Good afternoon, and welcome to Globant's Second Quarter 2025 Earnings Conference Call. I am Arturo Langa, Investor Relations Officer at Globant. Please note, this event is being recorded and streamed live on YouTube. By now, you should have received a copy of the earnings release. If you have not, a copy is available on our website, investors.globant.com. We will begin with remarks by our Chief Executive Officer, Martin Migoya; our Chief Financial Officer, Juan Urthiague; and our Chief Technology Officer, Diego Tartara. This will be followed by a Q&A section. 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 will now turn the call over to Martin Migoya.

Good afternoon, everyone, and thank you for joining us once again for Globant's quarterly earnings. It's always a pleasure to connect and share how we are continuing to evolve and improve. For us, innovation and reinvention are not just occasional events; they are part of our DNA. Right now, we're building on that tradition with a clear and steady focus on the future. In the second quarter, we delivered revenue of $614.2 million, representing 4.5% year-over-year growth. Our pipeline is at an all-time high of $3.7 billion, up 25% from last year. Although the macro environment has extended sales cycles, our teams are laser-focused on converting this pipeline into signed work in the coming quarters with large potential deals in healthcare, financial services, CPG, and gaming, among others. These large engagements, many already in advanced stages, position us well for conversion in the coming months, reinforcing our focus on high-value clients with strategic impact. Internally, we are fine-tuning the organization to be not only more efficient and profitable but also more nimble and better aligned with the needs of the next generation of business models. Our aim is to ensure Globant is structurally agile and positioned to compete and win in an evolving landscape while continuing to deliver strong results for our shareholders. Juan will walk you through the details shortly. Globant's AI pods, which I introduced last quarter, are the virtual teams for the digital workforce. They are powered by Agentic AI and orchestrated by our experts. The way companies access our AI pods is unique in the industry through our monthly subscription model. It is a consumption-based outcome-aligned pricing that provides guaranteed time and cost savings, shifting the value proposition to concrete results. After just one quarter, we already have 18 clients who have chosen this new model, and our subscription model accounts for a significant portion of our recent pipeline growth. We look forward to expanding this in the future. The AI world is moving at incredible speed, and there are two major races going on. The first is over who builds the best foundational models or agents. And that race includes OpenAI, Anthropic, Meta, xAI, and others. Every week, new models, frameworks, and tools emerge, but this is not our race. The second is about who applies AI better, faster, and with greater return on investment on specific business cases for every company in every industry. For companies, the expansion of all these new foundational models presents an immense opportunity, but also a challenge of determining the right combination of models, tools, and approaches for their specific needs while managing data privacy and compliance. It is more like entering a dense and constantly changing forest where familiar paths disappear and new ones open overnight. In that environment, you need not just anyone, but an experienced guide who knows how to adapt the route as the terrain shifts. At Globant, we take on that role, helping our clients find the safest and most effective path forward. We remain 100% client-centric while leveraging our deep partnerships with all major AI leaders to ensure our clients get the best of each ecosystem. This means we can select or combine the most advanced models and capabilities available in the market, integrating them in ways that are tailored to each unique task and business context. Globant Enterprise AI is the toolkit we bring into that complex forest. It is the golden path for our customers' generative AI adoption and impact. Offering seamless access to all major LLMs, it provides traceability, auditability, granular access, and cost control. It includes a library of hundreds of industry-tailored plug-and-play business processes and a state-of-the-art retrieval augmented generation pipeline optimized for proprietary corporate data, delivering faster, more relevant and contextually precise insights. Enterprise AI integrates with major enterprise platforms, manages AI-driven workflows across departments, connects human teams with intelligent agents, and is fully compatible with A2A protocols and MCP servers. The platform uses a token-based execution model to align AI usage with measurable business value. We launched the 2.0 version of Globant Enterprise AI. Diego will go into more detail on this shortly. When you combine that with the industry-specific expertise of our AI studios, you get a fully integrated engine for transformation across the entire AI value chain. We go beyond offering AI services. We architect and connect every layer of the AI stack, then deliver it as a scalable subscription-first solution. Our AI studios continue to drive deeper engagement with major global clients, unlocking cross-selling opportunities and deploying specialized talent from across our global network and unrestricted by regional boundaries. Part of growing is partnering with the best. A couple of weeks ago, we announced a multi-year collaboration with OpenAI as one of their few global services partners. By combining their world-class models with our engineering capabilities, we're delivering secure, responsible, and scalable AI adoption worldwide. We're already integrating GPT-5 across all layers of our enterprise AI platform and embedding it into our AI Pods processes. Along a similar line, days ago, we took a big step forward by becoming one of the few global partners to sign a strategic collaboration agreement with Amazon Web Services. We have teamed up with LaLiga, Spain's premier football league, on a multi-year transformation program through Sportian, our sports tech joint venture. This is not just a technology project; it is a game changer. By embedding our AI pods at the heart of their operations, we will unlock the full power of AI agents in sports to boost team performance, deepen fan engagement, and drive operational excellence across the league. It is a clear example of how global enterprise AI is helping world-class organizations to embrace AI at scale and win in the most complex high-profile arenas. We have strengthened our position in the robotics and AI ecosystem by investing in InOrbit, a leading robotics integration company. This expands our capabilities, enabling advanced orchestration of different fleets of robots and autonomous systems across industries. It ensures we can integrate physical automation into enterprise workflows at scale, connecting AI agents not only to digital processes but also to real-world robotic operations. Today, our revenue mix is more diverse than ever. North America remains our largest market with 54.1% of our revenue. Latin America accounts for 19.7% and is showing strong recovery with new records in bookings. Europe represents 19.6% and is our fastest-growing region sequentially, up 8.1% with major wins in aviation and financial services. New markets grew an impressive 84% year-over-year and currently account for 6.6% of our total revenue. The Middle East leads this surge, driven by our work on several Giga-projects. Our 100 square program continues to gain momentum with our client base growing and diversifying. And Diego will share more on recent client wins and large-scale engagements that illustrate this strong momentum. 49 clients now generate more than $10 million in annual revenue, up from 39 a year ago. 339 clients generate over $1 million annually, up from 329 last year. Over the past 21 years, we have earned a unique position in our industry by fusing advanced technology, human creativity, and a deep understanding of our clients' needs. In 2025, the complexity of the environment is matched only by the scale of the opportunity as AI redefines business models, value chains, and competitive advantage. Our mandate is to help clients navigate this change with precision and foresight, capturing value across every layer of the AI stack. With AI Pods, our subscription model, AI studios, and the 100 square approach, we're delivering Globant as a full-stack AI company, one that designs, builds, and integrates technology platforms and industry-specific expertise into scalable solutions. This integrated model ensures we remain not just relevant but indispensable as enterprises embrace the AI-powered future. We're as energized by the challenges ahead as we are by the opportunity. And with this team, I have no doubt we will capture them all. Thank you very much.

