AgileThought, Inc. (AGIL) on Q1 2022 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the AgileThought First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode . A webcast replay of the call will be available approximately one hour after the end of call to August 12, 2022. I would now like to turn the call over to Scott Gordon of Core IR, Company’s Investor Relations Firm. Please go ahead, sir.
Scott Gordon: Good afternoon. And thank you for participating in today’s AgileThought conference call. Joining me from the company’s leadership team are Manuel Senderos, Chairman and Chief Executive Officer; and Amit Singh, Chief Financial Officer; and Ana Hernández, Chief Operations Finance Officer. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results for the company and are therefore forward-looking statements. The content of this call contains time sense of information that is accurate only as of today, May 12, 2022. Except as required by law, AgileThought disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. The company’s actual results may differ materially from its projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today’s remarks will also include references to non-GAAP financial measures, such as adjusted EBITDA. Additional information including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the associated earnings press release. This conference call will be available to replay by a webcast through AgileThought’s Investor Relations website at ir.agilethought.com. Manuel will discuss the company’s first quarter highlights and provide some comments about the business and the corporate outlook. Amit will then walk through a review of the quarterly financials and our financial guidance before we proceed to the Q&A section. With that, it’s now my pleasure to turn the call over to CEO, Manuel Senderos. Manuel, please go ahead.
Manuel Senderos: Thanks Scott. Good afternoon, and thanks to everyone for joining our first quarter 2022 conference call. In our previous earnings calls, we outlined who we are? The sizeable market opportunity, what do we do for our customers? And importantly, the strategic and financial goals we plan to achieve over the next several years. I just start reported strong first quarter 2022 financial results building our guidance, and with revenues up sequentially for the fifth consecutive quarter. We posted total revenue of $44.2 million during the first quarter of 2022, 19% higher than the same period in 2021, and 5% higher than our fourth quarter 2021. This performance is a direct result of our ongoing investments to build our sales and delivery capability in North America and to position us as a leading end-to-end at scale digital transformation and services provider. We remain confident in our ability to continue to deliver sequential revenue growth. Time total contract value is a strong indicator of future revenue performance. In the first quarter of 2022, our signed TCV was a record $64.4 million up 22% from $53 million in the fourth quarter of 2021, positioning us well for the next several quarters. Most of this TCV came from our U.S. clients. New customers are a key component of our organic growth as they feed our land and expand strategy. For the first quarter of 2022, we added nine new customers to our base, ranging from the financial services sector to healthcare, which are two of our strategic industry verticals. We expect this growth trend to continue over the rest of the year, while new client growth remains strong. We believe we have a continuing significant opportunity to materially expand our wallet share among existing customers. A key metric for us is the number of clients contributing $1 million or more in annual revenue. In the first quarter of 2022, we’ve had 29 of this customers as compared to 27 in the same period last year. Building our team of Agile Thinkers continues to be one of the top priorities for us, specifically our ability to attract onboard and retain top talent to deliver next generation solutions to our customers. We continue to make steady progress in both are recruiting and onboarding as well as managing our attrition rates. Some of our retention programs are in progress, such as enhancing our employee value proposition and tying it to our overall company value proposition, additional programs being implemented involve better connection points between the business market units and the focus recruitment and retention of talent teams that are tied to the delivery functions, which allow a more effective way to work together and are resulting in dividends. On top of hiring strong, experienced digital talent, our campus hiring program in LatAm and our HigherEd risk initiatives are accelerated, which together with our strong training infrastructure is enabling us to better serve and staff our clients’ needs more quickly. Another initiative is the launch of a dedicated staffing team in each region, creating better capacity planning and resulting in getting the right skills at the right time. We ended the first quarter with 2,268 billable resources increasing 13% from first quarter 2021, with the addition of key delivery executive talents over the last several quarters, including the addition of former Global and Executive Alejandro Manzocchi last quarter as our Chief Delivery Officer and Chief Technology Officer, we are witnessing improved talent acquisitions and retention metrics. As the initiatives launched by these new leaders are taking effect. We also continue to strengthen our senior leadership team. On the back of key executive moves and additions in 2021. Last week, we announced the addition of our new CFO, Amit Singh, formerly with Globant as Head of Finance for the U.S. and Global Head of Investor Relations. Amit has vast experience serving corporate clients and the investment community and a track record for delivering strong shareholder returns. We welcome Amit to the team, and are excited to have him continue the work of building our finance team into a world class organization. Now, I would like to provide some details on how we take insights and transform them to reality. It is a key reason customers choose AgileThought over our competitors. The best way to do this is to highlight some