GFT Technologies SE (GFT) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm very pleased, obviously, to perform the call today. I'm pleased with the outstanding performance in 2021 and for our financial figures despite the ongoing challenges, which COVID provided. And I think the main message is that our results demonstrate a new level of scale and our ability to catch market trends wherever they pop up. And our global footprint actually also allows us to do flexible sourcing along our locations. But let me go on to a bit to the numbers in the highlights. So Page #3. As you can see, every number looks just fantastic. So we have 27% growth in revenues. And let me point out, this is organic growth, all organic growth. And we grew in every sector we focus. Obviously, we had disproportional positive growth insurance and industries, but even the banking sector was growing 2 digits. We see a very, very strong demand for digital transformation, and this is not just for '21. We also see that for '22. And this allowed us to focus on higher-margin projects, which obviously, together with some economy of scale effects, contributed to growth in EBT of 184%. Needless to say, the year before '20 was hit with some restructuring measures and COVID impact. So the comparison is a bit, let's say, a bit unfair, you could say. However, you will see with the EBITDA numbers and all the details which Jochen going to provide later that we do have improved our profitability at all levels. Our employee growth is clearly keeping pace. We were able to digitally onboard a lot of people. So we grew net year-end to year-end by 29% employees all over the world. It's a bit higher than revenues because they simply grow in low-cost countries where the relation between revenue and employees is different than in high-cost countries. Our cash flow and liquidity remains high. We even improved our equity ratio to 36%. And if you look into where we are growing, obviously, cloud technology is that driver. The business with cloud technology grew by 48%, but also the digital transformation services, which are going to explain on the next slide. And at the very end, to also provide benefit to our shareholders, we are proposing to increase the dividend from EUR 0.20 for 2020 to EUR 0.35 for 2021. Now let's go on Page #4. And here, you see a high-level snapshot of our services portfolio. So what do we actually do from a client? And you can clearly see the big change we have implemented in GFT over the past 5 years to focus on digital transformation which is mainly based on cloud technology. This has high dynamic growth. In '21, this business was grown by 38% and even speed up compared to 31% already in '20. And then we have the smart technologies, which is much smaller. These are more point solutions where they use the newest technologies, whether it's artificial intelligence, DLT, blockchain or VR, robotic process automation and for sure, everything is based on data engineering, using data, for example, for new business models. So this service is technically smaller, 8%, maybe it could also be 7% or 10%. So this is the newest technologies, again, rather point solutions. The real business is in digital transformation where we have the big tickets and the big programs we manage. And then we have a very stable business, the platform services. Here, we grew all application management business, but also still we do projects to support regulatory changes or compliant services, replatforming, very stable business, rather long-term oriented in the range of 24%. And last but not least, on Page #5, and this is probably usually have not shown those slides in these type of presentations. But as you could see, demand is unbroken. And you will also -- you probably have read the press release already, we commit for 20% growth in '22. So demand is unbroken. So this is not the challenge. The challenge is the focus, the right prioritization to the right projects and the supply. So we focus a lot on onboarding our people, training our people. We invest heavily into academies and learning for new technologies for cloud, and we clearly prioritize the projects. We could actually grow much more, but we don't want -- we want to grow with the right projects, which enable us to have a sustainable growth, not just, let's say, onetime nice numbers. So growing tech talent globally is part of our focus and is also part of our CSR strategy. And the whole culture of GFT as a very strong team culture that we operate as one team for the benefit of clients, also help us to flexibilize not only the hiring and the recruiting, but also how we put the delivery teams together. And this enables us to catch market trends wherever they pop up, put the teams together, deliver it to the client. And then if this market trend like the Neobanking trend goes to another market, we can also catch it there because we can basically sometimes amuse the same teams or train additional teams. So this globalized approach helps us to be very flexible and, let's say, take benefit of the current market development. But now let's go into more details. Over to Jochen.