Hello, everyone. I'm happy to be back. I want to expand on the offering of Globant's Enterprise AI 2.0 version that now includes Agent to Agent and the marketplace of Agents for its users, among other new features. It enables full AI adoption addressing three core needs of our clients. First, governance. Organizations need to be in control of their own AI journey with strong security, risk management, traceability, and guardrails for both models and conversations. Globant Enterprise AI provides leaders with the control they need to map their exposure to both cost and risk. Second, build capability. Companies need the tools to create and deploy solutions connected to the enterprise systems. Globant Enterprise AI platform is home to the lab for agent creation, orchestration, and ensuring interoperability. As of this quarter, the lab now supports the model context protocol and the agent-to-agent protocol. These enhancements allow seamless integration of agents and tools from across the AI ecosystem like Google Cloud, Azure AI Foundry, and Amazon Bedrock. And third, impact, the ability to explore, combine, and share solutions and to operate them so they can generate measurable business outcomes. This is where AI moves from pilot to scale adoption, ensuring that investments translate into tangible value across the organization. In this layer, we have recently launched a specific module for our clients called the station. It offers a curated searchable library of in-house built AI agents tailored to diverse business and industry needs, streamlining discovery while removing friction. With just a few clicks, users can now deploy agents via intuitive orchestration tools, speeding time to experimentation and value. Organizations using Globant Enterprise AI have reported an 80% reduction in legacy systems modernization times and a 50% increase in software development costs. Globant Enterprise AI also powers a lineup of hundreds of industry-specific agents along with three flagship agents tailored to each of our core studios. Globant CODA is our Agentic suite for our digital studios, a key component of how we reimagine software development life cycles and how we deliver value. Navigate for our enterprise studio. It optimizes business operations and performance and FUSION from GUT Studio launched at Cannes Lions this year, it enhances full funnel marketing, communications, and advertising. It streamlines processes from content creation to campaign optimization. Now let's discuss our work with some fascinating clients as we partner with them on their reinvention journey. In gaming, we're working with one of the leaders in producing real-time 3D content to deliver interactive solutions to high-growth sectors, including digital twins, automotive, healthcare, life sciences, and manufacturing. By employing our global delivery network, we will help this company to expand to new commercial markets, unlocking new business for them. On the technology side, we will be integrating their products into enterprise technology stacks, supporting new go-to-market strategies and co-developing tailored solutions. Our sustainable business studio is proud to be collaborating with the Worldwide Fund for Nature. Together, we are developing tools that link traceability with carbon footprint assessments. This initiative engaged multiple stakeholders, including national agribusiness entities, industry leaders, and civil society, facilitating the transition towards more sustainable meat production practices. The complexity and the time-sensitive nature of the challenges the WWF faced led them to enlist our low-code GeneXus platform. This collaborative effort will accelerate the adoption of sustainable practices, support regulatory compliance, and empower producers globally. We're excited to announce a partnership with a world leader in premium spirits to develop a generative AI-powered commercial insights agent. This innovative tool will provide our clients' employees with immediate access to critical data insights, streamlining decision-making in product development, marketing, sales, and strategy. By automating data retrieval, we are helping them to reduce the time and cost of traditional business intelligence workflows, allowing the teams to focus on strategic initiatives. The agent will enhance efficiency through self-service decision support and tailored recommendations. This initiative is just the beginning as the commercial insights agents will lay the groundwork for future applications in brand planning, commercial forecasting, and innovation. We are redefining the potential of AI-powered enterprises and unlocking new growth opportunities. Regarding our partnerships, days ago, we advanced our relationship with AWS by establishing a strategic collaboration agreement to accelerate AI adoption and enable Globant to provide clients in specific industries with enhanced support for cloud migration, generative AI adoption, and industry-specific solutions while helping them to optimize their cloud usage and manage expenses efficiently. We're collaborating with Salesforce to deploy Agentforce and Data Cloud across multiple industries, automating their teams and enhancing their ability to support their customers, tailor marketing journeys, and better segment their clients. As Globant's creative industry pillar, GUT advanced on large-scale projects for top brands, including Progressive, Procter & Gamble, DoorDash, and more, as well as new projects for Havaianas, RIMOWA, among others. Thank you, everyone, for joining us again.

