Good afternoon, ladies and gentlemen, and welcome to the Nagarro SE earnings call Q1 2021. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Christian Bacherl. Please go ahead. Thank you, Julia. On behalf of Nagarro SE, allow me to extend a warm welcome to you. You should have received a copy of the earnings release for Nagarro's first quarter 2021 results. If you have not received the press release, a copy of the release as well as of this presentation is available on nagarro.com in the investor relations section. I am covering for Christopher Grosse, and with me on today's call are Manas Fuloria, custodian of entrepreneurship, and Gagan Bakshi, custodian of strategic finance. Before I pass you over to Manas, I would like to remind those listening that some of the comments made on today's call may contain forward-looking statements. These statements are subject to risk and uncertainties as described in the company's earnings release. Additionally, please also refer to the earnings release for the notice on reported results that are non-GAAP measures. Thank you, Christian, and welcome everyone to Nagarro's very first earnings call. We really appreciate your support, and we are glad you've taken the time to join us today at short notice. We are still smoothing out the processes of being a listed company, so you will receive more notice for future earnings calls. The last year was, for Nagarro, quite a tumultuous year. We had the spinoff and listing, which took a lot of work. We had the COVID pandemic to deal with. We had an ERP rollout and a couple of other things, a new brand. In Q1, it felt like we were once again able to focus on the business. We had excellent traction with our clients, and the strong bounce in our demand situation, which had started already in Q4 2020, continued into this quarter. That's not to say that all clients recovered. That's not to say that all industries recovered, but the overall demand situation was still very positive. On the supply side, to recap a little, when the bounce in the demand hit us in Q4, we had no hiring pipeline to service it. It took us a little bit by surprise. A lot of this quarter was about building up the hiring pipeline and also the hiring operations to be able to hire at the scale that we needed to. This was made more complex by the job market, which was very extraordinary in these months. Because of the work from home, work from anywhere, there was a new edge to the competition for talent, and there was also this lack of physical interaction that had some strange results, like the pipeline drop-off rates were higher than usual. With people who are not actually coming into your offices, not actually meeting human beings face-to-face, more likely to accept an offer and then just not show up on the joining date, right? We had to improve our hiring machine and our hiring ops significantly, and were able to do so and then commence hiring at a fast clip. We also had some milestones in this quarter. The acquisition of Livisi from Innogy was effective from January 1st. That's the IoT smart home solution. We created a new service region in Sri Lanka and incorporated a company there. We also started on some of the tasks that we had listed out in our listing prospectus. We rolled out a stock options program whose details had already been in the prospectus. As you may know, we have management indirectly holding around 16% of the equity of Nagarro Holding GmbH, the operating company that sits below Nagarro SE. We had declared in the listing prospectus the intent to roll this over to the level of the SE, and we began that process and hope to conclude it by the end of the year. These are the key numbers that describe our quarter. We did EUR 115.7 million in revenue. The year-on-year growth was 4.3%, which is usually a very significant number, but perhaps not the best number for a year where we had disruption of COVID for two quarters and we're pulling ourselves out of that situation. Just keep in mind that the USD to euro exchange rate declined from around 1.1%-1.2% in the intervening year. More significant in our view is that we grew significantly quarter on quarter. After a smaller jump from Q3- Q4, we grew 6.2% from Q4- Q1. Our gross margin was 29.4%, and I would just mention here in passing that this is to some extent affected by the fewer working days in Q1 2021 versus Q1 2020 in some of our main geographies of operations. Also because of the leap year in 2020 with 29 days in February. Not a major change. We ran an adjusted EBITDA of EUR 18.6 million, which is roughly 16% of revenue. In the next row, we have put some illustrative numbers. We have a lot of industries and quite a few segments. Just trying to put this all in one slide. Visually, we just put the fastest-growing industry versus our slowest-growing industry to give you a sense of the range, as well as our fastest-growing segment, client region versus our slowest growing. You can see that among industries, horizontal tech grew by 32%, while travel and logistics shrank by 20%, which is, of course, not unexpected. The shrinkage in travel and logistics and a couple of other industries also affected Central Europe, which was our worst-performing client region, while the rest of the world continued to grow fast off a smaller base. More detail on this, of course, by industry and by segment is there in the statement. Our top five clients continue to account for just a small fraction of our revenues, 