EPAM Systems Inc (EPAM) — Q4 2020 Earnings Call Transcript

Thank you, operator, and good morning, everyone. By now you should have received a copy of the earnings release for the Company’s fourth quarter fiscal 2020 results. If you have not, a copy is available on epam.com in the Investors section. With me on today’s call are Arkadiy Dobkin, CEO and President; and Jason Peterson, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today’s call may contain Forward-Looking Statements. These statements are subject to risks and uncertainties as described in the Company’s earnings release and SEC filings. Additionally, all references to reported results that are non-GAAP measures have been reconciled to GAAP and are available in our quarterly earnings materials located in the Investors section of our website. With that said, I will now turn the call over to Ark.

Thank you, David. Good morning, everyone, and thank you for joining us today. I want to reflect on 2020, which was undoubtedly a challenging year for us all. In preparing for this call, I reviewed our thoughts and communications from the past year, starting from 12 months ago to three months ago. In February last year, we were hopeful for a nearly normal year, anticipating over 20% organic growth while focusing on our adaptive enterprise strategy. By three months later, we still reported 26% constant currency growth for Q1, but like others, we were unsure of what lay ahead given the rapidly changing situation. The impact was significant, as over 30% of our client portfolio faced some revenue effects, forcing us to reorganize and prioritize the safety of our people while ensuring our business remained viable. I want to extend our deep gratitude to the many EPAMers who supported each other and to our clients for their trust during this time. Initially, we were uncertain about how the year would end, but as we progressed, we noticed signs of stabilization and clients adapting to a new normal, prompting an urgency for agile transformation. This situation catalyzed our drive for agility and connected us as a company, enabling faster information sharing and decision-making. Despite our original plans for 2020 not aligning with our financial outcomes, we recognized that many of our intended changes would accelerate strategically. During this time, we secured several significant new clients and began capturing a larger share of our existing portfolio in key strategic areas. Just three months ago, amid new geopolitical challenges, we reaffirmed our goal of transforming EPAM into a truly adaptive company, feeling confident in the growth we achieved in a challenging environment. Our investments in integrated consulting with EPAM Continuum, cloud-driven transformations, and analytics have made us more flexible and scalable, utilizing our educational platform, EPAM Anywhere. We are seeing recognition of our new service offerings and positive client feedback across various sectors. Our approach emphasizes the integration of EPAM's capabilities through a network model, allowing us to create agile and expert teams efficiently. Our current portfolio shows strong results that are enhancing customer value and allowing us to manage large projects more rapidly than before. Over the past year, we highlighted several successful projects, including significant engagements in healthcare technology and with a leading global insurance provider, among others. These initiatives underscore our ongoing commitment to investing in our business, which we expect to increase even further in 2021. Looking at our 2020 results, we finished the year with nearly $2.7 billion in revenue, reflecting a 16% year-over-year constant currency growth, including double-digit growth in most of our sectors. Our non-GAAP earnings per share reached $6.34, a 17% increase over 2019, along with $476 million in free cash flow, significantly above our previous averages. We welcomed over 4,400 new employees to EPAM in 2020. Throughout the year, we maintained a strong belief in our position as a leading digital product and platform engineering service provider, combined with our evolving consulting skills, which we see as our core differentiator. We are confident in emerging from this challenging time as a company focused on value and results, aiming for over 20% organic growth once more. Looking ahead to 2021, we see strong market activity and demand for our services, driven by clients adapting to new hybrid business models and customer interaction strategies. We will support large-scale transformations through consulting, product development, and engineering solutions, all aligning closely with our clients and key platform partners. We still see ourselves positioned well in the burgeoning digital platform engineering market while also recognizing opportunities in broader application development and cloud integration services, projected to be worth over $700 billion this year. While there may still be some disruptions and long-term impacts from the pandemic for certain industries, we believe that 2021 will yield over 20% organic growth for us. With that, I'll hand the call over to Jason for a deeper dive into our 2020 results and our outlook for fiscal 2021.

