Juan Urthiague - Investor Relations Martin Migoya - Chief Executive Officer Alejandro Scannapieco - Chief Financial Officer.

Tien-Tsin Huang - JPMorgan Anil Doradla - William Blair Amit Singh - Jefferies & Co Avashai Kantor - Cowen & Co. Joseph Foresi - Cantor Fitzgerald Frank Atkins - SunTrust Robinson Humphrey, Inc. Moshe Katri - Sterne, Agee.

Good afternoon and welcome to the Globant’s First Quarter 2016 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 [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Juan Urthiague, Investor Relations, Please go ahead..

Thank you operator, and thank you all for joining us today on our call to review our 2016 first quarter financial results. By now, you should have received a copy of the earnings release. If you have not, a copy is available on our website investors.globant.com.

Our speakers today are Martin Migoya, Globant's CEO; and Alejandro Scannapieco, Globant's CFO. 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 other peers in the industry.

You will find a reconciliation of IFRS and non-IFRS measures at the end of the press release we published in our investor relations website announcing this quarter's results. I would like now to turn the call over to Martin Migoya, our CEO..

Thank you Juan. Good afternoon everybody and thanks for joining us today. I’m pleased to be here to review our Q1 2016 business and financial performance. Q1 2016 was an impressive quarter for our company. We deliver an outstanding 34.5% year-over-year revenue growth driven by both top 10 and non-top 10 accounts.

We continue focusing on high growth, high potential accounts. As it has been the case over the last few quarters more and more companies across every industry are engaging a companywide additional transformational projects, most of the time these projects are being led by top management including in some cases CEOs.

This transformational projects are long-term in nature having become a must have in the current competitive landscape and have multimillion dollar budget coming from both business and a IT buckets.

Our expertise in delivering digital journey and our unique understanding on how technologies can be used to develop a new customer experience, position us as a preferred partner for companies embarking on such initiatives.

During this quarter, we are in a growth was fostered by North America and Europe in terms of regions and by travel and financial services in terms of industry verticals. However, we also see growth in LATAM especially in Columbia.

As an example, we had established a true relationship with one of the most important financial and insurance groups in Colombia called [Indiscernible] and we are working together to define their new digital strategy. Also if compared to Q1 2015 both our top 10 and our non-top 10 accounts deliver revenue growth north of 30%.

Typically, our company is exposed to seasonality in quarter one as it is a holiday season in Latin America. However, for the first time in the history of our company we achieved sequential revenue growth for the first quarter.

As Alejandro will discuss later in the call Q1 2016 is characterize by a significant improvement in our operating numbers, both our gross margin and operating margins expanded significantly. Finally, our adjusted diluted EPS amounted for $0.24 for this quarter.

Before our CFO goes deeper into our financials I would like to share we view some of initiatives that we have been working on during the past months and some trends that we foresee that will drive the amount even near future. It is important to highlight our focus on specialization, so let me first start talking about that.

To meet our goal of becoming leaders in the creation of digital journeys we need to say on top of the user behavior and we it adopts to new technologies. Our holistic approach driven by stay relevant, discover and build teams position us as a key player in this new scenario. Let me start first talking about stay relevant.

I would like to share with you some recent discoveries publish in the latest Sentinel report. In this edition we go through the concept about omnirelevance. A superior approach to create digital journeys. In the report, we described how consumers are constantly targeted with new technologies that compete for their attention.

So we believe that France must focus on maintaining relevant to consumers. To become relevant means knowing when customers will need you and how you can offer the most efficient solution without any friction.

According to our team [Ultimater] (Ph) reducing friction in experiences produces a conservatively improvement in engagement reported up to 75% today 90% of the people say they use multiple screens for everyday activities such as booking a hotel or shopping for electronics says a report from Google Ellipsis.

So now, we need to go beyond that approach and think about being relevant about and omnirelevant approach. This means that the conversation needs to change from an older model of thinking about in channels of to a more current way of thinking about moment and knowing that channels are only means of enhancing that moment.

In the past, companies have seen channels as the way of interacting with their customers. As a result, many developed big more to channel strategies focus on creating highways for users to navigate rather than considering what digital journeys those customers wanted to take.

Steering the conversation away from omnichannel toward omnirelevance requires us to stop thinking about channels as a target and start thinking about moments of impact that a brand needs to be aware in order to provide a meaningful experience to their consumers.

