Globant S.A. (GLOB) Q3 2020 Earnings Call Transcript

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Globant S.A. (NYSE:GLOB)
Q3 2020 Earnings Call
Nov 12, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Globant Third Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. 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.

Paula CondeInvestor Relations

Thank you, operator. And thanks, everyone, for joining us today on our call to review our third quarter 2020 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 Martin Migoya, Co-Founder and Chief Executive Officer; Juan Urthiague, Chief Financial Officer; and Patricia Pomies, Chief Delivery and People 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 would now like to turn the call over to Martin Migoya, our CEO.

Martin MigoyaChief Executive Officer

Thanks Paula, and hello everyone. I’m happy to be with you again as we continue on our journey to reinvent this industry. In Q3 Globant brought in $207.2 million in revenue, delivering 20.9% year-over-year growth. I’m happy to see how our Globers continue to demonstrate their amazing talent and resilience in the face of uncertainty. This year for us, meant to push our ambition to reinvent the industry even further. IDC predicts that there will be over $6.8 trillion of direct additional transformation investment between now and 2023. Despite the uncertainties, we have a unique opportunity and we will keep working to make companies agile and accelerated.

Our position remains at the forefront of the market as a pure play in the digital and cognitive transformations space. Recognizing this, IDC MarketScape named Globant as a global leader in its Worldwide Customer Experience Improvement Services 2020 Vendor Assessment. We are very honored because this shows our commitment to creating product and customer experiences that connect with millions of consumers in a different way. Many special thanks to our clients like DIRECTV, LATAM Airlines, Rockwell Automation, and Prisma, who shared their experience with IDC and made this recognition possible.

Now I’d like to turn the call over to Patricia Pomies, our Chief Delivery and People Officer to share with you some of our new initiatives. Pato, please.

Patricia PomiesChief Delivery Officer, Chief People Officer

Thanks, Martin. Hello, everyone. It’s nice to be with you all again. As I have shared with you before, at Globant we have more than a vision of changing the world through technology. We want to change the technology sector itself. At the time when all of us are of reinventing ourselves, reevaluating our opportunities and reminding ourselves of what is truly important in life, Globant is taking those steps forward as a company, our Be Kind initiative is taken on a new project this fall.

We are presenting the Globant Awards-Women That Build Edition, to recognize women who have shown tremendous leadership in technology and who are the future of this sector. We will be recognizing this women across 16 markets where we work. With this initiative, we aim to build a community of support, awareness and education for greater female participation in the tech sector and to close the gender gap. This is meant to create a virtuous circle of ideas, innovation, and growth. Leaders from the business, academic, and civil society fields will be in our panel of judges. Shari Loessberg of MIT, as well as Linda Rottenberg of Endeavor, and The Edge from U2 will make our global recognition. I invite you all to discover more at Women awards at globant.com.

Now I’d also like to take this opportunity to mention our ongoing investment in our talent. Our digital education platform, Globant University continues to be used by our Globers to upskill and reskill in the most sought after capabilities of the sector. Since our launch last quarter, I’m so happy to see that so many of our Globers have taken advantage of this opportunity. As digital trend continues, this is our company’s moment to take a global a step.

Globant has never been a more exciting place to work, were professionals have the opportunity to join teams from all over the world and create exciting solutions for some of the most innovative brands in the planet. Realizing the uniqueness of this opportunity, combined with our constant search for the best talents, we are looking to hire talent from the world to execute our ambitious growth initiatives. We are collaborating with many prestigious business course to offer graduates a worldwide hands-on a multi-sector experience. I look forward to sharing with you more of this initiatives in the near future. Thank you. Martin, Please.

Martin MigoyaChief Executive Officer

Thanks Pato. As you may remember, our Be Kind initiative was first presented on this call one year ago. It was based on three pillars, be kind to our peers, to humanity, and our planet. For us this vision is how we want to positively impact the state of our world. In addition to diversity and inclusion programs, we continue to dedicate ourselves to the planet. We will meet our objective of relying on 100% renewable energy this year, but today I also want to share with you that we are committing ourselves toward a new and more ambitious goal. We will become full carbon-neutral by the end of 2021. We make this commitment because we know that as global citizens, we must set an example of sustainability over the long term. Aligned to this as we evolve our organization, we also believe that we have a commitment to helping our clients reinvent themselves.