Thank you, Marika. So let's look into the detailed numbers directly going to Slide #7, key figures at the glance. Revenue number was already mentioned, 27% growth. We ended the year at EUR 566 million in revenues. You see at the next line, the order book in the table on the left. The order book increased by 62% to more than EUR 300 million, quite a steep increase versus 2020. Main reason is that clients feel more safe about ordering and being already legally binding in that respect. This was different 12 months ago. With the COVID in securities, clients were behaving more cautious and not handing out projects early, it was more fast moving into projects after discussion. Today, we see a stronger order backlog, and it is, of course, fully supporting the revenue guidance we're giving. On the EBITDA side, EUR 64.8 million. That's up 52% versus last year. On the right side, you see the third bullet point with a couple of smaller bullet points highlighting some special cost items, which mainly hit us in 2020. So look at the underutilization, which cost us more than EUR 4 million in 2020. Of course, this was gone in '21. And similar restructure measures in 2020 were quite heavy, only EUR 2.6 million in the year '21. And from the FX side, well, we got hit a bit harder in '21 with EUR 1.8 million. That was only minus EUR 700,000 in 2020. So some effects coming back from the COVID year, but a lot of positive effects coming from the good margin revenue growth we're experiencing growing EBITDA and EBITDA adjusted by more than 50%. When we look at EBIT and EBT, we're up more than 100% and of course, the same explanation supply, smaller numbers, bigger percentages. Net income also up 100%, earnings per share at EUR 1.14. Moving forward, Slide #8. Let's look at our diversification in the year 2021. How did that work out looking at the left side of the slide first, in our client portfolio. Well, in the end, we've looked at this in the last quarterly calls already. So all clusters are pretty much moving into the same direction as in previous quarters. And they are all growing, except for the first cluster, which is the cluster of clients with more than EUR 50 million. Well, as everybody who knows GFT knows this is currently Deutsche Bank, the only client above EUR 50 million. They have been quite stable. We will see that later, but the percentage, of course, declined when the group grows so strongly. The client group with more than EUR 10 million in revenues showed a big push to 37% of our total revenues. This is mainly because we moved 5 smaller clients who were in categories to the further right in the year before into this group of more than EUR 10 million. So we see more client concentration. And as I always say, that is good for us because it is efficiency on the sales side. The middle block decline between EUR 5 million and EUR 10 million, had a little decline from 19% to 15% of our total revenue, mainly because this group lost 5 clients to the left, which is good news, but not for this category. And when we look further to the right, we see quite stable, meaning growing in line with group average in the clients with more than EUR 1 million and smaller than EUR 1 million. On the right side, we show our 2 sectors -- our 3 sectors, sorry, and we see strong growth in all of them. Industry growing by 27%, remaining at 11% of our total revenue. The biggest increase in our insurance business growing by 52%, now stands for 16% of the group revenues. And last but not least, the banking business growing by 23%, a bit below the group average which is mainly because Deutsche was not growing, and it is still standing for 73% of the revenues. Now let's look at quarterly numbers, Slide #9 and compare quarter-over-quarter and quarter-over-year other quarter. Q4 versus Q3 of 2021 shows an increase in revenue of 12%. So that's quite steep for the last quarter of the year that we see an EBITDA adjusted increase of 9%. When we compare versus a year ago, we see a 36% increase. And of course, on the earnings side, again, a bit of a hit in COVID Q4 last year. We are growing by 60% versus 2020. So maybe that is not fully comparable. Moving forward, Slide #10, revenue by segment. Our fast-growing Americas, U.K. and APAC segment was growing by 48% organically. That's a very small FX hit, so the total growth is 47%. Growth coming from Canada, Brazil, our Asian markets, U.K. and U.S.A., so nearly all markets that we serve in Americas, U.K. and APAC. Looking at Continental Europe, we're up 9% and 1 digit, but on the high side, that's where we wanted to be. Of course, we have a bit of trouble in the Deutsche Bank accounts in Europe that have been slightly declining, but we have been overcompensating by growth, mainly in Italy, and in Germany. Let's go one step deeper. And hopefully, this is the last time I showed this slide because it highlights the top 2 clients