of our customers who have accomplished this with our help. One of our clients in the state and local government sector had an IT organization that required transforming they’re inefficient operations to provide more innovation, higher functional resiliency, and a faster yield in the IT organization. Using agile methods, we align their business strategy to move to an output based higher performing organization, eliminating waste and increasing productivity in a significant way. We move the vision into reality that provided rapid scale in natural progression of workflows, and speed to business results in a faster and connected way. Another example, a healthcare lab management software company was focused on chronic kidney disease for early detection testing. Using the client lab records to proactively screen incoming patients and alert doctors. We deployed casual AI techniques to identify drivers that were not based on traditional disease measures, leveraging cloud-based causality platforms and AI driven machine learning platforms. We build a suite of high accuracy, predictive models in a very short period of time. The result was a creation of a new line of service for proactive testing that can now be offered in the highly competitive diagnostics and surveillance lab sector for early detection of disease progression. Another recent organizations choose AgileThought over our competition is due to our advanced thinking, in the agile transformation and AI data analytics space for digital transformation. During the first quarter, we conducted our accelerate by AgileThought a two-day virtual conference, which is our annual thought leadership event. This virtual event focused on organizations that look to move away from the concept of digital transformation to reality. Our event showcase conversation on use cases with our clients and partners ranging from fireside chat to panel discussions. We discussed a range of topics such as using agile methods to transform an organization to implementing AI and how organizations can cultivate a culture of innovation. The sessions through real examples, from a variety of industries sectors with the digital initiatives. All discussion sessions were recorded and are available for viewing on our website. In closing, we are encouraged by what we have achieved to date and are extremely excited about our future opportunities. Our ongoing journey towards industry leadership is a direct result of the dedication and hard work of our Agile Thinkers. And it is why we have high conviction and our ability to continue to achieve our objectives. Now, I will turn the call over to Amit Singh our CFO, who will provide additional insights into our financial results. Amit?
Amit Singh: Thank you, Manuel, and good afternoon, everyone. Before I jump into the financial discussion, I would like to take this opportunity to thank Manuel, the Board, and the Agile Thinkers around the globe for putting their trust in me for this role. Coming from another leading digital transformation services company, I’ve always seen AgileThought is a very strong competitor in this sector. And I’m extremely excited about working with the team to help the company attain industry leadership. Now, I would like to start by providing a brief summary of our first quarter 2022 financial results. I’ll then provide our second quarter and full year 2022 financial guidance. AgileThought delivered a solid quarter with the revenues of $44.2 million and increase of 5% sequentially and an increase of 19% year-over-year. Revenues also beat our first quarter guidance we had provided at the last earnings call. These results were mainly driven by the expansion in the demand of our services within both existing and new clients. As we fulfilled the TCV, we had signed in our prior quarters. Gross margins in the first quarter were 31.3% beating our guidance and improving 156 basis point sequentially and 175 basis points year-over-year. As previously discussed, we have a number of initiatives and trends in our business that we expect will gradually drive us towards the goal of industry-leading gross margins. These include pricing increases, increased deficiencies in our delivery infrastructure, and increase revenues from U.S.-based engagements. That said, we anticipate the possibility that our gross margins may fluctuate from quarter-to-quarter, as we want to remain nimble in our investments to drive TCV in revenue growth. Demand for our next-generation services is currently extremely strong and we remain focused on hiring aggressively to capture that demand and implementing initiatives to increase talent growth and retention. Adjusted EBITDA for the first quarter of 2022 was $1.1 million, a sequential increase of 272% compared to the $0.3 million in the fourth quarter of 2021. The main driver of the sequential increase was the aforementioned increase in gross margins compared to the same period of prior year adjusted EBITDA decreased 45% from $1.9 million in first quarter of 2021 to $1.1 million in first quarter of 2022. The increase in SG&A we experience during the second half of 2021 as a result of investments to accelerate growth and becoming a public company were the main drivers of the year-over-year adjusted EBITDA decline. We expect that SG&A as a percent of revenues will normalize to industry levels in the mid to long term, providing strong operating leverage. Net loss for the first quarter was $6.3 million, as compared to a net loss of $6 million in the fourth quarter of 2021, and a net loss of $3.8 million in the first quarter of 2021. Switching to the balance sheet total debt at the end of first quarter 2022 stood at $57.7 million compared to $57.1 million at December 31, 2021. Cash at March 31, 2022 was $2.7 million. Now, I’d like to provide forward guidance for the second quarter and full year 2022. We expect revenues for the second quarter of 2022 to be at least $45.5 million. Also we expect revenues for the full year 2022 to be at least $184.1 million implying at least 16% year-over-year growth. Gross margin for the full year 2022 is expected to be in the range of 31% to 32%. This concludes my prepared remarks. And now I’d like to turn the call back to Manuel for any closing remarks. Manuel, please.