For a long time, the concept of sustainability has focused mostly on environmental issues, but we believe that the sustainable development of the world should take into consideration a holistic approach where people, profit and planet are interconnected. This calls for a new approach. I’m glad to share that we have just launched our new sustainable business studio. This is studio will operate as intersection between digital technology and sustainability, bringing together you know how and capabilities. We want to provide organizations and stakeholders with the tools and expertise to support climate actions and perform as responsible businesses. It is an exciting area and I expect to share more news soon. For more information about this new studio, feel free to visit sustainablebusiness.globant.com.

Now I’d like to go over what we have been working on. We believe the future of all companies lays heavily on their ability to embrace artificial intelligence. I have talked to you in the past about Augmented Globant, especially Augmented Coding, our solution to a low coders to work quicker and with greater collaboration and creativity. In September, during Converge, we officially presented Augmented Coding with Steve Wozniak as our special guest. Adapting to the current reality, this was the first online version of Converge, which enabled us to expand the typical attendance to over 9,000 people watching live.

Now regarding our clients. As I mentioned on our last earnings call, the pandemic has accelerated the shift to digital for many of our clients across several industries. This trend is accelerating Q3 with the engagement we deliver. We have brought in 40 new logos in the past quarter across many different industries. Let me double click on a few. We have continued to work with Finning International throughout the COVID crisis. Globant created a COVID-19 partnership program for Finning to support several projects throughout 2020. We have also just started multiple long-term engagements with Depop, a mobile fashion marketplace. We’re working on their mobile development and quality assurance services. In gaming, we’re providing co-development services for two of Warner Bros games, Hogwarts Legacy and Gotham Knights.

In the retail space, we won strategic mobile development project with Gap [Phonetic] in early Q3. Our project is directly aligned to increase the company’s revenue from its online channel, a critical adoption to the new normal. In the financial sector, Globant continues to capitalize on the shift to digital finance. One such project at SoFi, where we are providing the technology support for the integration process of one of their acquired companies. We also continue to broaden our relationship with Openbank, Spain’s first and largest digital bank. As a strategic partner, we are involved in the international rollout of their multi-country platform, with more than 27 projects in nine countries, we are working at every layer and with a broad technology stack. This will help Openbank to scale up their banking platform that will drive future expansion.

In the Food and Beverage sector, we are working with Grupo Riquelme, a holding that produces, distributes, and sales in Paraguay. It has a strong supermarket chain and is innovating an e-commerce platform. We are partnering with them so they can offer an integrated value proposition and develop a data driven work culture with the capabilities necessary for industry in disruption. Closing out, I’m happy to say that our global family keeps on growing.

In personnel, we have ended the quarter with 14,340 Globers worldwide. During Q3, we broke records in recruiting, while attrition remain low at 12.6% for the last 12 months. 2020 made something very clear, organizations everywhere need to truly harness the power of AI and have the agility necessary to build and leverage their unique capabilities. This would be Globant positioning as we move forward. As we continue to craft the right solution for our clients.

With that, I’ll turn it over to Juan to go further into the financials. Thank you very much. Juan, please.

Juan UrthiagueChief Financial Officer

Thanks Martin, and good afternoon everyone. I hope you are all doing well and staying safe. Let me start by summarizing our third quarter 2020 results. I will then discuss our guidance for the fourth quarter. We are very pleased with overall results for the third quarter of this year as we displayed strong execution in these challenging times. Our revenues for Q3 amounted to $207.2 million, beating our guidance and representing a solid 20.9% year-over-year growth. On a sequential basis, our revenues for Q3 increased 13.4%, showing a very healthy recovery. Q3 revenue growth was 21.9% year-over-year in constant currency.

In line with our expectation, the overall demand environment, largely stabilized in the latter half of the second quarter and we have witnessed an improvement in end market in the last several months, which is reflected in our strong sequential organic top line improvement in the third quarter. We remain bullish about the demand environment, post the COVID-19 crisis and are encouraged by the ongoing positive trend in our bookings. That said we also remain cautious about any impact to our end market, due to the potentially new waves of lockdowns, like the ones we are currently witnessing in Europe and in some parts of the US.

As discussed in our last earnings call, we always prioritized the health and safety of our employees. And almost all of our employees continue to work from home while maintaining seamless delivery of services to our customers. Our delivery and people teams continue to develop and execute strong and innovative initiatives to keep employee productivity morale high. Disney was once again our largest customer for the quarter, growing a strong 10.2% year-over-year and 14.8% quarter-over-quarter. We continue to be very well diversified within Disney, serving the majority of its subsidiaries. Other than Disney, rest of our accounts collectively grew at a solid 22.4% [Phonetic] year-over-year with revenues from the Top 5 and Top 10 accounts increasing at a robust rate of 49.3% and 41.1% respectively over the third quarter of 2019. Consistent with Q2, our top accounts are proving to be more resilient to COVID-19 impact relative to the rest.