14%. Coming to the next row, we ended the quarter with EUR 99 million in cash balance. In the quarter, we added 1,084 professionals and had a high customer satisfaction score, even for us, of 96%. We're also maintaining our guidance that we shall talk about later in the presentation. Here's some more detail on how the different industries performed. Apart from horizontal tech, the other industries to show significant growth were automotive manufacturing and industrial, retail and CPG, as you might expect, and to some extent, life sciences and healthcare. On the flip side, of course, travel and logistics was impacted negatively, but also energy utilities and building automation, since we have considerable exposure to building automation and the construction of hotels and buildings slowed. We also have some other impacts in some industries which are more due to one or two specific clients rather than in broader industry trends. We already talked in the previous slide about our revenue by customers. There was almost zero movement in the top five and top 10 numbers. Although some clients changed places, the revenue concentration ratios remained almost precisely the same. We continue to ramp up engineering resources. On the right of this slide, you can see that we added 1,084 professionals. We ended Q1 at the edge of the magic number 10,000, very much a round number in the base 10 number system. I must point out, though, that a number of these hires were engineers fresh out of college, and they will take some time to undergo the intensive training that we put them through before they become productive in our system. But still, this was a very creditable achievement. On the left of this chart, we have the revenues by client region, and you can see again Central Europe, which was impacted by its exposure to travel and logistics and to a couple of specific clients. The rest, we have already just talked about. Now, just a quick view of our segments. You have, as we discussed, Central Europe shrinking a little bit, but growth in the other segments. You had North America grow from EUR 37 million- EUR 39 million, rest of Europe from roughly EUR 17 million- EUR 18 million, and rest of world from EUR 14.5 million- EUR 16.4 million year-on-year as compared to Q1 2020. The gross margins, they have had some slight movements, but nothing extremely significant. Now, I'll just turn this over to Gagan to talk a little bit about our cash flows and liabilities. Okay. Thank you, Manas. Hi, everyone. On this slide, we will talk about the cash flows and liabilities. If you would please focus on the chart on the left-hand side. Our cash flow for Q1 2021 was a negative EUR 7.2 million against negative EUR 1.3 million in Q1 2020. The operating cash flow was EUR 1.6 million in Q1 2021 as compared to EUR 5.4 million in Q1 2020. The reduction in operating cash flow can largely be ascribed to the payment of spinoff and listing costs. The cash outflow from financing activities in Q1 2021 was EUR 4.9 million as compared to EUR 2.3 million in Q1 2020. Major items of cash outflow in Q1 2021 were lease payments of about EUR 4.3 million and net interest payout of EUR 1.3 million, which can be mainly ascribed to the new syndicated loan facility we had taken in mid-December 2020. The cash outflow from investing activities in Q1 2021 was EUR 3.8 million versus EUR 4.4 million in Q1 2020. The cash outflow was mainly to meet contractual payment obligations of older acquisitions. Let's turn our attention to the chart on the right-hand side. The chart shows financial liabilities and lease liabilities and cash, which helps us calculate the net liabilities. Lease liabilities for Q1 2021 were EUR 58.2 million, marginally up from December 31st, 2020 of EUR 55.2 million. Financial liabilities for the Q1 2021 were EUR 180.2 million versus EUR 182.6 million at December 31st, 2020. These include drawdown on our EUR 200 million syndicated credit facility, some working capital facilities, and other bank loans. Cash and cash equivalents were at EUR 99.2 million, marginally lower than the closing cash balance of EUR 107.7 million at the end of year 2020. As such, our net liabilities for Q1 2021 totaled EUR 139.1 million versus EUR 130 million at December 31st, 2020. Net leverage, which is net liabilities divided by adjusted EBITDA, was unchanged at 1.7X. With this, I will turn over to Manas. Thanks, Gagan. Now, we're close to the end of the presentation, and before we move to Q&A, a couple of final slides. This slide shows a little bit of the recent history and the outlook that we have. We have been growing organically at around 19% in the 2017-2019 period, and COVID slowed down our growth in 2020. This year, we expect to grow at about 15%, not because of demand constraints, because there's absolutely no demand constraint operative at the moment, but because of supply constraints. As I said, we started this year without a pipeline and without the ability to ramp up to the extent that we needed to. The way this works, in our experience, is that the run rate at which you end the year gives a lot of momentum to the following year. This year, we had to sort of pull ourselves out of some negative momentum in 2020, particularly in Q2 and Q3. With that, we expect to grow at 15% this year, but we expect to resume our regular 20% rates of organic revenue growth in the medium term. We also expect that our adjusted EBITDA guidance of 15% will hold for 2021, and then