Hello, everyone. I will now review our Q2 2025 financial results before providing our outlook. Our performance this quarter is very aligned with our expectations back in May. Revenue for the second quarter came in at $614.2 million, representing 4.5% year-over-year growth or 1% in organic constant currency and 0.5% growth sequentially. Our non-IFRS adjusted operating margin was 15% for the quarter, holding steady despite some FX headwinds in LatAm currencies and demonstrating pricing and cost discipline in a tough market environment. Non-IFRS adjusted diluted EPS for the quarter was $1.53, an increase from the $1.51 we reported in the second quarter of 2024. Turning to the balance sheet. Our cash and cash equivalents and short-term investments totaled $174.2 million. Net debt as of June 30 was $255 million. During this quarter, we increased our debt capacity to up to $1.1 billion. Free cash flow for the quarter was negative $2.9 million compared to negative $28 million from the same period last year. As always, we expect to generate strong free cash flow during the second half of the year. This quarter, we executed a business optimization plan. As explained by Martin, during Q2, we launched a new go-to-market strategy centered around our AI industry studios and our 100 square accounts. The recently launched Globant subscription model based on AI and our proprietary Globant Enterprise AI platform is gaining traction with our customers. While we have delivered strong growth for many years, we have observed a more tempered demand environment over the last few quarters. The business optimization plan is part of our response to these organizational and demand changes and to best position ourselves for the next wave of growth. The primary goal of this plan is not only to protect our near-term profitability, but more importantly, to create the capacity to increase our investments in strategic growth areas for the rest of 2025 and beyond. This plan ensures we have the right talent and resources to execute on our AI-centric strategy and capture future opportunities while managing our cost base in the current market. The main actions under this plan included a comprehensive review of our workforce to align skills and size with our strategic priorities, which resulted in a reduction of approximately 1,000 employees or 3% of our workforce during Q2, a consolidation of our global office footprint based on an analysis of our facilities and lease contracts, and the strategic prioritization of our delivery centers to support future expansion. In connection with these actions, we recorded a one-time charge of $47.6 million in the second quarter. This plan should generate $80 million in annualized savings. These savings will be critical in protecting our profitability in the short term despite FX headwinds in LatAm and will also be reinvested to fuel our growth engines, specifically our AI platform development and our people. We are taking decisive action now to build a more resilient and agile organization, ready to lead when the market accelerates. Now let's talk about our business going forward. Based on current visibility for the third quarter of 2025, we expect revenue to be at least $615 million, which implies 0.1% year-over-year growth. This expected growth includes a positive FX impact of 50 basis points. We expect a non-IFRS adjusted operating margin to be at least 15% and the IFRS effective income tax rate is expected to be in the 20% to 22% range. Non-IFRS adjusted diluted EPS is expected to be at least $1.53 per share, assuming an average of 45.6 million diluted shares outstanding during the third quarter. For the full year 2025, we now expect revenue to be at least $2.445 billion, representing 1.2% year-over-year growth. This expected growth includes a positive FX impact of 25 basis points. For the full year, we now expect our non-IFRS adjusted operating margin to be at least 15% and the IFRS effective income tax rate is expected to be in the 20% to 22% range. Our full year non-IFRS adjusted diluted EPS is expected to be at least $6.12 per share, assuming 45.5 million diluted shares outstanding during 2025. Thank you for your continued support.