As mentioned before, we experienced sequential improvement in Disney with revenues growing 14.8% quarter-over-quarter. Outside of Disney, rest of the accounts collectively also grew strongly at 13.2% quarter-over-quarter as we experienced improvements in most industry verticals. Our customer concentration numbers for Q3 2020 remain similar to Q2 2020. Our Top one, Top 5 and Top 10 accounts, representing 10.8%, 32.2% and 45% of revenues compared to 11.9%, 26.1%, and 38.6% of revenues respectively for the third quarter of 2019.

Looking at diversification of our revenues by industry verticals. We remain balanced across the different industries with financial services and media and entertainment leading the pack, accounting for 23% and 22.8% of our revenues, respectively. Professional services and financial services were the fastest growing industry verticals in Q3, growing at 39.1% and 30.6% year-over-year respectively. Starting this quarter we are disclosing our exposure to defense care vertical. Healthcare represented 8.8% of our revenues in the third quarter and we believe it has a massive growth potential for us.

Regarding the progress of our 100-Squared strategy during the last 12 months ended September 30, 2020, we had 16 accounts above $10 million in annual revenues compared to 13 customers for the same period last year and we had 118 customers with more than $1 million of annual revenues compared to $104 million one year ago. We continue to expand our relationships with our key accounts, the basis for our continuous growth.

In terms of geographic regions, during the third quarter of 2020, 70% of our revenues were in North America, 22.4% in Latin America and others, and 7.6% were in Europe. In Europe, we witnessed a strong acceleration in revenues growing at 56.1% year-over-year and up 34% on a sequential basis. Also Latin America and others, showed continued strength growing at 58.7% year-over-year and 22.1% sequentially. During the third quarter of 2020, 84.5% of our revenues were denominated in US dollars, providing a hedge to our top line against currency fluctuations.

Turning now to profitability. Our adjusted gross profit for the period increased to $80.8 million, representing 39% adjusted gross margin compared to $69.6 million representing 40.6% adjusted gross margin in the third quarter of 2019. Year-over-year adjusted gross margin decline is mainly explained by COVID-19 relate to lower utilization. However, on a sequential basis, adjusted gross margin improved 80 basis points, helped by the sequential improvement in utilization, partially offset by salary increases on FX fluctuations.

We finished the quarter with 14,340 Globers, 13,436 of which were technology, design, and innovation professionals. In the second quarter, we have decided to focus on only selective hiring of IT professionals in response to the impact on the demand environment from COVID-19 crisis. However, since the latter half of Q2 and continuing into Q3, we have been witnessing gradual improvement in the demand environment. In response to this, we strongly restarted our hiring engine in Q3 and had a robust addition of 1,863 IT professionals sequentially. Organic sequential net additions of IT professionals, excluding gA’s acquisition stood at 717, representing a solid return to pre-pandemic levels of employee additions.

Over the last few years Globant has invested heavily in establishing a robust training and hiring infrastructure across the globe, which gives us strong ability to seamlessly ramp up hiring and trainings as required. At this moment, we don’t foresee any challenges in finding the right talent to meet the demand.

Attrition for the last 12 months continued to decrease and was at 12.6% compared to 14.1% one year ago, normalizing from the impact of the recent gA acquisition, our attrition will have been 13.4% still very healthy. We continue to expect attrition in the 14% to 16% level, once we come into a post-COVID-19 world. Adjusted SG&A came at 20% of our quarterly revenues, an increase of 70 basis points compared to Q2 2020, but an increase of 60 basis points year-over-year. We continued investing for the future, primarily to expand our sales coverage in our target markets, mainly in Europe. We believe this focus will better prepare us to capture the robust demand expected post the COVID-19 crisis and help maintain a strong long-term revenue growth profile. As a result, our adjusted operating income for the quarter amounted to say $31.6 million or 15.3% of revenues compared to $30.9 million or 18.1% of revenues for the third quarter of 2019. On a sequential basis, adjusted operating margins improved 190 basis points, as our revenue growth profile and utilizations continue to trend toward the pre-COVID-19 levels, it will have a positive impact on our adjusted operating margins. However, we will continue to strongly invest in the company as well. Together, this leads us to believe that the adjusted operating margin will trend in the 15% to 17% range in the near and mid-term.