This initiatives allows brands to infuse more customer centric thinking into their culture and to inside of strategic initiatives that serve the brand’s purpose more effectively. The report highlights five elements that must exist to achieve omnirelevance. Harmony, familiar security, contractual content, sensory, and surprise.

These elements live together within an experience and present themselves at a right moment and in the right ways to create a fulfilling successful experience. Everyone to take then into consideration to create an omnirelevant experience that will surprise their users.

If you would like to know more about this new concept and research you may find a complete sentinel report at sentinel.globant.com. Regarding discovery, during Q1 the team has been exploring new scenarios on future editions to inspire our clients.

We have engaged with several company to help them in their process like the extensive research in [indiscernible] a specific retail market on how we can create a holistic experience that enhance the delight of consumers through technology or the research we are executing in the banking industry to identify behaviors and new ways to engage with millennials.

On the build side, we continue to assemble strong expertise on different trends through our studios. As you know these teams gather our professionals around different practices to creating [innovative] (Ph) software pros that will surprise our customers users. Let me mentioned a few updates around them.

During the past month the consumer experience studio has reinforced its user centric approach to address some of our customers most important goals the studio have been working on some of the most ambitious and long-term projects.

With this in mind, they have focus on improving our customers actual practice by leveraging our actual sports model to help in a timely and entotic manner. And other studio that is key for our digital journey approach is the UX design studio which has also seen an important growth.

During Q1, they launched a new practice called Services Designed that aims to offer clients an holistic approach to ambition strategic scenarios for system to innovate different touch point actors and processes.

As an example of their capabilities, let me share that they work for a leading financial institution to define their new digital channel’s ecosystems starting with a U.S.

and a strategy consultancy to define the new channels and then together with the other studios continue working on internal and external sites as well as their IOS and android applications. Another example is our Cognitive Computing Studio, this team has revamped the value offering to become a key player in the creation of emotional experiences.

Cognitive computing leverages the advantage in machine learning and neuroscience to improve the user digital journey enhancing the emotional cognitive and decision making process of the human being behind the technology. The Digital Content Studio on the other hand has also seen a steady growth into their capacity.

One of their success cases is a work that they are doing for Puma International, the studio is involved in the creation of digital products to enable the customer to improve their communications with end users.

Finally, the world and internet of things studio has been quite active during the past months with introduction of Globant's playground experience in our San Francisco offices. During Q1, we receive business from top companies coming from a wide variety of industries like media and entertainment, finance and retail to name the few.

They came to the playground to learn more about our experience on the emerging platforms like 360 Video, Augmented Reality and more. These visits were the key cause of different project that we are now starting to work on. We believe that our digital and technology focus would enabled us to continue grow and in the months to come.

We continue to see strong demand of our portfolio of services especially driven by our client's interest in pushing their business closer to the new users demand.

for example, for a leading finance institute who are working on the design of new digital channel ecosystem like across entire digital journey, including all the technology implementation for digital channels, the cross API and the big data solution.

Or the one we are doing for a major media and entertainment company, who is planning to revolutionize the entire media experience. We expect these types of engagements to grow during the coming quarters. In the mean time, we are pleased to announce that one of our customer NatGeo has collected 10 Webby awards two webbywinners and eight people’s voice.

And Globant has been actively involved in some of its approach that received these recognitions. These processes are NatGeo kids, Unique Lodges of the World and the Climate change issue. We would like to congratulate NatGeo and the Globant team involved for their amazing work.

As you may recall from the last earning calls, for the past months we have been working on a new initiative called services-over-platforms. With this new offering we are improving the construction of digital journeys by accelerating the results and creation pros.

This means that we provide some specific platforms to be used as a starting point and then we customize them to the specific need of each customer using our service force, we charge for that per user per month or per transaction such as software as a service companies do.

Let me share a few update that we have seen for our two implemented platforms, StarMeUp and I AM AT. StarMeUp is an platform that contributes with a creation of internal digital journeys for company's employees.

Today we see a lot of interest on this platform, is now being implemented in large companies coming mainly from the finance sector and ramp up very quickly to more than 30K monthly paying users. We expect this interest to growth in the months to come and foresee our customer portfolio to expand large throughout other industries.

I AM AT, it's Globant's platform that helps augment mobile experiences, it brings together four global trends gaming, social networking and big and first data to augment experiences before during and after a touch point with a consumer. During Q1, I AM AT has also continued to expand its customers base.

At a same time, we have improved the platform by adding a system that simplifies the digital engagement experience and incorporates in App purchases and user generated content.