Manuel Senderos: Thank you, Amit. In conclusion, we are confident about our revenues and margin momentum and expect to show continuous improvement in the coming years. We believe we are very well positioned to benefit from the strong digital transformation demand across the world. And with that, I’d like to turn the call over to the operator, so that we can begin the question-and-answer session. Operator?
Operator: Our first question comes from Maggie Nolan with William Blair. Please proceed with your question.
Maggie Nolan: Thank you. And congrats on the strong start to the year. I wanted to ask about the revenue growth that you saw, and what drove upside to revenue in the quarter and what gives you confidence in the outlook that you’ve put out for the full year?
Manuel Senderos: Hi, Maggie. Good afternoon. Thanks for joining us. So, I would say that the TCV that we’ve been signing over the last quarters is becoming a big backlog for us to be able to implement the growth that we want. And our main constraint here is, how fast and how quickly can we start those projects and staff them with the right talent and quality. In the first quarter actually, I would say that a combination of price increases and new engagement starting throughout the quarter are the two main impacts on us achieving the revenue growth that we just mentioned. And going forward, I think we have very strong backlog from the TCV we’ve been signing. And our main efforts right now are in accelerating our staffing and obviously retaining more of our talent cause the attrition the discussion is an industry-wide problem. So, I think we’re all battling to that. So those are the two key levers that we’re trying to move in a positive way.
Maggie Nolan: Thanks, Manuel. And on that last point, can you talk a little bit about your progress in your talent retention initiative?
Manuel Senderos: Yes, absolutely. Yes, you want to go ahead, Amit? Go ahead.
Amit Singh: Sure, sure. So Maggie, as you understand, and as you’ve seen in the industry, the attrition currently remains a little higher than where we would like it to be. And then Manuel you can go into the details of all the efforts that we are taking, but I just wanted to point out that if you look at the trend. In attrition, over the last few months, we’re already seeing a month over month improvement in that trend. And Manuel, if you want go into the steps that we are taking?
Manuel Senderos: Thanks, Amit. Yes. I would say with the addition of Alejandro Manzocchi, which came in at the beginning of the year we’ve implemented quite a few new strategies to be able to retain more people. One of them is developing the employee value proposition, which was probably not sufficiently clear and within the different geographies where we participate in throughout Latin America, it wasn’t strong in all of the geographies. So Alejandro has done a very good job in the short time that he’s been with us implementing that employee value proposition to tie it with our overall company value proposition. We think that our engineers really stick around because of the interesting work that we do and the possibility of progressing in their career in a company that is doing really interesting work. So, we’re really trying to make sure that we put that message out there and not only to retain more people, but also to attract more people.
Maggie Nolan: Very good. And then great to hear those client examples that you gave on the call. Are there any particular industry verticals that you’re excited about that you think pose a good opportunity for AgileThought?
Manuel Senderos: Yes. I think that for now, the two strongest industries for us is, are healthcare, really strong, there’s a lot of large and mid-size technology-based healthcare companies out there in the U.S. that require our services and that we can add value to them. So, we’ve been very successful in capturing new logos in that sector. The financial sector as well is a very big sector for us and they consume a lot of our services. So, we’ve been able to expand throughout Latin America where we have a good presence, but also bring that knowledge into the U.S. market. So, we’re excited about expanding more financial services in the U.S. market because as it is today, most of our financial services are throughout Latin America, I would say. But those same firms are U.S. firms for global firms. So, we have the same opportunity to move with them into the U.S. market.