Share-based compensation expense for the third quarter of 2020 amounted to $6.6 million, representing 3.2% total revenues for the period. This expense is mainly related to the planned restricted stock units granted to certain key employees and Directors of the company as part of our long-term retention plan. Finance expenses amounted to $2.3 million in the third quarter of 2020 compared to $1.8 million for the same period last year. This loss is mainly composed of interest expense on lease liabilities and interest expense on borrowings.

Other financial results, net amounted to a loss of $1.5 million for the quarter compared to a loss of $2.1 million during the third quarter of 2019. This item is primarily composed of FX results from monetary assets and liabilities in local currencies, results from our hedging strategies and gains from transaction with bonds.

In the third quarter, we recorded a loss of $3.7 million in other income and expenses net. This is related to remeasurement of the fair value of contingent consideration associated with one of our acquisitions in 2019. Our IFRS effective tax rate for the quarter was 23.4%, coming in line with our expectations of 22% to 24%. We expect our fourth quarter 2020 effective tax rate to be between 23% to 25%. Adjusted net income for the third quarter of the year totaled $24.4 million, representing 11.8% adjusted net income margin compared to $23.5 million representing 13.7% adjusting net income margin for the third quarter of 2019. On a sequential basis, adjusting net income margin increased by 90 basis points. Adjusted diluted EPS for this quarter was $0.60, based on 40.8 million average diluted shares for the quarter compared to $0.62 for the third quarter of 2019, based on 37.8 million average diluted shares for the quarter.

Moving on to the balance sheet, our cash and investments as of September 30, 2020, amounted to $385.6 million. While borrowings amounted to $78.6 million. During the third quarter, we generated strong free cash flow of $21.6 million. Q3 was another solid quarter for free cash flow despite the ongoing COVID environment. And our free cash flow to adjusted net income was around 90%. We also continue to execute on our M&A strategy with the latest acquisition of gA on July 31. gA performing as expected and the integration is proceeding very smoothly.

Now let’s talk about the nine months ended September 30, 2020. Revenue for the nine months ended September 30, 2020 was $581.5 million, implying a solid 22.4% year-over-year growth. Revenues, started on a strong footing in the first quarter followed by a period of softness in the second quarter resulting from COVID and then showcasing strong sequential strength in the third quarter. Adjusted Gross profit for the nine month period was $226.2 million or 38.9% adjusted gross margin compared to $193 million or 40.6% adjusted gross margin for the same period last year, a decrease of 170 basis points. On a year-to-date basis, this margin compression was mainly explained by lower revenues to the impact from COVID-19 and lower utilization.

As previously discussed, despite the impact to our top line from the ongoing pandemic, we have decided to not let go of our employees with the assumption that COVID-19 crisis is short term in nature. Adjusted SG&A for the nine month period accounting for 20.3% of revenues increasing 60 basis points compared to the same period last year. Adjusted profit from operations for the nine-month period ended September 30th, 2020 was $86.1 million or 14.8% adjusted profit from operations margin compared to $81.6 million or 17.2% adjusted profit from operations margin for the same period last year, representing an decrease of 240 basis points and driven primarily by the impact of COVID and FX on gross margins.

Adjusted net income for the nine months period ended September 30, 2020 was $68.8 million or 11.8%, adjusted net income margin compared to $61.9 million or 13% adjusted net income margin for the same period last year. Adjusted diluted EPS for the nine month period ended September 30th, 2020 was $1.75 based on 39.3 million average diluted shares for the period, compared to $1.65 for the same period last year based on 37.6 million average diluted shares.

To wrap up, I would like to share with you our outlook for Q4. Based on current visibility, we expect Q4 2020 revenues to be at least $220 million or 19.4% year-over-year growth. At this point, we do not expect any FX impact to our fourth quarter revenues. Q4 adjusted operating margin is expected to be largely in line with Q3 2020. And adjusted diluted EPS is expected to be at least $0.66, assuming 41.3 million average diluted shares outstanding for the quarter. Also, we expect our tax rate to be in the 23% to 25% range in Q4 2020.

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

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Tien-Tsin Huang of J.P. Morgan. Please go ahead.