Lastly, let me remark that our pipeline and backlog remains strong with a number of high potential new customers coming from a wide variety of industries including retail, media and entertainment, travel and finance among others. We are working to increase our account diversification with a focus on consolidating growth of the next quarters.

We will also continue to work to reinforce relationship with our current customers and into a corporate more brands in a wide variety of industries looking to integrate their businesses into new experiences that will help attract and retain their users.

With that, I’ll turn the call over to Alejandro Scannapieco, our CFO for a detailed financial review on Q1 and to provide guidance for Q2 and full-year 2016. Alej, please. Thank you very much..

Thanks Martin. Good afternoon everyone, I’m going to spend a few minutes discussion our Q1 financial performance and then I will provide guidance for Q2 on the rest of the year. We finished the quarter with 5,285 globers 4,847 of which were IT professionals.

Attrition for the 12-months ending March 31, 2016 was 18.5% compared to 19.9% for the 12-months ended March 31, 2015 and to 17.8% for the full-year of 2015. I'm very pleased to announce a robust financial performance for the first quarter of 2016. Our revenues reached a new record level of 73.3 million accelerating to a 34.5% year-over-year growth.

This robust revenue growth was driven not only by our top 10 but also by our non-10 accounts, which grew to 35.6% and 33.5% respectively compared to the same period of last year.

Our top one account grew at solid 52.6% compared to Q1 2015 though it experienced a decreased compared to Q4 2015 based on their priority taken of the investment in one of their main overseas theme products. Excluding our top one account, our accounts increased 32.5% year-over-year and 3.8% quarter-over-quarter.

Our strategy to have a diversified base of multimillion-dollar accounts is working out in line with our expectations. As pointed out by Martin, Globant has its solid value proposition which attracts companies across all the industry. We continue to target specific accounts to adding to our portfolio.

During Q1 we added some new high potential accounts by just one of the largest online travel agencies, one of the largest Canadian banks and a leader in consumer goods. As it has been the case in previous quarters, the vast majority of our revenue was generated from customers that were already working with us in the prior years.

A clear sign of our ability to form accounts. For the first quarter of 2016, our top one customer represented 11.6% of total revenues. Top five customers represented a 6.4% and top 10 customers represented 48.4% of revenues compared to 10.2%, 30.9% and 48% of revenues respectively for the first quarter of 2016.

We continue to be well diversified in terms of customers and industries, with an increasing number of multimillion dollar accounts. Compared to the first quarter of 2015, average quarterly revenue for top five customers increased 58.8% to 5.3 million an average revenue per top 10 customer increased 35.6% to 3.5 million.

As discussed in the past, we have a delivery strategy that focuses on growing our top accounts. During the first quarter of 2016, 82.2% of our customers were in North America the U.S. is our top country. 10.8% in Latin American and others Chile our top country and 7% were in Europe.

The Spain replacing UK as the top country while starting to collect the benefits from the investments in our European [software] (Ph) strategy.

Our top three industry verticals for these whole were media and entertainment with 21.9% of revenues, travel and hospitality with 20.5% of revenues and technology and telecommunications with 17.3% of revenues. We remain very well diversified across different verticals during the first quarter of 2016, 91.9% of our revenues were denominated in U.S.

dollars protecting our top line against currency fluctuations. During the last 12-months we rendered services to 359 customers. We now have 54 customers with annual revenues in excess of 1 million compared to 43 million one-year ago.

Despite our focus to form large accounts, we have start adding some brand new customers start with our services-over-platform and strategy. As mentioned before, our fourth quarter revenue amounted to 73.3 million, which imply a 34.5% growth year-over-year.

Moving down on the P&L line items, our adjusted gross profit for the period increased to 33 million. 45% adjusted gross margin compared to 21 million 38.5% adjusted gross margin in the first quarter of 2016 and 28 million 39.2% adjusted gross margin in the first quarter of 2015.

The increase in adjusted gross margin was primarily due the full quarter effect of the devaluation of Argentine Pesos that occurred towards the end of December 2015 and continue during this last quarter.

During this quarter, we also managed to dilute further our SG&A 310 basis points sequentially or 420 basis points compared to Q1 2015, while at the same time we continue invest on our onsite sales force and delivery capabilities. This is an impressive dilution that contribute further to our operating leverage expansion.

Important to know that Argentina has moved to a free floating currency system and FX rates converge. As such, the spread between the official and the blue chip FX rate has disappeared and no additional gains from transaction with warrens that we use to show below the line where recorded.