Maggie Nolan: Thank you. And then last one for me. Can you comment a little bit on kind of client sentiment as they talk to you about their budgeting and their intentions to spend within these service areas that you provide in the coming quarters and year?
Manuel Senderos: Absolutely. I mean, what we’re seeing is that those budgets continue to grow. There’s a combination of budgets that were traditionally placed for IT, traditional IT, and now are being enhanced with budgets, for marketing, and business operations. And those combinations are expanding the budgets for companies like us to do work that now becomes probably the most important in many of our clients. The most important driver for their future and for them to be successful in their industries. So we’ve seen those budgets grow, as well as we’ve been able to capture new logo. So, I think there’s a very big opportunity to grow within the accounts that we participate already. Most of them have huge spending in digital transformation, and we can very easily grow with those as well as capturing new logos of the same caliber and scope that we have now.
Maggie Nolan: And while just one follow up since you mentioned new logos, is there any kind of increase in inbound of clients given this disruption in some other Eastern European delivery locations or any changes otherwise in the competitive environment? Thank you.
Manuel Senderos: Yes, of course it’s been – it’s been very interesting to see how this has played out. There’s a lot of existing clients, new logos that we’ve been able to capture because they’ve been disrupted by what’s going on in Central or Eastern Europe, in Ukraine. And even some of our competitors that have reached out to us for help, because they need to continue their projects. And they’ve also been impaired by the war in Ukraine. So, we’ve been actually working with some competitors as doing some cooperation, but also been able to capture new business from our existing clients and new logos. So definitely it has played out for us. I believe in the future this really puts in front of the IT managers for the budget owners, the requirement of distributor in their work with looking at geopolitical risks and obviously Latin America plays a very good hedge for that type of strategy for the global clients. So, we are benefiting from that. Amit you want to compliment?
Amit Singh: Yes, what I would add is Maggie, obviously the company is witnessing and improving revenue growth profile. And given if we get a small amount of benefit from our location advantage, delivery location advantage, I think the bigger thing to sort of look for us going forward is, the broader market that we are playing game and how we have over in – over the last couple of years, significantly expanded our services and the breadth of services and enhanced targeting a bigger overall TAM in the market. So yes, we are guiding to a certain growth for this year, but internally we know that the company has the ability to continue improving on that growth to reach or exceed sort of the industry leading growth that exists right now.
Maggie Nolan: Helpful context. Thank you.
Manuel Senderos: Thank you, Maggie.
Operator: Our next question comes from Bryan Bergin with Cowen. Please go ahead.
Zack Ajzenman: Hi, thanks. This is Zack Ajzenman on for Bryan. First question Amit, congrats on the new role here as a recent joiner with outside experience. Can you maybe talk about what drew you to AgileThought as you assess the company, what you find most attractive, and then at the same time, where do you now plan to focus on most in your early tenure?
Amit Singh: Okay, perfect. Thank you very much, Zach and good to have you on the call. So look, I mean when I was at my prior firm, I’d always seen AgileThought as a very strong competitor, right? I mean, a smaller competitor, a very, but a very strong competitor in the digital transformation space. So that was sort of my – so I knew the firm and the work that the firm has been doing, and that was the primary sort of attraction factor for me, for the company. And as we have discussed in the past, there are obviously certain things that, we can continue improving on and which should help us, hopefully as you move forward materially improve our top line profile and materially improve our margin profile to be industry leading. So given AgileThought existing capabilities, plus the opportunity of this improvement, both in, top line and margins to be industry leading was the attract, the attractive factor for me. And then after talking to all the management inside where everyone’s focus was towards, not just playing in this field, but being the leader in this field is, another factor that attracted me plus as we all know, and we have seen it as we grow bigger, obviously the company at some point will become a multinational company, but as we’ve seen right now, delivery from Latin America obviously is, has its benefit for clients across North America. So that’s a benefit for the company as well. As I come in to the firm, there are a couple of things that I’ll be focusing on. One is, making finance, call it a business enabler, right? Using all the data from finance to help us, better approach clients, better drive revenue growth within clients, better drive margin growth within clients so rather than keeping finance as a separate sort of organization within the company time finance, very closely to our business and margin growth, that’ll be my sort of number one target. Then given my background, working with shareholders and investors, trying to work more and more on our internal called forecasting and our overall analysis on how we see our growth and margins trending over the next, in the near term, in the mid long term, and then keeping the shareholder base and then the analyst completely aware and on board with that trajectory. So that will be a big focus. And then finally more operational, there’s a lot of opportunity as it is in all the companies to drive more and more automation and more and more efficiencies within the operations of the organization. So, I know it’s just my second week at work, but those are the initial things that I’m focusing on. And I’m very excited about, because I see, everywhere you look, in any of these departments, it’s all opportunities, to further improve and the whole team is on board. We already have a very strong sales base set up. We already have a very strong delivery network set up now is just about, executing from here. And our deal activity already shows that, that execution is working out well as well.