Tien-Tsin HuangJ.P. Morgan — Analyst

Thank you so much. Very good results here. I wanted to ask with the improvement that you saw from the second quarter including from your larger strategic clients, Martin, is it safe to say that your visibility is back to pre-COVID levels especially among your larger clients. I know we can’t really say we’re beyond the pandemic yet, but are you at a point now where you feel like the visibility is back to pre-COVID levels?

Martin MigoyaChief Executive Officer

Hi, Tien-Tsin and thank you so much for coming today. In general terms, I would say, yes. There are some caveats that are happening on — the ramp up — so some of those customers that ramped down. And but I feel that it is by far compensated by activity on other places and even other areas of that of those same customers that are growing very, very fast. So visibility is good, pipeline remains at very healthy levels and increasing from previous levels. So I’m optimistic in general that the situation is good although COVID you never know what’s going to happen. So, I would never be 100% sure about the visibility, but it’s is much better than last quarter.

Tien-Tsin HuangJ.P. Morgan — Analyst

Yeah, it sounds that way and it sounds like you’re also, is my follow-up question, that you’re hiring — you’re organically back to sort of pre-COVID hiring. It sounds when you’re talking about your no issues or challenges from a hiring standpoint. So I’m just thinking if this — if this demand trend continues, do you feel confident that you have the resources to delivery if we want to get back to sort of your pre-COVID revenue growth in 2021? For instance, do you have the resources and the delivery to do it?

Martin MigoyaChief Executive Officer

Yeah, look we took a very serious decision when the crisis started around what would be our — what we would do with the bench and the lower utilization that we were having, and we took a — I think now, looking it from further, we took a wise decision given that we choose to preserve the people and to have the people ready whenever the business comes back. As the other decision could have been to preserve margins and to preserve the utilization and to not be ready whenever the business come back and I think we were the winners in this decision because we choose to preserve the people, preserve the talent, keep on hiring, which slowed down, of course, during the crisis, but now we are back full steam ahead, 763 organic new people in the quarter, plus another amazing 1,100 people from the gA acquisition. So I feel very confident that we can complete and we can fulfill the needs of the talent that we need looking forward and into next year.

Tien-Tsin HuangJ.P. Morgan — Analyst

Very good. Thank you. Nice job.

Martin MigoyaChief Executive Officer

Thank you.

Operator

The next question comes from Bryan Bergin of Cowen. Please go ahead.

Bryan BerginCowen — Analyst

Hi, good evening. Thank you. I wanted to follow-up on that last question. Can you talk about where you’re focused on adding headcount, right, any regions — are you having a greater emphasis in any regions that you haven’t historically been adding in?

Juan UrthiagueChief Financial Officer

Yeah, hello, Bryan. This is Juan. As always, Latin America is still our largest talent development center. We are seeing a lot of growth in Colombia, in Mexico, also in Argentina at this point. On top of that, our India operation, which is extremely healthy and growing is another area where we are growing fast and of course we still need to do more work to accelerate in Eastern Europe, but we are doing good progress. So you should expect Latin American and India to lead the growth and then a little later Eastern Europe, which is another area where we are putting some investment.

Bryan BerginCowen — Analyst

Okay. And then just as it relates to the 4Q revenue guide, is there anything to call out on organic trajectory assumed in that 4Q outlook outside of just a more difficult comp from 4Q ’19 relative to 3Q, I’m hearing obviously the momentum and the positive comments on visibility, so just curious if there — what you might be baking into that 4Q growth rate, anything to call out?

Juan UrthiagueChief Financial Officer

Look I mean in Q4 is another sequential organic growth. We continue to see, as Martin was mentioning before, very good hiring and utilization improving in Q3 a little bit more than Q4. So, in the guidance for Q4 it is almost 20%, then the organic part that comes from gA is pretty much what we mentioned in the last call, even though the teams are already integrated and we have started cross-selling into the two companies and the customers of the two companies. At this point, we can say that gA is about $16 million in Q4, but again, this is probably one of the last time we will be able to split that revenue clearly, as the teams are already integrated into Globant’s regions.

Bryan BerginCowen — Analyst

Okay. Were they what you thought they would be from a revenue contribution for this quarter?

Juan UrthiagueChief Financial Officer

Yes, they are in line with what we mentioned in the last call, a little bit close to $11 million.

Bryan BerginCowen — Analyst

Okay, great, thanks guys.

Operator

Your next question comes from Ashwin Shirvaikar of Citi. Please go ahead.