They are now part of our operating income line as it was expected and I think it was discussed thoroughly in the past. For the reasons detailed before our adjusted operating income for the quarter amounted to 14.7 million or 20% revenues compared to 4.5 million or 8.2% for the first quarter of 2015.

Financial income and expense net amounted to a loss of 0.6 million.

This net result is composed of FX gains from the impact of the Argentine devaluation on Argentine denominated monetary liabilities, gains from our hedging strategies and interest income and losses resulting from the impact of the Argentine devaluation on Argentine denominated monetary assets.

We continue hitting our net exposure and monetary line items against potential devaluations. Our income tax for the quarter amounted to 5.7 million that is high with an effective tax rate of 42%, [indiscernible] so when a decreasing trend compared to Q4 2015.

As discussed during last quarter's call, this abnormally high effective tax rate is a consequence of the impact of the Argentine devaluation that generated taxable profits in the local Argentine financials that do not flow into the consolidated financials but do generate higher taxes to be paid locally.

This effect is expected to be reduce as we move along the year and FX rate in Argentina stabilizes. Adjusted net income for the first quarter of the year totaled 8.4 million, 11.5% adjusted net income margin, an increase of 0.9 million or 11.9% versus the first quarter of 2015.

Adjusted diluted EPS for the quarter was $0.24 based on 35.2 million average diluted shares for the quarter, increasing from $0.22 a year ago. Moving on to the balance sheet, our cash on investments as of March 31, 2016 increased to 69.2 million compared to 62.4 million as of December 31, 2015. And borrowings remain at 0.5 million.

Our balance sheet remains strong, with current assets of $131.3 million, accounting for 56.3% of the Company's equity. Total shares outstanding as of March 31, 2016 were at 34.2 million common shares. To wrap up, I would like to share with you our outlook for Q2 2016 and an update for the full-year ending December 31, 2016.

We continue to be optimistic in terms of the overall demand environment as we see that companies from all industries need the type of services we provide and consumers are engaging through technology with their brands and products.

We pursue this need across all industries and geographies and Globant is very well positioned to help our customers within that demand environment. We expect growth to be driven by a large number of high potential accounts not only our top 10 accounts.

We are very positive that during Q2 and the rest of the year which we will able to continue to delivering a solid financial results. At the same time, we will accelerate investment in our people for future growth.

FX movement around the Globe particularly in the different regions where we have delivery centers needs to be carefully managed to avoid fluctuations in our results. Particularly in terms of cost as 94% of our headcount sits outside of the U.S. As such, we need to take a conservative approach in our guidance.

For the upcoming quarters, we expect a slightly lower gross margin, [indiscernible] increase is keeping and there will be some increase in our SG&A as a result of sales coverage expansion. Though we will continue gaining dilution compare to last year.

Finally, we see a normalization of effective tax rate at 25% to 27% range for the long-term, once the stabilization of the FX rate in Argentina has happened. We still may see some volatility by reducing as we move along the year. Based on current visibility, we expect revenue for 2016 to be between 309 million and 315 million.

We will reaffirm our guidance for effective diluted EPS for the year in the range of 1.12 to 1.20 assuming 35.8 million average diluted share outstanding for the full-year.

Turning to our guidance for the second quarter, which is also embedded in our full-year guidance, we expect revenue to be between 76 million and 78 million, and adjusted diluted EPS to be in the range of $0.25 to $0.29, assuming 35.3 million average diluted shares outstanding for the quarter.

Thanks to everyone for participating on the call, and for your coverage and support. Let's please now move to the Q&A section of the call. Operator, can you please queue questions? Thank you..

We will now begin the question-and-answer session [Operation Instruction] And our first question comes from Tien-Tsin Huang with JPMorgan. Please go ahead..

Hi good afternoon, good growth here.

Just wanted to ask about - it looks like [indiscernible] clients Q through to four grew at a really quite strong pace, I’m curious is that pretty broad base across Q through to four or was it a single account that drove some of that and is it sustainable?.

It's cost base, Tien-Tsin, this is Alej how are you. it's cost base. All accounts are really nicely within that frame..

Okay, that’s good to hear.

And then just broadly speaking just given the volatility in the FX and can you give the detail around the peso, what is the latest on wage inflation and how you plan to manage that from here, any change - I heard the commentary on gross margin for second quarter, but just going forward what should we expect?.