Thank you, Ark, and good morning, everyone. We are pleased with our 2020 fiscal year performance, especially given the dynamic environment. Our results demonstrate the durability of our portfolio, adaptability of our people, and highlight EPAM’s ability to meet the needs of clients even during challenging times. In the fourth quarter, EPAM generated revenue of $723.5 million, a year-over-year increase of 14.3% on a reported basis and 13.7% in constant currency terms, reflecting a positive foreign exchange impact of approximately 60 basis points. Revenue came in higher than previously guided due to our ability to expand our delivery capacity in response to a stronger-than-anticipated demand environment. Revenues also benefited somewhat from the aforementioned foreign exchange contribution. Our industry vertical performance in Q4 produced very strong sequential improvement, driven by a higher level of growth from both new work and existing clients and revenue from new customer relationships established over the last 12 months. Looking at year-over-year performance across this group: Life Sciences & Healthcare grew 24%. Growth in the quarter was driven by data and analytics, platform development to support new business models, and client investments to improve R&D efficiency. Business Information and Media delivered 16.2% growth in the quarter. Financial Services grew 16.1%, with growth coming from traditional banking, insurance, and, to a lesser degree, wealth management. Software & Hi-Tech grew 14.3% in the quarter. Travel and Consumer returned to growth, increasing 5.4% year-over-year. In Q4, we saw strong growth from our consumer clients, along with solid and improving performance within retail as clients made investments in response to the dramatic changes in their operating environments. Finally, our emerging vertical delivered 13.1% growth, driven by clients in telecommunications, automotive, and materials. From a geographic perspective, North America, our largest region, representing 59.9% of our Q4 revenues, grew 14% year-over-year or 13.7% in constant currency. Europe, representing 32% of our Q4 revenues, grew 11.8% year-over-year or 7.5% in constant currency. CIS, representing 5.2% of our Q4 revenues, grew 22.9% year-over-year and 45.2% in constant currency. Similar to Q3, growth in the CIS region was driven primarily by clients in financial services and materials. Finally, APAC grew 39.4% year-over-year or 35.7% in constant currency terms and now represents 2.9% of our revenues. APAC growth in the quarter was primarily driven by clients in financial services. In the fourth quarter, year-over-year growth in our top 20 clients was 16.6%, and growth outside our top 20 clients was 12.8%. Moving down the income statement, as mentioned last quarter, we continue to operate with a cost base that is lower than previous levels. While the lower cost base results from operational efficiencies delivered across the business, there are also temporary contributors, including reduced travel, relocations, and certain administrative expenses producing lower levels of SG&A spend over the last three quarters. Looking forward, we expect a higher level of costs in a post-pandemic environment but anticipate that some of the efficiency benefits may be maintained longer-term. Our GAAP gross margin for the quarter was 35.6% compared to 35.2% in Q4 of last year. Non-GAAP gross margin for the quarter was 36.9% compared to 36.7% for the same quarter last year. GAAP SG&A was 17.8% of revenue compared to 19.8% in Q4 of last year. Non-GAAP SG&A came in at 16.2% of revenue compared to 18.1% in the same period last year. Our SG&A results continue to see short-term benefits from the previously mentioned items. GAAP income from operations was $112 million or 15.5% of revenue in the quarter compared to $84.7 million or 13.4% of revenue in Q4 of last year. Non-GAAP income from operations was $135.9 million or 18.8% of revenue in the quarter compared to $107.6 million or 17% of revenue in Q4 of last year. Our GAAP effective tax rate for the quarter came in at 16.2%, which includes a lower-than-expected level of excess tax benefits related to stock-based compensation. Our non-GAAP effective tax rate, which excludes excess tax benefits, was 22.6%. Diluted earnings per share on a GAAP basis was $1.46. Non-GAAP EPS was $1.81, reflecting a 19.9% increase over the same quarter in fiscal 2019. In Q4, there were approximately 58.8 million diluted shares outstanding. Now turning to our cash flow and balance sheet. Cash flow from operations for Q4 was $159.3 million compared to $124.6 million in the same quarter for 2019. Free cash flow was $140.9 million compared to $77.6 million in the same quarter last year, resulting in a 133% conversion of adjusted net income. We ended the quarter with $1.3 billion in cash and cash equivalents. In Q4, DSO was 64 days, the lowest in at least five years, compared to 70 days at the end of Q3 2020 and 72 days in the same quarter last year. We are very pleased with this performance and believe we can manage future DSO levels in the upper 60s. Moving on to a few operational metrics. We ended this quarter with approximately 36,700 engineers, designers, and consultants, a year-over-year increase of 12.8% and a sequential increase