Ashwin ShirvaikarCiti — Analyst

Hi, thanks. Hope you guys are well. So my first question was to ask if you’re seeing very strong sequential growth here, some of that’s partly because of the beaten down base that we’re kind of going through. Do you expect that to persist the next couple of quarters heading — looking into next year? So not looking for guidance, obviously, but it is pretty good, solid sequential growth.

Juan UrthiagueChief Financial Officer

Yes, hello, Ashwin. Thank you for the question. So at this point, as Martin was saying, we are optimistic about the future. The visibility is improving. We are seeing good momentum in our top accounts even in those that do have some COVID impact, but we are starting to see some comeback on some business units within those customers and again at this point we expect — provided that the COVID situation does not deteriorate or does not come back a good 2021. I mean everything seems to be moving to the right direction in terms of pipeline, in terms of visibility, but I think we still need to wait a little bit until the vaccine or new treatments are out there and remove all the uncertainty that is still around, but all in all, I think we are optimistic about 2021.

Ashwin ShirvaikarCiti — Analyst

Okay. So in other words, as you speak with your clients and talk to them about their budgets for next year and that can get a bit delayed here and there of course, the budget itself when times are tougher, but you’re seeing for the type of work you do that demand should continue to be strong, correct?

Martin MigoyaChief Executive Officer

Yeah, look Ashwin, thank you. My approach to that is that I believe that the thing is totally across the board. I mean, yes, I can talk with my customers, but I can also talk with other new customers and potential customers, and pretty much all of them are thinking about increasing that spending or do the transformation faster. So I mean I think, yes, to answer your question rather than just talking about the customers, I would talk about the general environment of the demand in the industry, which I feel is strong. So this is my — so this is what we are seeing for next year too. I mean this is just the beginning, and we are optimistic because of that reason, and on top of that then, some of the customers are — we’re seeing, a positive trend in terms of how fast they want to do the transformations.

Ashwin ShirvaikarCiti — Analyst

Understood. Thank you.

Martin MigoyaChief Executive Officer

Thank you, Ashwin.

Operator

Your next question comes from Maggie Nolan of William Blair. Please go ahead.

Maggie NolanWilliam Blair — Analyst

Thank you. When you think about all of the changes in the last couple of quarters in this year, have there been any changes in that Top 10 customer group? And can you give us an idea of the makeup of that group in terms of vertical exposure, length of relationships with those customers, and other similar details, how it may have changed over the last couple of quarters?

Juan UrthiagueChief Financial Officer

Yeah, hello Maggie. So yeah on the top accounts, as you would expect, some of the travel companies are out of the Top 10, they were impacted heavily by COVID. And those accounts were replaced by some manufacturing companies, by some professional services companies and some financial institutions. So I think that we are actually in a situation where this year we lost a lot of revenue from the travel and hospitality industry. If you look at that number last year, it was $92 million. If you look at the number and you do kind of a run rate, we are going to end up somewhere in the $65 million to $68 million. So even in a scenario where we basically lost more than $20 million in travel, we’re still achieving a very, very healthy growth. And hopefully at some point in the future, those accounts start to come back. I mean, we are in very good relationship with all those accounts, and we feel that when — once all these COVID situation is over and they are able to come back to investment mode, we will be in a very good situation. So those are the major changes in the top accounts, Maggie. I would say, less travel and a little bit more of all the other industries. It’s pretty clear it’s also another industry that — that as an industry, you will continue to see growing, not still in the Top 10, but we will still see some of those customers showing up in the top accounts over time.

Maggie NolanWilliam Blair — Analyst

Okay, thank you. And then can you talk about the pace of project ramp-up and how that’s changed since last quarter?

Martin MigoyaChief Executive Officer

Yes. So, I would say that when you look at Q2, Q2 basically was — initially things started to slow down then they stabilized and toward the end of the quarter, you started to see a recovery, right, and the recovery accelerated all throughout Q3, every month was a little bit better than other, the previous one. We restarted all the hiring engines and we ended up with a very solid hiring number, very, very solid, and I think that again the needs from the customers — the customers have more visibility now. So they are more comfortable restarting or accelerating some of the projects on digital transformations that they had in the pipeline, and I think that we got some of that benefit, and the fact that we kept basically pretty much everyone in the company and we kept on hiring selectively and we accelerated very early in the quarter. It helps us to take part of that growth very quickly.

Maggie NolanWilliam Blair — Analyst

Okay. Thank you.

Martin MigoyaChief Executive Officer

You’re welcome, Maggie.