We as usually did in the past, I mean beginning with wage inflation in all of the Latin America countries where we operate is part of our business.

Probably Argentina is bit high in terms of our wage inflation, what is expecting the market is that based on many of our economic measures that the new government is taking is that inflations is lower towards the second half of the year.

Having said that, again for us it's a combination of wage inflation that take up the evolution, we had a significant devaluation in the first quarter of the year, at first we know of wage increases in April then the second one in October. So on and on we think we are going to be able to keep up with the wages in constant currency.

There is still some FX volatility in Argentina, but I think the situations is quite different from last year where the [indiscernible] exchange rate was artificially [Indiscernible] by the government. Now there is three filtrations, wage inflation is one of the variables that we usually monitor and manage I we have indicated in past..

Good, understood. That's helpful. Thank you..

No problem..

Hey good Tien-Tsin..

The next question is from Anil Doradla with William Blair. Please go ahead..

Hey guys good job on the continued strength and the business. A couple of questions Martin. So when I look at the June quarter obviously you made some comments around the gross margin and perhaps that kind of deal through the EPS line, but you are maintaining your full-year.

So as we look into the second half obviously it's going to be a second half loaded here what makes you confident that some of the issues you face on the gross margin perhaps in the near-term won't play out again as the year progresses?.

I think Anil this is Alejandro. I think what we see, the forward-looking deal that we have is first one of the of the bigger layers that would definitely a headwind for us in terms of the bottom line or EPS level is the high complex rate. This quarter it was still high, it was up 42% though it was lower than Q4 last year that would start to 55.

So we clearly see an FX rate trend that is more normalized, as that factor is normalized and the level of open accounts receivable that we have between our Argentina subsidiaries and U.S. subsidiaries is decreasing. We can clearly see a different trend for the income tax rates with the stable margin.

So the we think about that is that all the topics that we had below the line in that gain and some types of rebounds that we had in the past, now are part of the operating margin of the company. We still see very healthy business coming in, even the [indiscernible] business is coming at very good rate.

So we can clearly see a very good pattern for our gross margins and definitely some of the factors like that may affect the EPS growth are pretty much related to this income tax line. So we think it's going to be normalizing in the next couple of quarters..

Okay, great. And as a follow-up I mean if I look at your largest customer Disney. There was some decline this quarter off of a flattish sequential growth last quarter. I know in the bigger scheme of things you know there are so many things moving around, we should not look at patterns in one, two quarters with some of these large customers.

But any comments on your largest customer, I mean from the demand environment, from our pipeline environment everything moving in the right direction, is there an increased competitive pressures any comment would be great?.

This is Martin, Anil thank you for the question. Look we come from an year of extraordinary high growth as we see including some this discretionary expenditures that they did on quarter four. So that's on top of - Disney is going in a moment right now of putting the Shanghai Park on-track so on and so forth.

So I'm not seeing any major trend in terms of someone competing against us, it's just Disney going slower little bit slower this year as we forecasted and we've said many times last year.

So no concerns on our side on the Disney front, we will be keep on being their preferred vendor for all the things that are digital and we are in very good shape, the relationship is extremely good.

And talking deeper into that we were able to enter now into ESPN for example, and starting to explore ESPN as an account and right away going very fast in ESPN. So those things are positive trends and again coming from such a year would be very difficult to keep the pace forever at that speed. So this is what we are seeing now..

Very good. And it's one last one if you don’t mind, you guys talked about client consolidation going from this large number to more focus clients. How are you progressing on that front, are you able to let go some clients. And help us understand when you tell a client that maybe we don’t want to do more work with you or we are consolidating our list.

Explain how that interaction is going on, do you find clients unhappy when you make that move? Thank you..

Yes, it definitely happen very often when we tell to customer that we will won't work anymore. I mean I think it plays out in a rational way and in a normal way. It's also us not paying the right - it's like saying okay, we will pay this amount of potential to this customer.

So that’s a dynamic, it's not like having the hard conversation saying, we don’t want to anymore at the customer. Of course there are exceptions to that but that’s a situation in general.

If that answer your question, let me know please?.

Yes, yes, great. And great job..

Excellent. Thank you very much Anil..

Our next question comes from Jason Kupfernerg with Jefferies. Please go ahead..

Hey guys this is Amit Singh for Jason. Thank you for taking our question.

Is Clarice, the contribution from Clarice in your numbers in this quarter, if it is, can you tell me what is the organic revenue growth for the quarter?.