of 8.8%, marking our highest quarterly increase in the last five years. Our total headcount for Q4 was more than 41,100 employees, a net addition of more than 3,100 EPAMers from the previous quarter. Utilization was 77.9%, consistent with Q4 of last year and down from 78.2% in Q3 2020. Turning to results for the full fiscal year of 2020, revenues closed at $2.66 billion, reflecting a 15.9% reported growth over 2019 and 16% on a constant currency basis. During fiscal 2020, our acquisitions contributed approximately 100 basis points to our growth. GAAP income from operations was $379.3 million, an increase of 25.3% year-over-year, representing 14.3% of revenue. Our non-GAAP income from operations was $472.7 million, an increase of 21.5% over the prior year, representing 17.8% of revenue. Our GAAP effective tax rate for the year came in at 13.6%. Excluding the impact of the excess tax benefits related to stock-based compensation and certain one-time adjustments, our non-GAAP effective tax rate was 22.6%. Diluted earnings per share on a GAAP basis was $5.60. Non-GAAP EPS, which excludes adjustments for stock-based compensation, acquisition-related costs, and other certain one-time items, was $6.34, reflecting a 17% increase over fiscal 2019 and higher than our pre-pandemic expectations of $6.30. In fiscal 2020, approximately 58.4 million weighted average diluted shares were outstanding. Finally, cash flow from operations was $544.4 million compared to $287.5 million for fiscal 2019. Free cash flow was $475.6 million, reflecting a 128% adjusted net income conversion. Now, let’s turn to guidance. Given the relative stability as well as improved visibility across the portfolio, we are resuming our full-year guidance for fiscal 2021. While we anticipate growth patterns across the industry verticals to vary throughout the year, we expect our diversified portfolio to drive growth more in line with pre-pandemic levels. At the same time, we will be investing at elevated levels across the business to ensure we have sufficient resources to meet renewed demand. Additionally, we will increasingly invest in new geographies to support our long-term growth. One area of focus in 2021 will be the creation of infrastructure to support a larger and increasingly global EPAM. Starting with our full-year outlook, we anticipate revenue growth of at least 23% on a reported basis and in constant currency terms will be at least 22% after factoring in a 1% favorable foreign exchange impact. We expect GAAP income from operations to be in the range of 13.5% to 14.5%, and non-GAAP income from operations to be in the range of 16.5% to 17.5%. Our income from operations reflects a higher level of investment in the planned expansion of our capabilities and geographies in 2021. We expect our GAAP effective tax rate to be approximately 12% and our non-GAAP effective tax rate to be approximately 23%. For earnings per share, we expect GAAP diluted EPS to be in the range of $6.65 to $6.86 for the full year and non-GAAP diluted EPS to be in the range of $7.20 to $7.41 for the full year. We anticipate a weighted average share count of 59 million fully diluted shares outstanding. For Q1 of FY 2021, we expect revenues to be in the range of $757 million to $765 million, producing a year-over-year growth rate of approximately 17% at the midpoint of the range. In Q1, we expect the favorable impact of foreign exchange on revenue growth to be approximately 2%. For the first quarter, we expect GAAP income from operations to be in the range of 12.5% to 13.5% and non-GAAP income from operations to be in the range of 16% to 17%. We anticipate our GAAP effective tax rate to be approximately 1% and non-GAAP effective tax rate to be approximately 23%. We expect our GAAP effective tax rate in the quarter will be impacted by a higher level of excess tax benefits related to the vesting of restricted stock units in connection to our annual compensation cycle. For earnings per share, we expect GAAP diluted EPS to be in the range of $1.66 to $1.74 for the quarter and non-GAAP diluted EPS to be in the range of $1.62 to $1.70 for the quarter. We expect a weighted average share count of 59 million diluted shares outstanding. Finally, a few key assumptions that support our GAAP to non-GAAP measurements. Stock compensation expenses are expected to be approximately $86.5 million, with $22.5 million in Q1, $20 million in Q2 and $22 million in the remaining quarters. Amortization of intangibles is expected to be approximately $12.5 million for the year, evenly spread across each quarter. The impact of foreign exchange is expected to be approximately a $5.5 million loss for the year, with $1 million for Q1 and the balance evenly spread across each remaining quarter. The tax-effective non-GAAP adjustments are expected to be around $21.6 million for the year, with $5.1 million for Q1 and Q2 and $5.7 million in each remaining quarter. Finally, we expect excess tax benefits to be around $51.5 million for the full year, with approximately $24.5 million in Q1, $13.5 million in Q2 and $6.8 million in each remaining quarter. In summary, we are pleased with the high-quality results we delivered in fiscal 2020 and are encouraged by what lies ahead in 2021. Operator, let’s open the call up for questions.