Thank you, Juan, and hi, everyone. So as we go through the Q&A section of this call, I will announce your name. Please follow the Operator’s instructions. So with that in mind, thank you very much. And we'll take the first question from the line of Tien-Tsin Huang from JPMorgan.

I wanted to ask just on the AI-based delivery model. And I think you mentioned on the subscription side, you had 10 clients that chose that model. I think I heard that. Can you tell us a little bit more about that? What work is being done? And how would the work and maybe the contract terms compare to what you would normally see in a more traditional model? Maybe start with that, if that's okay.

Thank you for the question. We actually have 18 customers. The pipeline has grown very quickly in terms of opportunities. We successfully generated those 18 paying customers under the subscription model, which has been well received. We leverage these customers to utilize Agentic AI for generating code, development, and software they need. We manage the risk by supervising what the agents create under this subscription model. We anticipate that the level of supervision will decrease over time, and currently, we are focused on maintaining the same quality as in our traditional model. We are very excited about the feedback from our customers and the nature of the contracts, which can sometimes lead to extensive discussions with procurement offices, as this is a new approach for them. Overall, I'm pleased with the results and how our pipeline has been received by customers, as they understand the subscription model and the limits on tokens.

No, I think, Tien-Tsin, for the most part, the most mature aspect is actually how we deliver value, particularly in the way we build software and our approach. This has been the most challenging and risky because it changes our methods. We are not simply integrating AI into existing processes; we have completely overhauled our approach to maximize its effectiveness. This complexity arises because we have to persuade clients who have been operating in a certain way for a long time. We even charge for this service differently, but we are making a tangible reality out of what has previously been a promise: the positive impact of AI in an enterprise setting. As Martin noted, the reception has been incredible. I anticipated that gaining traction would be more difficult, yet the market and our clients grasped this concept very well. We received insightful questions, which is impressive. Consequently, our pipeline is expanding healthily, and I am confident that this significant change will undoubtedly drive the future of Globant.