Amit it's pretty much organic, if you recall we have less than 250 people coming from Clarice, so if you compare that level of revenue and even some of that revenue was at the lower revenue per head than Globant. So I would say it's a pretty much a immaterial, I mean the companies are fully integrated, we acquired Clarice back in May 2016.

So it's pretty much organic..

Okay, and just to put some of the previous questions together, I mean the revenue guidance has been raised, EPS guidance maintained because what is the new tax rate expectations for the full-year, I think earlier it was 34 to 35, but that seems like now you guys probably expecting more.

And then between last quarter and this quarter, your expectations for full-year margins is now slightly lower, is that correct way to think about it?.

As you know we usually guide conservative, we try to factor and to bake into our guidance most of the variables that may affect the numbers and we guide where feel comfortable that we can achieve.

As far as tax rate, the full-year forecast is second, third and fourth quarter are going to be lower than Q1 so probably something in the 28% to 32% range, it's going to be the full-year, but defiantly it's going to be a significant decrease in the upcoming quarter as I explained before the big - the devaluation Argentina already happened.

And also the intercompany opened accounts within Argentina and U.S. are much lower now, because we are bringing a more money to cancel and to settle that open account receivables..

All right. Thank you very much..

Our next question comes from Avashai Kantor with Cowen. Please go ahead..

My first question is on Disney.

Was Disney in line with what you expected at the beginning of the quarter or something happened throughout the quarter?.

No, nothing happened, it was absolutely in line with what we expected yes..

Then what was the DSO for the quarter?.

It was 58 days Avashai..

Thank you very much..

56, yes..

And how does that compared to the previous quarter, can you just remind us?.

We are usually running at 58, 59 days. So it was pretty much in line, a little bit lower..

Okay and then my last question, do you have a measure what is the incremental wage inflation from the devaluation compared to wage inflation in previous years?.

It’s going to be pretty much the same Avashai. We are not seeing that’s going to change dramatically, same low I think its compared to 2015..

So we target by 20% to 25% range is that….

It's 20%, yes for Argentina. Its 30%....

Yes, in Argentina. Great thank you very much. That answers all my questions..

No problem..

Thank you..

Our next question comes from Joseph Foresi with Cantor Fitzgerald. Please go ahead..

Hi, I know you gave some color about the margin this year, but I was wondering could you just talk about what you think the natural margins to the business are and expansions to those margins over the long-term?.

Yes sure Joe.

I think the expansion that we have in Q1 was a little bit out of the ordinary course, because of high devolution in Argentina in the last quarter, but having said that we definitely see - [indiscernible] the margins to be in the we think that's historic our ranges 40% to 42% that should be at a range for gross margins on a full-year basis.

Now we have a blend of delivery centers in many Latin America places combined with India, so the blend would be a range of 40% to 42% keep in mind that we are actually investing a lot in training trying to get our people up to speed in this emerging technology.

Operating margins definitely improved significantly, we were expecting that as we said in the past that gain transaction with bonds the way we saw that it was kind of validated in a higher exchange rate that was artificially being sell out the government.

So now we feel that piece went above the line as far now of our operating margins and definitely the expansion there is going to account from G&A dilution.

As we have been improving over these last four or five quarters dilution has been a fairly - or very basically in the way we manage expenditures within the company but nevertheless we continue investing in expand our sales force and our coverage..

Okay, so I mean this is a little dip towards in the year when we're talking about, should we expect I guess margin expansion on an annual basis as we look to 2017 and 2018 I'm obviously I'm not asking you to commit to anything specific, but I'm just wondering directionally how to think about it?.

Directionally you should expect us to get leverage on G&A dilutions, it could range from 50 to 100 basis points, but that should be the projector in the long-run..

Okay.

And then could you give us an idea of what's the expression rate look like in the quarter, I'm not sure if you had any in your prepared remarks and then I'm wondering is labor the gaiting factor that’s scaling the business at this point is that your biggest concerns?.

So attrition went up a little bit this quarter. Let me take that first part and I'll leave the second one to Martin. I think it was 18.5% that was the precise number for Q1 a little bit 70 basis points above last quarter.

I think that the big driver there is definitely Argentina and within Argentina a couple of cities [indiscernible] but we continues to keep our plan to lower attrition in the long-run.

I think we have been leading for the years in the low 20s, our [indiscernible] is pretty much diversifying, our deliveries centers out of that tier-1 cities providing project mobility, working towards competitive compensation.