Hi guys, thanks for taking my question and congratulations on another strong quarter. Ark, you mentioned that you are seeing some COVID-related - you are still seeing a little COVID-related impact for some of your clients. And I think you said potential longer-term adjustments to certain verticals kind of going forward. I guess the question is, how do you see the post-pandemic sort of business mix for EPAM evolving? Should we start to think about verticals like FI growing a lot faster than some of your other verticals or how should we think about the mix kind of going forward?

Probably when we look at historically, we still have a pretty good level of volatility on a quarterly basis and even annually across our verticals. And again, we believe that with our growing size, this type of volatility, which can depend on one, two, three, four, or five large accounts, could still be in place. So it is, I think, difficult to say. If you look at it quarter-by-quarter, it was practically changing champions all the time. So I think in general, it would be something similar, at least for this year. There is unpredictability, but some industries heavily impacted by COVID might actually start to invest even more, like we see in retail, for example, where even travel may start investing more to prepare for the future. So I apologize, but it is difficult to predict.

Okay. So hard to tell at this point. Okay. And I also wanted to ask about margins and sort of specifically your visibility to margin performance next year. How confident are you that the costs that basically kind of came out of the model in the context of COVID are going to flow back in? I guess the easier way to ask the question is, what would see you sort of outperform margins versus underperform margins next year?

Okay. So I think the first thing I would say is that our guide is expected to communicate that we do feel that sort of the middle point of the guided range of 16.5% to 17.5% or 17% is really kind of how we are thinking about the business next year. If I sort of break it into two components, we expect that SG&A will go up somewhat as a percentage of revenue. We exited the full year at about 16.4%, and I think for the full year of 2021, you would be looking at something heading towards 17%. Some of that is additional investments in the business, and some of that is the return to some amount of normalcy in spending later in the year. You can see that there is still some benefit that results from that because prior to the pandemic, we were running at over 18%. Now from a gross margin standpoint, what we expect is that we will continue to see strong growth, as evidenced by our guide on the top line. We do think that we will continue to make investments in growing the business, which will include traditional headcount additions and all the infrastructure that is required to attract talent and bring talent into the company. This will also include an expansion in geographies, such as Poland, India, Mexico, and potentially other places in Latin America and Europe. Those investments, at least probably in 2021, may have somewhat of a negative impact on gross margin, with the idea being that they are subscale at this point. We need to grow them rapidly, and as they get closer to scale, they will have more consistent profitability. Therefore, the guide incorporates a somewhat elevated level of SG&A, maybe a slightly lower level of gross margin, again, as we invest in our infrastructure so that we can increasingly become a much larger and, of course, more global company.