The growth in the pipeline is significantly attributed to this. We have new conversations and new developments emerging, and we are very pleased with that.

Okay. I know it's a lot, and I appreciate your strong push for this. It's great. You mentioned the pipeline, and it seems like there's a significant amount of AI content overall. Are you anticipating a lot of conversion in the pipeline outlook for the second half? What has changed? Do you expect some of these deals to close in the second half, or could they be delayed further due to their newness and current circumstances?

We're experiencing conversion, but the macro environment remains quite uncertain. Therefore, we've chosen to adopt a conservative approach. In August, conversion has improved significantly, exceeding our expectations, which gives us a positive outlook. However, we want to exercise caution regarding the second half of the year.

The next question comes from the line of Bryan Bergin from TD Cowen.

So I'll ask on the optimization. Maybe can you talk about how far through those initial changes you have progressed? We could see the 3% billable headcount reduction on a sequential basis. Should we expect any further activity to carry through into Q3 as well? Or is that now through the system?

So on the headcount side, you're going to see some additional reductions happening in Q3, which already happened by now. The costs have all been accounted for during the second quarter because the plan was all provided at that point in time. There are also additional effects that are going to happen throughout the rest of the year in terms of the office consolidation and the talent development consolidation that we are doing. But the vast majority of the plan has been already implemented, especially on the people side. Between what we did in Q2 plus some additional adjustments in Q3, that's already done.

Okay. Okay. And then my follow-up is on the creative performance. So can you give us a sense of how GUT performed here, really the creative pillar relative to other studios? And I ask because there's incremental concerns on the street about these particular areas from Gen AI risks, right, and the ability for enterprises to do more themselves. So I'm curious if you're seeing any trends specifically around that creative area that would support or refute that perspective.

Yes. It's quite a small operation, but it has been growing nicely.

18%.

So we're very happy with that. And I would say that from the quality and the caliber of work that we do, it's not the work that would be affected faster by the AI. I think that for those that are doing outsourcing of generation of images and creation of specific campaigns for different channels, that impact could come faster. Our FUSION agent is targeting those kinds of customers that want to automate that pipeline of creation of content. So I'm very bullish about the idea of how our entrance into that creative space will grow in the future. So what we are seeing is that between all the technology that is coming into the marketing space plus the amazing brand that we have with GUT in the space, we're creating a very good momentum for the future. And we're fully aligned with all the efficiencies that can be made in that space. So I don't see that as a threat; even more, I see it as an opportunity.

Also, Brian, when you consider how we generate revenues, the majority comes from branding and company positioning. It's very high level and strategic, rather than dependent on short-term campaigns or advertising, which might be expected to be affected. We are not observing any impacts there. In fact, it is one of the fastest-growing areas at Globant.

The next question comes from the line of Maggie Nolan from William Blair.

I'm wondering if the enterprise AI platform is creating enhanced stickiness with your customers compared to maybe traditional more project-based engagements.

That's a great question, Maggie. I believe the enterprise AI platform serves as a crucial pathway for our customers to adopt generative AI. It offers a comprehensive integration of the complex AI ecosystem, making it practical and effective. This allows companies to choose from various LLM providers rather than being limited to just one. Additionally, it enables the integration of all workflows within the company and connects with corporate information systems to create agents that generate necessary business processes. We are implementing enterprise AI in all our engagements on the AI pods side and with many customers who are seeking a secure way to incorporate AI into their organizations. As I mentioned during our last earnings call, it is an essential element for establishing the AI ecosystem within companies. Accessing LLMs is just one part; there are also critical considerations such as administering permissions, controlling costs, and managing the intricate aspects of an enterprise-class AI implementation, all of which are made possible by enterprise AI. I find it extremely important, as it can be layered on top of major hyperscaler platforms and leverage their services, making it well integrated into our solutions. I anticipate that it will continue to be a pivotal component of our future endeavors. Diego, do you have anything to add?