in the medium term as well. One question on your mind when you think of our guidance must be COVID, especially in India, the second wave, and I don't want to brush it under the carpet. I just want to address it very explicitly. The second wave of COVID in India has been terrible. We have lost already six young colleagues, just around 30 years old, which is 0.1% of our workforce. I would say dozens, if not hundreds, of Nagarrians have lost family members or close friends, and it's been a complete disaster. You can imagine the disruption as people have scrambled to deal with the illness, either that they have been having or in their families. I would say that we are still on track for meeting our revenue and adjusted EBITDA guidance. We are very quite confident of that. I would just, though, make a larger point and just take this moment to caution everyone on this call to please personally, as well as in terms of persuading your communities and governments to not let down your guard. This new strain of virus is very deadly, and I think it's best that no one across the world becomes overconfident or lets down their guard till everyone is fully vaccinated. With that, just a quick recap. When we listed the company, we put forward these investment highlights. We felt that we had a company in a market that was very resilient and had tailwinds. We had a good positioning. We had great clients, highly diversified. We had a strong organization that could deal with all kinds of change. We had good financials, robust financials, and had lots of opportunities for growth. I think today, coming through this crisis, we feel that a lot of the things that we put into our Capital Markets Day presentation and our listing prospectus have held us in good stead, been very good for us. We are now excited to get back to our normal growth trajectory, and that's what this quarter basically felt like, just going back to business and getting back to our normal growth trajectory. The floor is now open for questions. Julia, maybe you can just take that. Gladly. Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to raise a question, please press 9 and star on your telephone keypad. If you would like to withdraw your question, press 9 and star a second time. We have several questions coming in. The very first question comes from Martin Comtesse from Jefferies. Your line is open. Please go ahead. Good afternoon, Manas and Gagan. Hey. Thanks for sharing your view on the quarter. Just three questions, if I may. First of all, you mentioned that it was quite tough hiring people at the beginning of the year. Could you just share how the average salary environment has developed over that time? Do you expect for the full year to see some pressure on that cost position? Or did you figure out other processes to basically avoid paying higher salaries? Secondly, your margin was actually fairly strong. Above expectations, I would say. Can you also share how much of that was related to COVID and savings around COVID, and how you think about that cost position going forward? Lastly, I think you already brought that point very clearly across. I think it's a very devastating situation in India right now in terms of COVID. Could you maybe be a bit more specific on what that means for the second quarter for you? Are you currently having closed offices or outages or project delays or something like that? Just to get a feeling for that. Thank you. Thank you, Martin. Thanks. Let me just address those questions one by one. On the hiring of people, we did have a very tough environment. I must say that Nagarro continued to have good retention rates, or at least compared to a lot of our competitors or other companies in the IT services space, and continued to grow, whereas some other companies are struggling to do that. Nagarro is seen as a good place to work, and that was sort of underlined in this environment. There was some pressure on salaries, but not very much. We do not expect the changes to create any significant deviations in the full-year results. We also have, I must say, a client base that is very much attuned to all of these trends. We feel that we have room to also go back to our clients should we need to let them adjust the rates, if we need to in order to hold to our lines. Coming to the margin, we are not currently measuring, separating out which of the components of the margin are related to COVID savings and which are not. In the short term, what we do see is that there are significant savings that are occurring. We are not attending events, we are not traveling and things like that. At the same time, for example, there might be a little bit more pressure on, for example, taking care of people in a crisis like the COVID crisis. We are not very much betting on these increased margins, but we are confident in saying that we should be able to reach the 15% adjusted margins for the whole year. On the India COVID situation, what we have seen is, see, we have had our offices closed pretty much now for a year and a few months. It's also, by the way, very interesting how a company can operate perfectly virtually for so long. I'm not saying that every office around the world has been closed for this period, but most of our offices have been closed. In terms of project delays, et cetera, I think we've had very little of that. Our clients have been very understanding. They've been making lovely videos and sending them across to our teams. Very nice