Okay. So that is super helpful. I appreciate it. Thank you so much.

Good morning. Thank you. I wonder if I could just follow up, Jason, on your comment about geographic diversification. How much of that, if any, is related to some of the unrest in Belarus over the last kind of year, one and a half years? Can you remind us about how a new facility ramps up, and what is the typical trajectory of gross margin as you ramp a new geography?

Okay. Let me, David, start from Belarus because, yes, there is definitely some influence from what is happening there, similar to how we thought in terms of diversification when we began eyeing global delivery events in 2014 around Crimea and the Russian-Ukrainian conflict. We accelerated our presence in Central, Eastern Europe, India, and Latin America. During this time between 2014 and 2020, we definitely moved in this direction, and I think we continue to do so. So there are multiple new centers we are opening, and there are different cost structures there, which I will pass on to Jason to comment on specifically.

Yes. As Ark indicated, we would grow more rapidly in some of these other geographies. But Belarus is part of what we are looking at this point. We probably will see some employees who may help us stand up operations in Lithuania and help us grow in Poland even further. From a gross margin standpoint, when you start a brand-new facility from scratch, like we did in Lithuania, initially, you will have very low utilization, and you will incur additional infrastructure costs that aren’t necessarily reflected in rates. Again, those are relatively modest facilities. In Poland, where we are still subscale, it has somewhat lower levels of profitability than a couple of our at-scale operations like in Belarus and Ukraine. It is a more rapid growth rate in those entities, which have a somewhat lower level of profitability. David, I think you will see an evening out of the profitability and gross margins as we get those countries and individual delivery centers up to a more appropriate scale.

In general, we expect a very similar future to what we experienced in 2015 and 2016.

And just how long does it take to get to a scale where those margins would look more similar to some of your other geographies?

I think, again, there is some slight impact, and it's hard to predict at this point, because you learn along the way. But we have many more practical points now than we had five or six years ago. Additionally, if there is a more significant impact on margin, it might come from changes in the global tax situation as well, which could have a bigger impact, but that is completely unpredictable.

Yes, David. As Ark said, it is somewhat difficult to tell. But I think as we work through this fiscal year and into the next fiscal year, that is when you will get to a more appropriate scale and more normalized margin.

I see. And then just looking at the evolution of this industry. I’m just curious, at this point, do you have any better insight into how the workplace for the future is going to evolve for your customers? Do you sense that they are getting more comfortable with more distributed work models, allowing you to operate more satellites or just giving you access to a broader talent pool in a more fragmented workforce that may not be working in a centralized location? Any insights into how those cost savings get shared with the client, or maybe it's just too early at this point, but I’m just curious if you have any updates on how this is evolving.

I think there are definitely visibility on several large programs, as many clients have analyzed what has happened and created strategy from this to prepare for the next unexpected events. There are a number of large programs, some of them being better shaped, but others will be shaped during the next one or two quarters as well. We are seeing increased engagement here.

That is helpful. And then just a final question related to that; how do some of these larger projects or the potential for larger projects impact your visibility as you look out to 2021? When I look back over the last couple of quarters, you have come in well above guidance. I’m assuming part of that is just a faster-than-anticipated recovery. But when you think about the forward guide, how should we think about the visibility into that and where you might end up above that 23%?

I don't know if you can share something which you don’t know from our message regarding how we predict it. We were comfortable enough to return to our annual guidance cycles. In the big picture, we are doing this very similarly to how we did pre-COVID. While we are seeing larger programs happen, we also become larger. It is very rational from our point of view. Our visibility and prediction methods today are very similar to what we did in pre-COVID times.

