health and their mind and we have this concept of having altogether spirit, mind and body.

So we are helping them in understand if this is not only just a place where we work, it's also a place where we are taking care of each of them and their families. So we have been able to understand the situation that has changed. Some of them working from their homes as many of us, some others starting to go to their offices. And in the middle of all of that, I mean, how are we going to continue developing my career. So I think that is a really huge differentiation from other competitors.

Congratulations.

Next, let's go to Arturo Langa from Itau.

Congratulations on the results. Just a couple. I think the first one is housekeeping. But Juan, I believe you mentioned that from the full year '22 guidance, about 32 percentage points should be organic growth. I just wanted to clarify that. And then my second question is regarding -- going back to geographic expansion. Maybe if you can talk about your expectations, particularly in Europe and in Asia in terms of maybe headcount growth and revenue growth. And then maybe there just detail a little bit the rationale behind expansion in Germany, Austria and Switzerland, that caught my interest. It seems like a new and exciting geographic footprint to expand into. So those will be my questions.

Thank you, Arturo. So on the 35% full year guidance that we provided, we estimate 32.5% to be organic, the remaining 2.5% coming from the acquisitions that we closed in 2021. As for the geographic expansion, I don't know, Diego, if you want to discuss a little bit our strategy.

Yes, sure. With regards to geographic expansion, we expect to have -- of course, we have a organic and inorganic. We see very good opportunities, especially with regards to the Reinvention Studios. When you see intersection of the Reinvention Studio headquarters for some of the large pharma, some of the things that we will be launching pretty soon, especially in this -- also Germany, Switzerland, France, I expect to have a healthy grow there. Especially with and probably with on-site people, that's typically the way they tend to hire and work in Europe, it's kind of a different from the U.S. even from a cultural perspective.

So hopefully, we will be able to increase the local headcount, which is always something healthy. And with regards to expanding -- second question was -- sorry, Germany, Austria.

Asia.

Well, Asia. Asia is more -- I would say, Asia is more complicated. I think we've -- we have like 2 different alternatives. So of course, the organic versus inorganic. We are exploring both. I think it's too early to come up with an answer that is actually solid these days, but let's say that we will do it during this year, definitely.

Yes. On the organic side, as you can see by the numbers, from Asia, we are having new customers in that region. That's why the revenue number has been trending up in Asia. But as Diego said, we look into Asia as a big opportunity that we have to explore either more organically or with M&A or with both. We are analyzing that.

Perfect. Congratulations.

Next, let's go to Diego Aragao from Goldman Sachs.

Yes. First, congrats on the results. So it seems that you had a great acceleration on the revenue per IT consultant in the fourth quarter. And if I'm not mistaken, it moved from [68,000] in the last 12 months as of the third quarter to [69.3] for the year-end. So this means that the fourth quarter was very strong and apparently driven by solid performance within existing clients, right? So just wondering if this came from a specific client or maybe it was just a trend you saw among different clients.

Thank you, Diego, for the question. As we were discussing our -- throughout 2021, pricing discussions have been happening throughout the year. And of course, the final that you get is a combination of new customers, new projects, changes in pricing in existing customers different levels of utilization. And they all happen at different points in time, right? It's not that you negotiate and all the prices change at the same date.

So what you saw during the year was an evolution and we have been able to expand our pricing. But at the end of the day, again, this is not just because we go and raise our prices. It is related to the value that you're adding. It is related to how strategic you become. And I think it's a good number, the one that we saw in 2021 because the mix has not changed. So it's basically an increase in value and effectively an increase in rates. That's what happened throughout 2021. And again, the year is just starting, but we target to be able to also increase our prices to offset eventually whatever happens in the labor market. It's still early in the game, but we are confident that is our possibility for 2022.

Perfect. And maybe just a quick question here on the platform business, right? Can you just help us to quantify the size of this business today and how fast is this grown?

Yes. Thank you for the question. The Globant X initiative continues to evolve and through some of the platforms we already acquired in the past, which are performing really great. And some of our own platforms that are maturing and continuing that evolution. We're still not talking either disclosing any kind of differentiating in those 2 factors and in those 2 components. But the growth is pretty steady and very solid in the 2 segments, in the segment of the companies that we acquired and in the segment of the platforms that we are developing for ourselves.