letters and offering support of different types. When we are trying, for example, to organize aid equipment, our clients are jumping in. All in all, I think we see that the reduction, for example, in billable hours that we see in April and potentially in May, is still relatively small. We see that this is not going to set us off our expected revenue or adjusted EBITDA goals. It's a bit tragic to be talking about these numbers in the backdrop of this humongous tragedy. Yeah, in terms of our financials, we are quite confident about them. Appreciate your answer here. Thanks. I'm going to go back to the queue. The next question comes from Michael Knapp from Commerzbank. Your line is open, please. Yes. Hello, gentlemen. Thanks for taking my question. For instance, I would like to talk about your Q1 growth of 4%. Could you elaborate a little bit on to what extent your growth in Q1 was affected by the more restricted talent supply, which might have had an impact on your internal project execution here? To what extent have you seen some slowdown in terms of demand coming from some of your end market verticals here? Particularly, for instance, if I see here in the split of the segment reporting, so for instance, management consulting or life sciences, financial services. I think these were some of the verticals which had a quite good momentum in 2020, where you now had a rather separate start of the year. Other verticals which showed, let's say the most pressure last year, like travel and logistics, telecoms, did not show very much of an improvement in Q1 either. A bit more color here would be very helpful in terms of your end market dynamics and how you would view the dynamics in the quarters to come. Thank you. Thanks, Michael. I think what is important to remember is that we had a very strong Q1 last year, then we had a low Q2, a flat Q3, then a slight recovery in Q4. The business that we lost, if you take the difference between Q1 and Q2 or Q3, which are roughly the same, but Q1 and Q2, that business is not coming back. Right? That's business typically in travel and logistics or building automation, things that are unlikely to bounce back. Right? We don't expect that to come back in the next couple of years. What we are actually pulling ourselves out of is Q2 or Q3. Right? That's kind of the way we see it. That's why for us, the sequential quarters are more important, right? In terms of demand right now is such that if you had another, any number of people, we could just deploy them. We have just, I hate to use the word infinite because it's not infinite, but it's for all practical purposes, unconstrained. We are not at all demand-constrained. If things stay the way they are, we don't expect to be demand-constrained for the rest of the year. We are completely talent-constrained. Completely talent-constrained. Right? That's the context. We don't see any slowdown whatsoever. We see just a very heated demand situation. The talent side, as I mentioned, is a little bit aggressive, but also chaotic. You're learning new things every few weeks. Even, for example, with this new wave, it remains to be seen whether it leads to people sticking on with their companies or continuing to move. There's a lot of changes almost week by week in this situation. I'm just happy to say that we've been able to add a lot of scaling in terms of number of hirers. We have a three-digit number of hirers now. We have AI being used. We have automation being used. We have marketing, almost like you market to clients. Sort of CRM type of activities being used for the people who are joining us. I think that we have done a lot to address this. Still, again, we could today add another few hundred of people, and they would just disappear in a second. Right? There is a lot that we still need to ramp up on the talent side to completely take advantage of the demand that we have today. Okay. Thank you. I appreciate very much. Another question I have, I know that in more normal non-COVID times, you tend to have a quite steep revenue visibility in your project order backlog, about 10-1 1 months from today. Is this still the case as of today, or has COVID now, in particular around the new spike of cases in India, kind of affected this, in usual times, pretty deep revenue visibility in your book? Has it been unchanged? Are there some changes now, and is your confidence to say, "Okay, I can recognize about 90% of the revenue in the 12 months ahead of me? That's a great question. I think our revenue visibility is unchanged. The ratio is unchanged. Of course, one doesn't know the unknowable. As of now, we have just a lot of pressure on the demand side. Pretty much every escalation that I get, and I don't get many, but every one that I get is about not ramping up fast enough. Right? This is just true for the entire industry. I think there's the digital product engineering side. On the digital engineering side, there's just immense demand. We continue to win new clients, but even the existing clients are just hungry for more and more teams and more and more work to be done. This is just the nature of the market right now. Good. Understood. Last question before I go back to the queue relates to your statements, what you made. I would assume you would try to implement pricing measures, so probably price increase in this year. I'm wondering from which quarter at the earliest these, let's say, these price increases could become visible in your books. We