Thank you. To start, just a question about how you look ahead to 2021. Can you talk about the mix you are anticipating in terms of revenues from current customers and from what you anticipate to be new customers over the next 12 months and how that go-to-market strategy is changing? It seems like you are getting wallet share; how should we think of that evolution?

So we haven’t traditionally forecasted new customer revenues. Instead, we kind of look at the historical trends. However, we are seeing a lot of customers beginning their journey with EPAM and very quickly moving into the top 20. In addition to existing clients, we are experiencing strong growth with smaller clients that are benefiting from acceleration of investments in their businesses.

Got it. In terms of the overall feel or client conversations you are having, it sounds like clients are willing to start embarking on some bigger projects. Can you talk a little about that? Are they trying to bite off smaller chunks, or are you just seeing a lot of renewal or follow-on of those projects?

There is definitely visibility to several large programs, as a considerable number of clients analyze what has happened and create strategies from this. Many are investing aggressively to prepare for future uncertainties.

That is helpful. Just to follow-up on how some of these larger projects or the potential for larger projects impact visibility as you look out to 2021, when I look back over the last couple of quarters, you guys have come in well above guidance. I’m assuming part of that is just a faster-than-anticipated recovery. How should we think about the visibility into that forward guide and where you might end up above the 23%?

I can't speak to things I don't know about our predictions. We felt comfortable returning to our annual guidance cycles. In a big picture, we are doing this similarly to how we did pre-COVID. While larger programs are happening, we are also getting larger ourselves. From our perspective, our visibility and methods of predictability are quite comparable to our pre-COVID approach.

Hey, good morning guys. I just wanted to start with kind of a big picture question. We recently did a CIO survey showing a significant decrease in the percentage of enterprises believing they are largely done with their digital transformation journey. This seems to be because they continue finding more areas of their business to digitize, extending the runway. I’m wondering if you are observing that dynamic within your client base?

I don't think we see that because like - I think it is -.

So it is a double negative. So there is a decline in the number that says that they are done.

Oh, decline in - yes, okay. So it is actually broad, I mean - okay. I think we see this as well. It is also very difficult to define because digitizing is not a very well-defined area, and different clients view this differently. But definitely, cloud migration and modernization are huge changes we have seen over the last several years. While everybody has been talking about it for almost a decade, the true impact has occurred in the last several years, especially driven by COVID.

Right, right. Okay. And Jason, could you tell us more about the assumptions you are making for utilization and pricing in the 2021 guidance?

Yes. So utilization is generally consistent with the 77.9% we exited Q4 at. We are not expecting a significant uptick in utilization unless something comes in unexpectedly. We are seeing wage inflation, which historically has been 4% to 5%, but in 2020 it was probably more in the 5% to 6% range and will likely remain elevated at that rate in 2021. Pricing is also a mixed environment; while newer engagements with high demand provide some opportunities for price increases, older clients, especially in impacted sectors of the economy, are less open to rate increases and may signal more willingness for increases in 2022.

Okay, that makes sense. Thank you.

Thank you. Following up on the build-out of new geographies, can you provide some insight into the decision process behind which geographies you chose to build out, why you picked those locations, and your assessment of your ability to attract talent in those markets?

Definitely. There was preparation for this. Since our IPO days, we were very heavily concentrated in a couple of countries. Right now, while we still have concerns in those countries, it's a much smaller portion of our operations. We have proven that we can scale in different locations and are actively looking at second-degree geographies. This includes acceleration in India, Latin America, and some countries across our traditional locations. The criteria usually involve IT infrastructure, availability of talent, and quality of the university system. In some instances, we select locations that offer a more comfortable environment for talent due to geopolitical situations.