So those are kind of the pillars towards against attrition, it has been paying off over the last few quarters, there was a little bit if a spike before the complete of 70 basis points, but what comfort all that in the long-run that plan that we have to lower attrition will continue to pay off.

I don’t know Martin do you want to touch base on the [indiscernible] question..

What was your second question? Sorry..

Well just wondering the business is running very well and the growth rates in there.

So I'm wondering what's the biggest gaiting factor to scaling is it just being able to find enough good talent of there?.

No I don’t think that's the bottleneck for us, I think the bottleneck for us is more on the coverage side, again this isn’t about how much coverage you have in the important accounts getting [future] (Ph) accounts 40 million each that our aim for the near future, well for the mid-term.

So I think that the talk here is the best coverage you have the better you can connect with your customers and more business you would pick up. So that's the bottleneck that's where we need to be more efficient, that's where we need hire more people and it's a difficult job because hiring people on that aspect is difficult.

Sometimes the you know failure rate on that specific aspect of a business is tough so that's a bottleneck but not the talent..

Got it, okay. And I'm going to sneak one last one in. You talked about higher growth accounts and going after them what criteria do you use for identifying a higher growth account versus one that maybe won't be as productive. Thank you..

Well we tend to see not the much is high of that account, but here is the headroom how much money do you spend, which are the conditions and then which are the projects that they are embarking. Also in which situation they are in terms of their digital transformation for us it is something important.

There are companies that are just starting to think about it there are companies are just making some plans for it and there are companies that are very advanced into it. So depending on where they are, it could be higher potential or lower potential for us.

Those are the factors that we consider as important factors when we see the headroom for us in an account. Then how well develop that relationship is that’s the matter that really to work.

I can give you many examples but there are accounts in which we are well develop but the headroom is very small and we have other accounts in which we are very [indiscernible] in the development of the relationship but the headroom is very big.

So we have a very specific metrics in which we measure how much friction that account has for us, how we see to deal them and then we figure out according to an index very scientific index, which is the type of accounts that we are in front of.

So that’s the way we decide - it’s not purely on expectation or abstract expectations but also on hard data we have from the accounts..

Thank you..

Welcome..

Our next question comes from Frank Atkins with SunTrust. Please go ahead..

Thanks for taking my question.

Wanted to ask about SG&A you mentioned the nice leverage on G&A, how sustainable is that going forward? And then where do you sit in terms of sales capacity and how do you balance investment there with managing this cost?.

Okay, I think the first one is SG&A dilution was pretty much driven by a combination of factors. I mean we are very discipline in terms of trying to keep cost under control that combine with the devaluation in Argentina that affected a number of our line items within SG&A to help us to take that high level of dilution that we have this quarter.

Having said that, within SG&A the sales coverage is one of our priorities, have been increase the sales team overall on yearly basis 20% of 20% class in terms of cash count. Now we have 56 people within the sales team, they are distributing mostly in U.S. and now in Europe as well plus some people in Latin America.

We feel confident that we will be able to maintain [indiscernible] SG&A dilution is not relative to things that we are going to have the kind of dilution that we have in this quarter.

Because we are still in the sales organization and in the coverage, that’s something very important to mature the relationship with our accounts and to get those high potential accounts.

It's very important that we investing the right people, not only sales guys purely sales guys, but also the kind of [indiscernible] for people who are walking out with our customers, participating in the roadmap of a their development and their transition into digital.

So we will continue investing there, but so defiantly there is going to be dilution of measured as a percentage of revenue coming mainly from SG&A..

Okay great that’s helpful.

And then can you quickly update us on exposure from WPP and how you are can of leveraging that relationship into opportunities?.

Yes the exposure to WPP direct accounts is very low as it historically it has been. As we always say the main idea with WPP is to work together and we are together to be able to penetrate the accounts they already have.

So relationship we accounts that they already have and they have good penetration there, we try to go directly into those relationships and try to build a business, which is different in the nature. The relationship they have it's more an agency relationship. We are coming from the technology sector.

So not necessary we can leverage some relationships, some people relationship, but the essence of engagement is different. So the major success story we have in past connecting the WPP accounts are going directly into the accounts that they have and pitching together with WPP. But us been like the main contractors on that specific engagement.

The potential is big, because they have - and are making roster of accounts and we don’t work together on many of them. And that’s how we see the future of our relationship with WPP..

Okay and last one from me, can you talk about any changes in pricing areas or strength or weakness by studio or services that you are seeing?.