separately. Top 2 clients, you remember when you follow GFT that used to be Deutsche Bank and Barclays. Barclays has heavily reduced, now standing for nearly EUR 0 of revenues today, but in '21 Deutsche stood for EUR 90.4 million. That's the number you see on the GFT Group, top 2 clients. And the share of Deutsche has reduced to 16%, so down 5 points, and this will continue in '22. The revenue with the top 2 clients was reducing by 5%, which is far lower reduction than in the years before. We used to be at 20%, and that was the hard time growing the top line of GFT. Now even though it has stabilized and all other clients, the next line, have been growing by 36%, which is on the high end of our last 3 to 4 years with all other clients, 36%. After 9 months, this growth stood at 32%, so we even did speed up in the last quarter. Let's look at profitability, Slide #12. And as always, we show EBITDA, adjusted EBITDA and EBT. EBITDA adjusted best reflects operational performance. The difference between EBITDA adjusted and EBITDA is only earn-outs for M&A. That's the only adjustment that we do. So that's always to keep in mind. Looking at the business segments themselves. America, U.K., we see a heavy increase on the EBITDA adjusted, be it nominally, but also in margin, mainly because of the strong top line growth, which is coming in at decent margins in '21. Looking at Continental Europe. Well, we have seen growth was not the heavy driver for Continental Europe, but we came back to normal margins anyway. 2020 was offset by some of those special effects I was mentioning on slides before, underutilization and restructuring, which mainly happened in Continental Europe. Now we're back to normal and showing a decent margin also in Continental Europe. Let me today give you one sentence about others. Others at minus EUR 7 million is quite a hefty number. There's one reason that drives this, which is we are not allocating part of our group charges to our Brazilian subsidiary. Why is that? Because we would have to pay a heavy import tax of 25% on those charges. So we leave roughly EUR 7 million to EUR 8 million of charges inside the holding and not charge it to Brazil. In other words, that should go to Americas, U.K. and APAC. But for tax reasons, for cost saving reasons, we're not doing that right now. There should be a reform of the tax system in Brazil, and we will look into it later again. Moving forward, Slide #13, revenues by market. But we are looking at this slide now quarter-over-quarter, and it looks pretty the same every quarter. No relevant changes. Only one, U.K. really is picking up. We're now at a 34% growth in the U.K. That number was far lower at the beginning of the year. So our U.K. business is picking up very, very nicely. And after 9 months, it stood at 23% growth. Now it's 34%. So true speed there. Besides that, our Spanish business was able to compensate reductions mainly in Deutsche Bank, really completely only a small minus. Well, in the fastest-growing countries have not changed, it's Canada, it's Brazil, Switzerland and it is our Asian markets. Which brings me to Slide #14, our 30 biggest clients in '21. Here, we have 5 new entries, the ones with the box around them, let's just name them briefly. Beneva is a Canadian insurance client, Credit Suisse, who we mainly serve in Brazil and U.K. is among our top 30. We see Google here, which we mainly serve in the U.S. and a bit in Poland. The London Stock Exchange had a strong growth in '21, now among the top 30 clients. Well, of course, that's all in the U.K. and U.S., whom we also serve in Brazil, U.K. and Switzerland. We have 2 clients not disclosed on the bottom right. One is an insurance client in Italy and the other is an American private equity company. To be among the top 30, a client has to deliver EUR 4.5 million in revenue. So that's the minimum entry number and the top 30 stand for 73% of our total revenue. Which brings me to Slide 15, our clients in '21. You see in total, we have served 450 clients as a B2B company classic numbers, not so big. We have 46 new qualified clients within which are clients with more than EUR 100,000 in revenues, we have not been serving in years before. Last year, the same number stood at 54 clients, but included the newly acquired in GmbH. So this year, it's fully organic, so really comparable. Some more classic financial slides following. Final -- start with the income statement on Slide 16. What is worth mentioning is the cost of purchased services has increased by 67%, which is, of course, far faster than the revenue. We've been using and tapping into the freelancer market more strongly in '21 because demand is there, people are scarce. And therefore, contractors support that. On top, some contractors are like employees, I'll come back to that on the slide later. The fourth bullet point, we always compare personnel expenses and