Zack Ajzenman: Appreciate the complete 360 degree view there. Our follow up, we want to dig in a bit on the workforce. So specifically just looking to see where utilization levels, the quarter versus historical dorms, and then more broadly we know AgileThought is well positioned in Mexico and other parts of Latin America. And it’s nice to hear the confidence on the anticipated hiring front, but curious if you’ve seen incremental resourcing competition as vendors with outside exposure to Eastern Europe, accelerate their hiring efforts in AgileThoughts, backyard.
Amit Singh: I mean, look that has been, first of all, utilization is in low 80s and generally for a company like us, anywhere from that 80% to 85% sort of makes sense, and for certain type of project in certain area, you can drive it higher than that. And the competition from call it non-LatAm firm that has always been there. Even in my prior firm, it was the same question. But when you look at a lot of, not just now, even in the past, if you look at a lot of these multinational firms, they’ve always had presence and I’ve always tried to grow in LatAm. So, what I would say is the digital transformation market has always been competitive for talent. So, I know given the current situation with Ukraine, Russia and maybe certain players will be a little bit more aggressive, in their hiring techniques, but we feel very confident given our base, especially in Mexico, our relatability with the talent in the region. And now increasingly more building out as Manuel had mentioned enhancing our value proposition and all of that. We feel very comfortable in us being able to sort of continue to drive or drive strong headcount growth. And then, finally, just on top of all of this, we also have to keep in mind that right now for the company, the base of headcount is low, right? Like we’re still a small firm. We expect to materially accelerate on all the different areas, but the absolute number of people that we are hiring is still relatively small. So all that works, very positively for us going forward.
Zack Ajzenman: Thanks very much.
Operator: Our next question comes from Puneet Jain with JPMorgan. Please go ahead.
Puneet Jain: Yes. Hi, thanks for taking my question and let me also take this opportunity to congratulate Amit. So, let me ask about macro environment more like follow up to Maggie’s question. Are you seeing with obviously stocks being down a lot concerns around strength of macro economy as it specifically in second half, are you seeing any change in client behavior, maybe reallocation of budgets or any delays in new project starts anywhere in the business at all?
Amit Singh: Hey, Puneet.
Manuel Senderos: Go ahead.
Amit Singh: Sorry, Puneet. Thank you very much. Maybe I can start and Manuel, please jump in. Look I mean a couple of teams that I’ve always played out sort of for digital transformation firm. Digital transformation firm, because generally working to help drive top line versus sort of just cutting cost. They sort of become counter to economic sort of slow down, right? Like, I mean, when the economic slowdown happens, that’s when the clients need digital partners to drive their top line and help them be more competitive and better placed in the end market. So, we feel, what we are witnessing among our clients. We see very positive trend and continue to see that positive trend. And that is evident in the TCV that we have been reporting. And I’ll leave it to Manuel to add any color please.
Manuel Senderos: Well, I think I agree with Amit. I think the demand side of our business is super strong. We haven’t seen any decline at all I think, we will continue to be strong and it’s actually accelerating. I think the main component of all of our business in, for us and our peers is the ability actually to grow our teams in a way that can meet the market demands. But the market demand is very, very strong.