Operator

The next question comes from Diego Aragao of Goldman Sachs. Please go ahead.

Diego AragaoGoldman Sachs — Analyst

Yes, thank you for taking my question. Actually my question is more like a follow-up with on the views and the outlook for 2021. I mean just I would like to understand what are the factors that should drive most of your growth? And maybe if you can also comment about like the factors that you are most concerned about at this point, that would be helpful? Thank you.

Juan UrthiagueChief Financial Officer

I am sorry, Diego, would be able to repeat the question? There was some noise in the line and we couldn’t get it.

Diego AragaoGoldman Sachs — Analyst

Yes, sure. So I just want to hear your views about the factors that should drive most of your growth in 2021 and also what are the factors that you are more concerned about at this point in terms of potential projects generally been delayed? It will be helpful if you can comment about the views for the main sectors you have been providing service. Thank you.

Martin MigoyaChief Executive Officer

Yeah Diego, now we got it. Thank you. This is Martin. In healthcare, financial sector, payments, retail, online retail, those segments grew quite fast and I feel that they will keep on growing there and then the catch up will come back from those that were not enjoying the COVID-19 crisis on the sectors that were a little bit more complicated through their business. And the drive for us during this month has been basically entertainment, entertainment not the online entertainment, but the — another strong sector for us was gaming and game creation and game operations and guys [Indecipherable] slower, in-person entertainment, and of course, the whole travel segment from airlines to cruise lines and hospitality and hotels, that part was the drug [Phonetic] and the accelerators were the others that I mentioned. Hope that answers your question.

Diego AragaoGoldman Sachs — Analyst

Okay, that’s helpful. Thank you.

Martin MigoyaChief Executive Officer

Thank you so much.

Operator

The next question comes from Arvind Ramnani with Piper Sandler. Please go ahead.

Arvind RamnaniPiper Sandler — Analyst

Hi, thanks for taking my question. You’ve talked a lot about the acceleration of digital work over the next couple of years. Can you talk a little bit more about how you’re preparing to take advantage of this demand? You know I would think from a sales, operations, delivery perspective there’s a lot to be done, and also if we can give some color sort of differences between how you are approaching it from your existing clients versus prospecting new clients?

Martin MigoyaChief Executive Officer

Hello, Arvind. Thank you for the question. Yeah, we’re doing many, many things. On the hiring front, we continue expanding our recruiting teams, our staffing teams in the regions where we are. As you know, we have taken the decision to have presence in Latin America, in India, and in Eastern Europe, and I think that’s going to be a possibility in the future because we are present in these three largest talent pools out there, right. So on that front, we’re doing a lot of things. If you look at the attrition number that has continued to come down, you know, we have done a lot of work to have our people engaged with the company to keep all the more senior people in the company, all the knowledge that they have gained over the last several years in the company.

And I think the training that we’re putting for these guys all the different skills that they are gaining are going to be very, very important. And those are some of the things that we are doing, just to make sure that we from a delivery point of view, we have the talent available that we need. We’ve been carrying quite a lot in advance. As you can see in our numbers I mean, we haven’t really stopped hiring, except from a little bit in Q2, and that’s part of getting ready. And then on top of that, as we’ve been investing quite a lot in our internal strategic initiatives like a augmented coding and those are things that augmented recruiting augmented staffing, augmented knowledge, multiple internal strategic initiatives that we believe are going to help us change the industry and help us be really, when all these opportunities that are happening i.e. from the past, right? So I think that those investments plus all the investments we bringing people into the company, retaining people and training people are the right decisions to take advantage of these opportunities that is in front of us.

Arvind RamnaniPiper Sandler — Analyst

Great, terrific. And I also wanted to ask on Disney to the extent that you’re able to share. Certainly, Disney has been really strong. You’ve talked previously about your kind of work with Disney Plus. Can you — let us know like, you know, kind of the breadth of work that’s being done at Disney? I mean, for example is parks still, like a good account, or sort of — should we expect kind of pent-up demand in park, as we look into 2021?

Martin MigoyaChief Executive Officer

Disney is a success story for us. As you know, we have been rolling a lot over the last several years. In the last quarter, we said that we were expecting recovery in Q3, and you know we wrote that recovery. Once again, we’re expecting sequential growth for this quarter at Disney and hopefully you know they’re able to reopen all the parks, and the vaccine is readily available, and that’s going to be a very positive factor for Disney, but if that doesn’t happen we’re still recovering it, we are able to expand our services into multiple areas within that account. That is the reason why we are going to recover our business to keep growing our business even in middle of the pandemic. So we feel optimistic of our business, it’s a great account, it’s more than 11 years we’re really working with them, and we have expanded our offerings into multiple areas in that customer.