purchase services business revenue as a percentage, and this was stable versus 2020 at 81%. What we do see is operating -- other operating costs are only up 14%, which, of course, helped a lot the EBITDA improvement of 53%. Some words about depreciation. Because in a growing year with 27% top line growth, we are reducing normal depreciation and amortization. That's for sure a trend that will not go on forever. But they are 3 main reasons for this. First, amortization has been slightly reducing. Amortization of the M&As of the past EUR 700,000 lower in '21 than in '20. That's a small one. The bigger one is we are using less space. And this is shown under the IFRS 16 depreciation. This is the way office rent has to be shown today. And we have reduced that by EUR 1 million or EUR 2 million versus 2020. And we will continue looking into our office space very closely on how much do we need. Of course, top line growth and people growth support, not having to look into it too deeply. Because for a growing number of people, we will need more office space and will be more efficient. But this is another source of improved profitability for years to come. Last but not least, depreciation. Classic depreciation is also under pressure, meaning reducing because we're moving more and more of our own internal services to the cloud, which means while we used to buy servers years ago and then depreciate them. Today, we're using cloud space and the cost for cloud space is in other operating expenses. So it moves above the EBITDA line. And same is true for software licenses. We used to buy software licenses and depreciate them. This is moving into classic SaaS business, monthly fees. And again, SaaS fees are in other operating expenses. Years ago, it was in depreciation. And last but not least, when we reduce our office space, less investments into office equipment. And therefore, depreciation overall was the biggest reducer for the line of depreciation and amortization in '21. Last but not least, so many words on this slide. Income taxes, 25%, quite low. It was 30% in the year before and 25% very efficient tax rate in 21 weeks, still but we are able to use a lot of carry forward tax losses. This will change a bit in '22 where we believe the tax rate will be at 28%, just as a very first number for '22. Going to Slide #17. Cash flow analysis. Well, overall, the very first bullet point and sentence says it, finance structure is still very solid. When you look at the slide on the left, the net cash at the beginning of the year was minus EUR 31 million. At the end of the year, the net cash was plus EUR 1.9 million. So we are net cash positive again. Cash flows from operating activities at EUR 53 million, just fueled by high profitability, while working capital was picking up a bit in line with revenue growth. In the year 2020, it was the other way around. It was low profitability, but clients were able to reduce days out with clients in 2020, which pushed operating cash flow. Now we're back to a more normal year with strong profitability and somewhat burdened by the working capital. On the financing activities, we paid back some debt just to reduce our interest payments and cash flow from investing activities was focused on classic investments. There was no M&A in the year '21. Which brings me to Slide 18, and I don't want to spend much time on this one with the balance sheet, and you will find more details in the appendix. The total balance sheet has increased because of the profits that are still in the company and the working capital that is increasing, the main reason there. Besides that, on the left side, second bullet point, noncurrent assets are a bit down mainly because we're using less office space, and this is where it's shown. Which brings me to Slide #19, people. Our employee number has increased to 7,718 which is 29% up, main growth coming from Brazil. Our utilization, the graph in the middle, was at 90%, slightly below prior year, which was mainly because of the very strong onboarding that we have experienced in the last quarter. Attrition is at 19%. Looking back 12 months, in the quarter, it was probably already above 20% and roughly 20%, 21% is what we face in the year 2022. Last but not least, the very last bullet point contractors. We are working with 1,305 contractors at the end of the year, which is not exactly but nearly doubling versus 2020. Main reason here is, a, capacity. We needed capacity in some of our markets. And the second trend is in some countries contracting is from social security cost perspective, more efficient and people opt for being rather freelances than employed. And currently, we have this trend, especially in Poland. And therefore, the contract number is going up. But in markets like Poland, they are like employees. It is more a wish because of personal cost optimization. I now hand over back to you, Marika.