probably would assume, let's say, probably better margin, a better gross margin development from there. Yeah. We have some clients or many clients with whom we have periodic discussions on price, so it's not clumped in a particular quarter. Last year, we skipped many of these discussions because of the pain everyone was feeling. This year also, we've been a little bit slow on picking it up. The time is coming when we will go back to our clients. There's no particular single quarter where this would show up. I think you will just see it in our steady maintenance of our margins. That's most likely. It's not likely to be clumped in any single quarter. Okay. Overall, it's fair to assume this is going to be a more back-end loaded year, 2021, in terms of revenue and in terms of earnings contribution, right? If you say that you would now try to implement price increases in the quarters to come, I would say that's probably a more back-end loaded year compared to 2020. In terms of revenue, as a growing company, we always have increasing revenue, usually have increasing revenue from quarter to quarter. Also, Q2 and Q3 have typically more working days than Q 1 and Q4. We have some other compounding things happening with COVID, et cetera, so we're not very clear, but this is how it should typically look like. In terms of our earnings, I would just again warn that even our employees get raises throughout the year. Then you have currency movements, it's a complicated picture. I would not place too many bets on having our earnings being back-loaded. That I would avoid trying to give that impression. Okay. Thank you. Thank you, Michael. We have one further question from Andreas Wolf from Warburg Research. Your line is open. Yeah. Hi, it's Andreas Wolf, Warburg Research. Congratulations on the strong profitability in Q1, and condolences to everyone experiencing a difficult situation right now. My question is basically regarding your currency-adjusted revenue growth. Since you had some headwind from the US dollar, and probably also some other currencies, what would be the currency-adjusted growth rate in Q1? That would be helpful. Another one is on your employee growth. You picked up in terms of number of employees quite nicely in Q1, plus 14%. You have already mentioned that not all will be billable immediately. Is it right to assume that it usually takes roughly nine months to get people billable after leaving college? On the office space, if I look at your depreciation compared to Q1 last year, seems like the figure has not changed much, which I take as an indicator that you are not adding additional office space, which is obviously what you also described in your presentation. Is it going to be the "new normal," in inverted commas, that people will work more from home going forward as well, i.e., it will be more of a hybrid model? Maybe on the constraint to onboard people, do you feel more competition also from Europe/the U.S. with regard to access to your people or the regions where you are active, given the fact that those companies might also implement work-from-anywhere policies? Thank you. That's a great set of questions, Andreas, and thanks for the commiserations at the beginning. Let me take these questions up one by one. Currency-adjusted revenue growth is definitely a number that we would like to put out later. We are coming from a spin-off from Allgeier with slightly different ways of doing things, so it's a difficult number to put out with reliability at this point. We hope to be adding this number in some quarters from now and starting to publish it. At the moment, I would not like to put a number out there, but you can sort of estimate it from a couple of things, of course. I appreciate that this is a very important number and in the long run, we definitely want to be publishing this number. It's just that the circumstances of the spin-off make it a little bit difficult. The second one, in terms of our employees, the fresh employees fresh out of college, how soon can they be deployed? I think it depends a lot on the client and depends a lot on the situation and the demand. The shortest period is six to nine months. It can be a little bit longer than that. Six months, I think, is the absolute shortest. It can be a little longer than that. Yes, we are also hiring in significant numbers laterally. I think that we are trying to cover. We're not waiting for this, but this is a good indicator of the confidence that we have in the situation nine months, 12 months from now. Coming to office space, I think what we have decided to do is to be still flexible in this topic. We have let go some of our smaller buildings, in India especially, and we had a very large building coming up, and we do plan to take it, because the rate at which we are growing, even if not everyone has a seat, we will need space. The new normal, I think for us, is going to be that there's going to be a lot of flexibility. People are going to have the flexibility to either be at work five days a week or zero days a week, or anywhere in between. Of course, this will be somewhat constrained by what the client wants or what security needs they have or what the project team feels they need. We have a strong expectation that in the medium term, our offices will not be built one-to-one for every employee that we have, but rather at a lower ratio. What that ratio is, I hesitate to say. It'll be a lower ratio. At the same time, we expect that in the