Arvind RamnaniPiper Sandler — Analyst

Great, thank you.

Operator

The next question comes from Steve Enders of KeyBanc. Please go ahead.

Steve EndersKeyBanc — Analyst

Hi, great. Thanks for taking the question. Just wanted to follow-up on what you’re hearing from your clients when it comes to demand outlook and other discussion around the vaccine is still fairly, fairly recent, but is there an opportunity to get a mock even further budget within your customers as we move into ’21?

Martin MigoyaChief Executive Officer

Yes, the demand outlook is interesting. I mean what’s going on in different industries is it’s really something that we’re seeing as a very positive trend, and again, when you talk about certain spaces, where the transformation were slow down, for example, ed-tech, and everything that is happening on education, and you’re seeing now that every single career in the planet is being taken offline, online, sorry, and it’s been — and even the exams are happening online. That’s a huge transformation that was about to happen, but never happened, and now suddenly you have 100% of the population of the world, pretty much studying from home. Well, that will require, and this is just an example, and I think it’s a very illustrative example, because that will require like a whole new set of technologies that needs to happen and need to get ready for this massive amount of things that maybe 20%, 30% of all things will come back to classes to physical connection, but 70% will remain or some of that will remain online, and that’s a massive jump in terms of the technology that is needed. So I’m taking this example, because I think it’s one of the most visible example, but in the same way, in many other industries, the same thing is happening. So when we talk about this acceleration in the demand, we’re talking about this kind of mega changes that are happening. Not all of them will — not everything would change, but many industries will have a deep and profound impact after this new — I would say the discovery of how to do things. So I’m very positive because of that, because of those kinds of examples, I’m mentioning. That’s my outlook on what’s going to happen in the coming months, quarters and maybe years.

Steve EndersKeyBanc — Analyst

Okay, great. That’s really helpful, and then just as a follow-up, I know you just had the Converge conference back in September and talked about augmented coding then but, what kind of interest have you seen from clients so far and what you’re doing with augmented coding?

Martin MigoyaChief Executive Officer

Well, the reaction is being pretty positive. I mean it takes a while to be able to deploy the whole technology, because now it has to do with the source code that they use in each of the clients. So, there’s a lot of work around to be enabled to install the applications and to train them all for that specific environment, but we’re being very successful with that, we have a huge pipeline of customers and a lot of interest from most of our customers to move into this new technology, and the results so far from what we have been seen are pretty impressive, not just providing the coder with a piece of code that is ready to be used, and then you just need to change vitals, but now we are playing with the auto complete, so while you’re typing, the next sentence that is the most probable sentence that you need appears on your screen and it’s not just a syntax, it’s auto complete like you may have any ID, but it’s something that is bringing — is being brought by artificial intelligence in front of you, which is even more amazing than what we had before. So I’m very positive with the adoption of these technologies, and I’m very positive about how these will differentiate Globant when we talk to our customers. This is very important. I mean it’s not just — this is a platform that would allow us to differentiate our offerings when creating software and this is one instance of reinvention of the industry. So every time I explain this, it’s the adoption, and it’s also the opportunities that talking about this is providing in front of our customers and positioning for our customers to see us as the reinvention of the industry you’re seeing and accelerated by artificial intelligence and much learning.

Steve EndersKeyBanc — Analyst

Okay, great. That’s really helpful. Appreciate the insights there.

Martin MigoyaChief Executive Officer

Thank you so much.

Operator

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

Martin MigoyaChief Executive Officer

Thank you very much for everyone for coming to our Q3 2020 earnings call. Thank you for your support, for your help during all these years and looking forward to see you on our next earnings call. Thank you.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Paula CondeInvestor Relations

Martin MigoyaChief Executive Officer

Patricia PomiesChief Delivery Officer, Chief People Officer

Juan UrthiagueChief Financial Officer

Tien-Tsin HuangJ.P. Morgan — Analyst

Bryan BerginCowen — Analyst

Ashwin ShirvaikarCiti — Analyst

Maggie NolanWilliam Blair — Analyst

Diego AragaoGoldman Sachs — Analyst

Arvind RamnaniPiper Sandler — Analyst

Steve EndersKeyBanc — Analyst

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