And for example, on the Augmented Coding side, we're about to release like the second version of our original idea. And that is expected to have a pretty large impact in many of our customers where we are using it. And so we are really creating something very interesting on the Globant X side and on the platform business. But we are not right now being able to disclose or separate revenue coming from there. I know that will be an advantage, but we're not doing it.

It will be great.

Next, let's go to Surinder Thind from Jefferies.

A question about the push-pull between on-site delivery and expansion of your global delivery footprint. Can you talk about maybe what you expect for longer-term targets as we look out a few years at this point? And then if -- has on-site delivery perhaps increased, how does that impact margins?

So I'll take it. So long term, as we have said in the past, we expect the business in India to become a larger part of our total headcount or our global delivery centers. We expect Latin America to become slightly smaller. And we also expect Eastern Europe to become a larger part of the business. Of course, given the circumstances, maybe we are not particularly pushing that region very, very fast as we speak. That's in terms of the geographic mix. And the 5% that we have onshore eventually needs to evolve and become around 12 -- 10% over time.

But it's not going to happen from 1 day to the next. It's not going to happen from 1 year to the next. It's going to be an evolution. And we want to do it in a healthy way. We don't want to grow the U.S. or the U.K. or Continental Europe at the expense of significantly impacting our margins. We want to make it in a way by which the offshore business somehow offsets any impact that the growth in the onshore markets may bring.

So I don't expect that growth on the onshore to be meaningful for the margins because it's going to be slowly but steady. I expect India to become a larger part of our business, as we have been saying over the last several years. And I do expect Latin America to be smaller. And finally, Eastern Europe has to be a little bit larger than where it is today, which is very small. It's around 2% of our headcount.

Got it. And then just a clarification. When you talk about getting to maybe a 10%, 11%, 12% on-site model, is that kind of a 5-year type target? Or what is just kind of (inaudible)

I think 5 years is a reasonable timeline. Again, we came down a lot over the last few years. The COVID situation basically pushed the offshore business significantly. But eventually, as you know, things go back to normal. We will want to expand just mentioning have more people in Germany, more people in Switzerland, France. We have been growing Spain quite a lot this year. We have been also expanding in the U.K. In the U.S., we are landing in Canada much stronger now. So I think a 5-year period to double the percentage of people that we have on-site makes sense. And it's more related to business. I mean, like we know it's going to generate more business once things go back to normal.

Got it. And then a question on M&A here. Given the really strong growth that you're seeing, how does that potentially change in the near term, your thinking or your strategy? Is it unchanged at this point? Are you willing to maybe get a bit more aggressive to maybe see if you can capture more of the market when things are in flux at this point? How should we think about M&A spend?

I would say that the M&A strategy will remain being like focus on 3 regions: Asia, Europe and Americas in general, North and South America. And the strategy would be to keep on doing them. But of course, valuation has been kind of a crazy -- in a crazy situation during the last few months. And we want to be very comfortable with the kind of deals we do and how we use our own cash, so -- and equity.

So we will continue doing them. They will be connected to a new geography, for example, to go to Germany or to go to Asia, to go to some of the countries in which we are interested in expanding. They will continue being based on the platform business that we want to build. They will continue being based on how we develop and keep on developing our main delivery centers in the countries in which we are located. And those are the 3 axis that will be -- that the central tool of the M&A strategy. Pretty much, they didn't remain -- they didn't change. But yes, of course, we want to be very sure that what we are acquiring makes sense, and we are paying a fair value for those acquisitions. And not jump like crazy.

Next, let's go to Arvind Ramnani from Piper Sandler.

I think Arvind you're on mute. Let's move to Walter from Santander. Walter, please go ahead.

Sorry, guys, my -- the question I had are already answered. So thank you for the results and great results again.

All right. Perfect. Thank you. So that will be all for the Q&A session today. Thank you very much, everyone, for joining the call. I'll now pass the call to Martin to provide the closing comments, Martin, please?

Thank you very much, Amit, and thank you to each of you for being there for supporting us, for helping us for providing the right analyst for our company -- analysis for our company and really looking forward to see you soon and on the next quarter. Thank you so much.

Thank you.

Bye-bye.