No we are not seeing any major change, indeed the revenue per head - Alejandro just correct me if I'm wrong. move a little bit from 63 to 64.

Is that correct?.

Yes..

But I’m seeing that in any specific studio, well they are only a [indiscernible] position in India was slower so dependency on that we were able to grew to grow our rate driven by some deals the discovery area of Globant in which we’re growing and working more with African [indiscernible] company understanding and discovering new opportunities for our customers the rate there is totally different and that's driving our revenue per head a little bit higher, but that would be the only thing to mentioned.

Then of course revenue coming from the services-over-platforms which is still very small, but started to be interesting it’s something that could drive our revenue per head very fast and that's another lever that we have for our margins over the future.

We are not counting on that still, because it's very recipient, but in one quarter we went from zero into almost 68 - almost 30,000 or more than 30,000 users paying every month for our services on the platforms we have which is pretty interesting as a trends. So those are the moments we are seeing..

Alright, great. Thank you very much..

Very welcome..

Our next question is from Moshe Katri with Sterne, Agee. Please go ahead..

Hey guys thanks. Can you comment on what's factored in terms of sharp comp increases this year in your guidance you mentioned that it's going to be salary increases coming up in Q2 maybe you can get out some sort of a range and how does that compare versus prior years? Thanks..

Hi Moshe how are you. In the case of Argentina what you have seen now kind of a similar ranges as last year, mid-20s it’s kind of the range. In the case of the countries in Latin America, I would say that the best estimate that we have is and wage increases actually in the phase of our devolution in those countries.

So we don’t expects expect where Argentina is still at the very high level of wage increases, to have that level of wage increases in the other countries. So it's a different situation for every single country..

Understood and remembering when Joe asked you the question about the long-term margins, you said gross margins at about 40% to 42%.

Can you give us the range also for the non-GAAP EBIT margins on the long-run?.

We don’t guide that for operating margin. What I can tell you Moshe is that we will continue to diluting SG&A at this level of our net income it's a pretty decent and reasonable level for a company of our size. So we will continue to funding that through G&A dilution.

I mentioned that range for the gross margin, because even though the currency fluctuation in Argentina is tough and now we see a much more normalized FX market in Argentina, which will contribute to have more normalized margin in the long run for the country.

[indiscernible] invest in a lot I mean most of the technologies that we’re implementing, executing and deploying within our customers or emerging technologies we need to invest in the people. It's not enough to get people out of college and assign them to projects.

We need to train them, we are in the sweetest spots of where the demand is, so we will continue invest in that and that's why we are projecting that that kind of margins in the long-run..

Alright and then last question do you have do you have a target for headcount growth additions in 2016 and then maybe you can put that in the context of some of your hiring I guess plans in India based on the acquisition that you have done last year. Thanks..

Yes, in terms of a headcount growth, we suspect that to grow a little bit below the top line we were executing on some initiatives that could decoupled revenue growth on headcount growth. Martin highlighted a couple of initiatives on the [Indiscernible] platform.

And in the case of India, we just launched a new office for 1200 peoples, it's a brand new office that was launched in May, there is going to be a formal launch in by mid-July. And definitely we are very happy and very proud of how the region is evolving in India.

I think we found a company with the right talent and we expect to have margin three or four of the capabilities that we've within our studios, within the domain expertise of our studios.

So we think combining that talent that we have been able to find in India, with the timing we already have in America we are definitely in a very well position to step with this level of growth. I think in India surprised us because of that quality of the talent and the matching with their culture of Globant.

So we are very happy, I don’t know Martin if you want to add something to the Indian play..

No, I think you have covered pretty much everything, but we are happy with the team we have there, I think it's a great team, great team of professionals that’s the most import part and they are performing quite wells in terms of its recruiting and in terms of business.

So the fact that we are now in India answers the question that without of our Global talent. Talent is everywhere. And we need to go wherever the talent is and so it doesn’t matter if that talent is in India or in Argentina or in Colombia. So I think that the game now became much more global, it’s not just an India game and Argentina game or whatever.

And we are pursuing that vision I think we are doing it in a very, very efficient way..

Alright guys. Thanks, good job..

Thank you..

Thank you for the question..

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

So thank you very much everybody for joining the call, for your time, for your continued support here. I'm looking forward to see you in the next quarter. Hopefully we will have great win ahead. Thank you very much..

The conference is now concluded. Thank you for attending today's presentation. You May now disconnect..