Got it, thank you. Regarding your client buckets, the top 20 saw good growth, although there was a slight sequential decline in the top 5. Can you comment on what is occurring there? And for those outside the top 10, that was a nice growth driver in the past, but this year it has trailed the consolidated growth. Should we be aware of any dynamics or thoughts on how to re-engage those clients as you navigate out of COVID?

Yes. I think we still think about the business as a diversified portfolio, whether we look at industry verticals or customers. We see growth from some large customers in the top 20 while seeing slowdowns in others. Notably, we have had very high growth with large customers in the business information media space, and we see continuing significant relationships with many of those clients. We think growth will come from larger customers in fiscal year 2021, while we’re also seeing increases in new logo revenues, indicating that we are making headway outside the top 20.

Alright. Thank you, Jason, and thank you, Ark.

Hey guys, good morning. Question on hiring here. You added a significant 3,000 billable headcount in the quarter. How do you feel the model operated as you have on-boarded over the last couple of months? Did you feel like you are nearing ceiling levels comfortably to add? How should we be thinking about the pace of headcount expansion in early 2021 before you scale some of these newer regions?

We have invested in our capacity to add additional headcount. In Q4, we were catching up from Q2 and Q3. Now, we might not see as much anticipated headcount growth in Q1. However, we are running at a faster pace than in previous years because demand is strong, and our infrastructure allows us to meet that demand.

Indeed, the challenge is not just to grow but to grow responsibly, ensuring a balance between demand and supply. This is one of the key challenges we navigate.

Okay. Can you comment on the cash position and M&A receptiveness? How are you thinking about M&A as a component of geographic expansion?

The M&A pipeline is quite active, and we are advanced in discussions with several companies. I expect to talk more about that soon. We will focus on capabilities, but geography will also play a role. We may use acquisitions to establish positions and management teams in new countries as well.

Thank you.

Thank you. Good morning, Ark, good morning, Jason. Ark, Jason, good quarter here. My first question is, you have mentioned a couple of times larger and increasingly global TAM. You provided a lot of detail on that from a delivery perspective. My question is from a revenue perspective if you can provide specifics on how you are thinking about future globalization of the EPAM footprint? You continue to generate the vast majority of your revenues from North America and Europe—any thoughts on diversification?

While the market investment may focus on customer-centric places such as Western Europe, for long-term expansion, APAC continues to offer opportunities. Although our revenues are primarily from Western Europe and North America, we are underpenetrated in Asia Pacific and expect revenue opportunities to grow there in the long term, albeit with less material impacts in 2021.

From a general direction, North America and Western Europe remain the main priority. The rest of the markets, as Jason mentioned, priority is focused on serving our global clients in those markets. Our growth in APAC is expected even with some local clients, but again, it is not predicted to be significant. Growth with global clients served in North America and Western Europe, extending to different markets—such as APAC—is anticipated and with our size, we see almost unlimited opportunities.

Understood. That is good to know. Ordinarily, I wouldn’t pull out a specific acquisition that you did, but I always thought that the Continuum acquisition with integrated consulting was a key capability set that you added. I was curious if you could shed more light on how that performed throughout 2020, particularly given that the discretionary nature was perhaps impacted? Or did clients look to you to adapt more so? How do you see that evolving and affecting your future investments?

We have tried to illustrate this with a couple of examples today. It's definitely a journey, and we have made various acquisitions to build consulting capabilities, both organic and through acquisitions. The robust growth during 2020 reflects multiple wins, leading us to enter new clients through various points that have significantly positive potential. We will keep focusing on the integration of these capabilities for future growth.

Got it. Thank you, guys.

Thank you. Thank you, everybody, for attending. Again, we all know how tough 2020 was. We really hope that 2021 will be a different year, while we all understand it will be a mix of different things. We are looking positively towards the overall situation. We hope our next quarter will be different from the second quarter update last year where we completely had to change the whole picture. Thank you very much, and talk to you next time.