No. Just to add to that, Maggie, I believe the quality of services and delivery provided by Globant has fostered strong loyalty among our clients. This is evident from the low churn rates and the maturity of our top accounts, many of which have been with us for over a decade. From a model perspective, this particular case involves a service as a software model, where we create something customized based on a platform, allowing us the opportunity to operate it as well. This approach offers a superior way to outsource functions compared to traditional BPO. From a software delivery standpoint, we provide our clients with tools like GeneXus Enterprise AI for building their agents, among other solutions. We also assist them in creating, maintaining, and operating custom solutions. Therefore, from the perspective of the model itself, it clearly enhances client loyalty.

That's really interesting and kind of exciting to hear for the business model. And then one other thing I wanted to ask about the script, it sounded like there were a couple of larger deals that were close to closing. Maybe comment on those and the growth trajectory you're expecting by geography, by vertical kind of revenue growth and how the pipeline is shaping up?

Okay. So Maggie, just a couple of deals that we are seeing now, a big deal in the financial services space, which is right in the final stages, and also another big deal in the healthcare and life sciences space. Both of them in the U.S., which are pretty exciting to see how the market is recovering. Also, we are seeing some deals on the enterprise side for CPG companies in Latin America. Also, Latin America is recovering as explained in the numbers too. So we're seeing some good signals across the board. It looks like the U.S. is recovering, and Latin America is recovering, which were the two big things that we had on our last earnings call. I don't know, Juan, if you want to.

Yes, definitely. When looking at Latin America, this is the first quarter with sequential growth after several quarters of decline. This is encouraging news as it indicates stabilization, and we are making progress as we move toward the end of the year in Latin America. In the U.S., when we account for the effects of professional services and some minor technology impacts, the rest seems satisfactory. The BFSI sector is performing very strongly, and travel and hospitality are also seeing robust performance. Overall, we are emerging from a period of lower growth, but some positive signs are starting to appear, particularly in the pipeline. The deal activity continues to expand, which puts us in a good position for a recovery whenever it occurs.

The next question comes from the line of Jonathan Lee from Guggenheim.

Can you help unpack some of the assumptions around the revised growth outlook and maybe the level of conservatism you're assuming? And how should we think about any potential acceleration off of your implied 4Q exit rate, if any?

Yes, sure. So when you look at the guidance back in May and the new guidance, basically, there are a number of things that happened in the quarter. When we look at the second quarter, we were able to meet or slightly exceed actually the guidance that we provided. Looking into the full year number, I mean, as you remember, we had a significant reduction in the guidance for the year back in May. Now you look at the EPS for the year; it is slightly up. There's a small tweak on the revenue line, mainly coming from one professional service customer and some small things that happened in technology. But overall, just a small tweak there. At the same time, when you look at Latin America, it's not coming down anymore. Sequentially, it was up this quarter. We are seeing kind of a stabilization and starting to build up based on the pipeline. When we look at the end of the year, I think that when we look at the U.S. economy, at some point, things will start to get better. We're not seeing further deterioration, which is good news, but things will have to get better. Companies will need to invest in the near future; they cannot withhold investments forever. So that's something that's going to have to happen. When you look at the size of the pipeline, the pipeline continues to build. When you look at all the changes that we did in our go-to-market with AI industry studios, the success that we are starting slowly but steadily showing progress on the subscription model. I think those are all good things that are shaping up, and we expect that to start getting traction in the future. We are doing a lot of changes. We did a lot of changes in the structure. We did a lot of changes to have the right people with the right skills in front of customers, people with the right skills given the new technologies that are coming that resulted in a significant business optimization plan. So we are doing lots of things to make that progress that I think is going to happen in the near future. We are working.