Puneet Jain: No, that’s very good to hear you actually answered my second question already. About if you had demand constrain or supply constrain. Let me ask about hiring, for your needs, like where do you hire from, like can you talk about like mix of new hires in terms of entry level versus at experience levels and where do you typically hire from?
Manuel Senderos: Sure. Because of the high level of work that we do, we hire more senior individuals into the company. But we understand that going forward to able to achieve a larger growth and meet the demand expectation. We probably need also to expand our, the bottom of our pyramid through college hires. So, we’re doing both the college hires program is continued to grow for us every month. We’re adding new programs and partnering up with different universities in different locations where we operate. So, we think that is part of our future. But the reality is that the high end type of work that we do require is senior developers and senior consultants. So, I would say today, most of our hires are coming from the most senior part of the pyramid.
Puneet Jain: Got it. Thank you.
Operator: Our next question comes from Surinder Thind with Jefferies. Please go ahead.
Surinder Thind: Thank you. Just following up a little bit on some of the earlier commentary, I mean, it clearly sounds like, it’s not a demand issue at this point in time. So, can you help me understand fully what the gating factor is? Does it really just come down to your ability to recruit and retain the talent? Or are there other considerations as well that we should think about scale brand recognition, some of those other kinds of things?
Manuel Senderos: I would say that the main constraint is just our ability to hire and retain people. That’s the small, the most stressful point in the whole organization, because the projects are sold, the TCV assigned and clients are expecting to start the projects on certain dates. And so the most stress that we have right now is hiring and just trying to meet the demand. So, I think we’ve, we have a big opportunity in the throughput of our hiring. Alejandro Manzocchi, I mentioned that came in the beginning of the year. He is implementing a lot of changes both in the recruiting and the value proposition and the attraction, the brand deployment through the different geographies where we hire. And we think we have a lot of opportunity to improve our throughput in hiring. And obviously the same, there’s the same levers that you move to attract as you do to retain. So, we feel very positive that with Alejandro here, we can significantly improve both of those levers. And those have a very direct impact on the amount of revenue that we can actually recognize every quarter
Surinder Thind: Understand.
Amit Singh: If I could just add to Manuel’s comments, look the most important part of being able to hire strong talent is the work that a company does. And that we already have, right? And now it’s more about call it the periphery around it, just further enhancing the overall methods around it, and putting in more sort of procedures in place to improve retention and all. But the good thing is we are already working with the leading companies across the U.S. We’re already doing very strong digital transformation work. So we have that, which is the core component of being able to hire strong talent. We already have that in place. And the other things are being put in place and a lot of them are in place. So, we feel very confident that that we should be, as we move forward and we should be able to start hiring enough talent to fulfill sort of the demand that we are seeing.
Surinder Thind: Understood. So is it fair to characterize that, that the firm is going through kind of the transition from what I would call a more niche player to a larger organization in the sense that a lot of these, I’ll call it, processes still need to kind of be put in place at this point. How should we think about that in terms of just truly getting the value proposition to where it needs to be to, to make sure that you do have the talent that you do need and you are able to retain it and stuff. Is it just the small company versus the big company mentality here at this point? Or how should we think about that?
Manuel Senderos: Well, I’ve made a big efforts here in making sure that the management team comes from big company mentality. So people from Global into DXC or IBM or other. So our management team knows how to operate at scale, and I’ve made a big effort in making sure that that’s the case, so that they know exactly what that looks like. So there is part of that, what you’re saying. So transitioning, and there’s a of processes that, that are being changed have been changed over the last couple of years, with Kevin Johnson, for example. So there’s part of that as a transition. There’s also, I think that the demand acceleration is probably faster than what we anticipated. And so the demand is more strong and we probably need to catch up with the supply part of it. I think that’s kind of what’s happening. I think we didn’t expect that high of a demand coming in over the last year after the pandemic and we have, so that’s just an opportunity for us. We just need to make sure that we are on par with that and the supply part of the equation.
Surinder Thind: Got it. And then just in terms of the earlier obviously confidence was expressed in the full year forecast. Can you maybe talk about if there’s any sensitivity there to potential downturn in the market? Obviously the markets have been very volatile. There is considerable macro risk. I do understand that, there was some earlier commentary about AgileThought or digital transformation being a little bit more macro proof, but how should we really think about how macro proof you really are?