Thank you, Jochen. So let me come to the guidance for the year '22. Clearly, we see that the megatrend, digital transformation is pushing us further up. We see high structural demand, but we anticipate growth in every of all 3 sectors. Highest dynamic clearly is with cloud technologies, which is the underlying technology for digital transformation. We will also see that there is more and more projects using AI technologies or DLT technologies. And clearly, we will continue to grow our talent pool globally and you're sorting in a flexible way as a competitive advantage. And let me say this, especially in these times, our global footprint, our geopolitical footprint is pretty savvy. And therefore, we see that we can grow there. We have a solid client structure. Finally, let me say this with a bit of a smile on my face, at least for the ones who listen to us for some years. Our biggest client Deutsche Bank in 2022 will be below 12%. Therefore, we stopped talking about client concentration. It's now a solid plan structure. You have seen in the numbers Jochen shared that we are very good in landing new clients and then expanding them. It's not about just collecting logos, it's about expanding them to a solid number. And again, digital transformation trend supports us here because these are the big tickets. We'll keep our solid foundation, no change on the strategy there. We will focus on growth while improving earnings year-over-year. We keep our sector focus. We adjusted a bit the midterm guidance for the sector, given that banking is so strongly growing. We do not aim for 60%, but 65%, 20% insurance, 15% industry, which I think is also quite diversified healthy sector strategy. And we're going to maintain a solid balance sheet and cash position, we continue focusing and looking into the market for M&A. We haven't done -- we haven't closed, let me be more precise. We haven't closed any M&A target in '21. Simply we either came to the conclusion that the company doesn't fit to us at all or the price was simply too high. And we do want to make good acquisitions for the right reason. But we keep looking into. And obviously, the current guidance is therefore given on a pure organic outlook. And we keep our shareholder friendly dividend policy with 20% to 50% of the net profit. Now let me come to the concrete numbers on Page 22. We already gave a guidance in October last year, where we guided that we're going to grow by 20%. Obviously, as we have closed the year with EUR 566 million, we did the math. We use the calculator, 20% is EUR 680 million. That's why we commit for that. The other numbers consequently also go up. We have committed in October to delivering EBT of 7.5%. You now see that we are guiding 8% for the year on the 20% growth, simply because we do see positive effects, as Jochen explained on our cost advantages, specifically below the EBITDA line. Why do we see that? Well, again, we see that unbroken growth trend for digital transformation, growth in every sector. We do see economies of scale and active price and cost management, and let me say, especially active price management. We do have pressure on the salary level. Salaries are going up everywhere. The demand is not only for us unbroken also for our competitors, so salaries go up heavily. And therefore, we are already increasing prices for our clients, and we're going to continue doing this. We also will prioritize focusing on the right margins. Hence, for the time being, it is about balancing those salary increases out. The better this works out, the better for all EBITDA . Nevertheless, so sum it all up, EUR 680 million in revenue and EUR 54.5 million in EBT. That's it. Then we have slides for the backup, but we usually do not present them. So I hand back to the operator, open for Q&A.

[Operator Instructions] The first question is from Andreas Wolf from Warburg Research.

Congratulations on the strong quarter. I have a few questions, if I may. So the first one would be regarding, let's say, ways to increase efficiency in terms of coding. So it seems like demand is growing significantly faster than there is the number of coders growing also worldwide. Do you see opportunities to improve efficiency by using tools like low-code platforms, et cetera? I guess you are doing this already, but maybe you could comment on this topic. . And then the second would be -- it's related to your fast growth area cloud. So Gartner has named cloud native platforms is one of the major topics for this year. I guess it's probably because everyone is talking about it, but not really doing anything regarding this. Do you already see cloud native platforms positively influencing client demand? Right now, I guess you are mainly still shifting the clients to the cloud. Then Question number 3 would be on attrition. Is there a threshold where -- how shall I ask it, where attrition becomes too difficult to manage because it seems to be climbing up? I guess the structure is still intact, but is there a certain threshold that we should be looking at? And then -- yes, the obvious topic, Russia and the bank -- the banking industry that was exposed to the sanctions. I guess you don't see any indirect effects coming from that. Otherwise, you would have reflected it in the guidance, but maybe you could reconfirm? And then I don't want to narrow Q4 results. But given the strong top line in Q4, especially if I look at the sequential development, I think there was a little bit more room on the profitability side. I guess you hired more people than towards the end of the year. Maybe you could provide some insights here as well.