And also, as a general comment, I think that the amount of opportunities are showing up in the pipeline. The amount of new projects, as we have been saying for many quarters, the amount of new projects is incredible. The complexity in any corporate environment to implement any of these agents into production with the right railways for the LLMs, with the right access permissions, the complexity of connecting with production data, and the complexity of implementing that and then spreading it out in a big organization is significant. We ourselves want to implement agents, and it takes us a while to generate using the most sophisticated tools; it takes time to make it happen in the whole organization because we need to connect to complex systems. That is creating a massive set of opportunities that didn't exist before. This is on top of all the digital transformation work. This is on top of all the enterprise migration that is happening and will keep on happening. So I think the opportunity for us is massive and is reflected in actual numbers. First conversion has been slower, but I believe that little by little, these corporations will come to us saying, 'Listen, we need help to implement this.' A year ago, I was saying, 'Well, this is like very small proof of concepts that are happening.' Now we're seeing customers saying, 'No, I want a full AI transformation program to change my processes' because I discovered that it's not that easy to make it happen, and we need help. So that's creating a massive opportunity for us. And I believe that's why I'm so bullish about the future of our company, and all the moves in which, of course, new ways of delivering the same things are needed, and we are delivering that. So I'm extremely excited about what's coming.

On the heels of those opportunities, can you talk through some of the pricing discussions you're having, particularly around potential impact to pricing from your AI pod model as well as just given the rather competitive environment that you're seeing today?

Yes, Jonathan, listen, the pricing of our AI pods leads us to a much better margin than what we have on a traditional project. So I think that explains by itself. I don't know, Juan.

No, at the same time that it has better margins, it is cost-effective for the customer as well. So it's a model that so far, the way we are selling it, the way we are contracting with customers is a win-win. They are getting part of the productivity gains, and we're getting part of the productivity gain. So it's working well. We need to make sure, as Martin said at the beginning, that we continue to deliver the same quality that we have always delivered to our customers. So over time, as the coding gets better, the agents get better, we should even be able to hopefully improve a little bit those margins. But it's marginally positive, and pricing gives customers some efficiencies straight away.

Next question comes from the line of Divya Goyal from Scotiabank.

Can you all hear me? Thanks for bringing me back. I really appreciate it here. I just want a little bit more color. I know you provided a lot of information on the AI pods. But could you help us understand what's the scale and scope of some of the engagements you're seeing? And are you seeing some of these engagements expand into existing clients? Or are you also seeing some net new clients adopting and getting interested in this AI pods methodology or a solution offering that you have?

Divya, the pipeline includes a significant number of new customers, with more than half being current customers. The conversions primarily involve existing customers along with a few new ones, but most of the deals we've closed recently are from current clients, plus one or two new ones. It's intriguing to observe the developments within the pipeline, as many customers are shifting from traditional deals to this new subscription model. We announced this change quietly, primarily through email communication with our clients, but I received a response from a hyperscaler expressing their understanding and interest in our new approach just yesterday. This indicates we're building momentum. Bain Consulting recently released a report discussing this new model, highlighting its potential as a preferred choice moving forward, which is very exciting for us. But I don't know if I've covered it all. Okay, so that's the short answer. You have one more.

It's great. It's very exciting. I can tell you, as outcomes-based pricing models pick up across the sector, you're definitely leading the trend is what I would say. One more question that I wanted to understand, like I know some of your peers have been talking about helping global enterprises set up global capability centers or GCCs; is that something Globant has been participating in, helping the global enterprises grow their offshoring unit? And what is the role, if at all, that you play in there? That's all for me.

Yes. The answer is yes. We are participating in many of those deals. One of the deals that we're just about to close or is closed already is about taking over one of these centers. Our proposal, as opposed to the traditional proposal, is a proposal that includes our AI pods, and it's something that we're pretty proud because we won because of that. I mean, this new strategy, this new AI Pods model comes with two things. First, it makes savings tangible. And second, it provides a level of transparency of what we do that is unparalleled to any other model in the past. We can give you a report of every single token that we used and how we used it and which artifacts were created using those tokens and how we supervise that and how we make sure that all those things made sense. In essence, I believe that it's a breakthrough on the offering, and we're extremely excited. Yes, we are participating in all these deals. And hopefully, we will win them all.

Thank you very much, Leo. So that will be all for the Q&A section of today. Thank you all. And with that, I...

Thank you, Arturo, and thank you, everyone, for participating, for your continued support, and looking forward to seeing you on our next earnings call. Chau, bye-bye.