Amit Singh: Sure.
Manuel Senderos: You want to address that Amit?
Amit Singh: Yes, yes, definitely. Look, I mean the way, and as you’ve seen, this is the first time we’re guiding to sort of full year as well. And the strategy here is going to be when we guide to something, we have very high visibility in those numbers, right? Similar to something, we have followed, or I have followed in the prior companies. So that’s where we stand. And a lot of this work is already, as you’ve seen in the last couple of quarters we’ve already signed it’s in our signed TCV. So all of this gives us very strong confidence in this guidance that we have provided. Hopefully we can do you, slightly better than this guidance, that would be hope. But one thing, we all know insight and that, guiding to a 16% growth, the opportunity for us to materially accelerate it from this level in the coming years is there. So, I think the way to think about this company is, okay, this is the guidance with this year. And, and we have strong confidence in this guidance, but as we move forward in the coming years, all of the metrics that we are guiding to should see year-over-year improvement. So, yes, I’ll leave it at that. And when the question was asked earlier about, my goals here, and then the second goal that I mentioned to make sure that the street is completely aware and is always kept, and then there’s a huge amount of communication between the company and the street to make sure, everyone knows the direction that we are going in and all of that, we’ll make sure that happens as well.
Surinder Thind: Understood. That’s helpful and that’s it for me. Thank you.
Operator: Our next question comes from Brian Kinstlinger with Alliance Global Partners. Please go ahead.
Brian Kinstlinger: Hi guys. Thanks for taking my questions, sorry, I joined late. In a typical year, how much revenue comes from customers that have been with the company for more than a year what’s churn or customer attention, either one? And then lastly, can you comment on the average duration of a program and once they’re starting a major transformational program, how easy or hard is it for them to slow their plans, if their priorities change?
Manuel Senderos: Hi, Brian, good afternoon. Thanks for joining. So, I would say that we always plan ahead. The way we plan is that 85% of our business is coming from our existing clients. And we plan for quite a bit of growth within those existing clients. And then the rest of the growth or the rest of the budget typically comes from new accounts. Now, I have been surprised over the last couple of quarters on the new business that we’ve been able to bring and the ability to rapidly grow them from a new account into a large account, large contributor into a revenue. So, I am very encouraged for that. Now, in terms of churn, we actually don’t have churn, I would say very close to zero. I don’t want to say completely zero, but I would expect very close to zero because we do look at a client profile very carefully before we engage. And we make sure that those clients have the potential to being very long term clients for us, that we have the ability to help them in their strategy. And we try to engagement in a very long term fashion. So every time we land a new client, we hope and believe, and that’s been the case as it’s going to be a five year, 10 year old account for us. And I think, that’s the first part of your question. And could you repeat the other part, Brian, please?
Brian Kinstlinger: Yes, I guess I’m just curious. I mean, it’s along a similar line of questioning that a few have asked if a customer starts in a deep, in the transformational program with you guys, how easy is it or hard? Is it for them to ramp up or ramp down more, more or less actually ramp down if their priorities change?
Manuel Senderos: Well, what we see typically is that they have a very large funnel. Typically are – the client profile that we see, that we attract has a very large funnel of projects to be done. And they have limited resources in terms of budget. There’s never enough budget to do all the projects they want to do. So what the client is typically trying to do is managing priorities. Now they have obviously the ability to ramp down. We typically try to engage them in a manner where we take onboard a large initiative and we put in place different Agile squads or strong teams for a long term. They have the ability to ramp them down, but we very seldom see that what we more constantly see is in fact, adding strong teams or squad to or squads to existing clients every quarter all the time. So it’s mostly growing accounts for us at this moment.
Brian Kinstlinger: Great. Thanks so much.
Manuel Senderos: Thank you, Brian.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Manuel Senderos for our closing remarks.
Manuel Senderos: I’d just like to appreciate everybody that attended and the questions that we received. I hope we were clear enough and you were able to get the information you needed. But if you need more, please don’t hesitate in reaching out to us to Amit directly or even myself. Thank you everyone and enjoy your evening.
Amit Singh: Thank you everyone.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