new normal, we will have a lot of smaller satellite offices in smaller towns across India. We had actually declared that we would start four such offices in July, which now looks unlikely. Offices where people could come in for a couple of days a week and just meet up with company mates. The idea just was that someone who joins us in a small town should feel that we are invested in the town and are likely to be there in the long run and not just ask them to move to Gurgaon, for example. That's the thinking. In terms of the competition for our talent, it's not really directly from Europe or the U.S. We haven't seen that at all. There have always been, actually for some years, some companies that do offer to put people looking for talent directly in touch with individual freelancers in countries like Romania or India or Mexico, but that model hasn't done very well. We do have, of course, a lot of competition from American companies, for example, that have their offices in India. When Amazon, when its need for new software to take care of the huge e-commerce boom was exploding, they were hiring in big numbers in India. We do face these competitors here anyway. We don't just necessarily face them directly from their home countries. I think the idea that we have that we are not just a staffing company, we're not just providing resources, we're not just doing arbitrage, but we are investing a lot in building vertical competence, in building innovation and thinking breakthroughs, which is our tagline. It's just that if you just want the warm body, that's a very different business. We want to be just adding a lot of value and being able to just bring the Nagarro touch to our projects. I think we don't expect this to change in the coming years, at least in the coming next few years. That's the fourth question, Andreas. Thanks again for these questions. Okay. Thank you. One quick follow-up, if I may, Manas. The currency that you have assumed for your 15% revenue growth, is it basically assuming a stable currency environment? Is it how we should look at it? Would you also be confident despite some currency headwinds to achieve the 15% revenue growth target this year? Thank you. That's the euro on euro sort of statement or guidance. We do feel comfortable that we are in a good position. We are not overly worried about minor currency headwinds. Okay. That's clear. Thank you. Thanks, Andreas. We have a further question from Martin Comtesse. With regards to the time, maybe sticking to just one question. Your line is open. Thank you. For one quick follow-up. We have seen in the past, in your history, that M&A has actually been quite a vital part of your growth story. Just to follow up, would that be a solution for sort of the supply shortage in the near term, or is that something that you currently put in the second row and not really pursuing actively? How do you think about M&A? Thanks, Martin. I thought no one would ask so thank you. M&A continues to be a part of our growth strategy. As you know, just like we did not have a hiring pipeline, we also do not have a M&A pipeline at the start of the year because we were all focused on the spin-off and listing till December. We have subsequently been talking to a number of targets, and it does remain a big part of our strategy, and we hope to be able to make some moves in the coming quarters. I would say that it's not really a solution to our hiring challenges directly, because what happens is that any company that we would take on, if it's a decent company and it's a growing company, it would already have its folks completely deployed. That's unfortunate, but it's also the fortunate part of having a company that joins you that is growing and has high utilizations. What it might do is give us feet on the ground in a geography to do a better job with hiring. That is definitely on our minds. As you look at targets all around the world, we do have this at the back of our minds that in some of these geographies, having a reasonably accomplished player join us would allow us to tap into the job markets better. It's not necessarily in every case a solution to our needs. Our needs now are several hundred people a month. Which is not very easy for even a large acquisition to be able to supply. Very clear. Thanks, Manas. Thank you. We have time for one very last question, which comes again from Michael Knapp. Please, your line is open. Yes. Hello. Thanks for taking my last question. It's on your receivables management. In 2020, you had a pretty strong cash conversion, which was also driven by your improved receivables management. Do you see any COVID related or any other headwinds on this year's receivables management, or do you expect that you can actually maintain the low level of receivables as a percentage of group revenue for this year as well? This will be my last question. At the moment, we do not see any headwinds with receivables. We do expect to do a reasonable job this year as well. Thank you. There are no further questions. Handing back for the closing words to Manas Fuloria, please. Well, thank you everyone for joining this call. It's, again, for me, a very important milestone, for the company, a very important milestone. Thank you all for supporting us and looking forward to deliver the stuff that you want and to sort of living up to the story that we put out late last year as we listed and spun off. Thank you again, and talk to you again in a quarter. Thank you.