Andreas, of course, I'll take two of the questions. Let me go for attrition. Is there a threshold? Well, you know the numbers that we show is always group numbers. We -- in some countries, we're experiencing higher numbers and in other countries, lower numbers. As you can imagine, countries like Germany and Spain are somewhat lower. Markets like Brazil or Poland, we used to have very high attrition in some quarters and then we manage it down again. So is there a real threshold? Not really it really hurts above 30%, and that's when we do very heavy countermeasures. And in the end, a lot countermeasures come down to money because usually, then this is in the market and then there's also pricing power in the market. If the demand is so high, but there is no real threshold, to be honest. But at 30%, it starts to truly hurt in the market. Again, it would not happen across the group. Usually, countries are in different speeds. Q4 top line could have led to a bit more profitability. Well, we guided for EUR 40 million, we delivered EUR 40 million. That was the goal of the fourth quarter. Yes, we have strong onboarding. Yes, we had more recruiting costs than ever in the group, as you can imagine. We never onboarded so many people because you have to add the net growth and the attrition. So it closed in on 4,000 new heads. And this was, of course, also costly. Nevertheless, in Q4, the target was to deliver the 40% and then let's look into '22.

And let me add Andreas was about preparing for the expected growth in '22. Let me answer your 3 questions. You asked whether we are -- how we see the future development of cloud-native platforms and whether they are involved. The answer is yes. We are involved. And yes, it's something which clients need for the future. It's sometimes also called lending platforms. And you might remember that already 2 or 3 years ago, I think it was the first time we talked about tranquility base, which was our lending platform, which we developed to help our clients. Nevertheless, it's not so that there is a product out there, which then clients use, it's more of these are architectures. So we know how to build such an architecture and sometimes legal frameworks from other companies, sometimes we use our own framework. Sometimes clients develop their own lending platform because they simply want to be in full control of the cloud-native platform in order to not be too dependent on one cloud provider. So yes, it's an underlying -- underlying architectural concept. You then asked logically about our exposure with the Russian banks. So first of all, we do not operate in Russia or Ukraine. We have actually so far only one client which is Deutsche Bank, Moscow, where we actually do not support Deutsche Bank, Moscow, but Deutsche Bank Moscow has an IT captive organization in Moscow with whom we sometimes have joined teams to develop solutions which Deutsche Bank is using globally. But it's very small, to be honest. So we are not very exposed on that. I hope this answered your question, Andreas -- and sorry, there was -- you asked the first one was you asked whether there are ways of increased efficiency on coding.

Exactly.

Yes. So -- and you mentioned low-code platforms. The low-code platforms are usually developed so that business users and you often see that in the industry business, sometimes also in data analytics business, that then the business side can use the so-called low-code platform because you actually don't code, you kind of customize. You kind of just put elements together. So this will never be used by coders. So you can now argue, okay, this is efficiency coding because you don't need coders. Yes, but you need coders to develop the low-code platform. So this is not a concept to reduce coding. It's more a concept to make the platform easy to be used by the business side, especially when the requirements are changing a lot. All over, I can only share as high demand for coders in the world. And just back to your point of attrition, we see high attrition also with our competitors. There is a new Gartner study again, however they calculated that, but they came up with an average global attrition of 21%. So our 19% is still a bit below. Obviously, we are not far off, which on one hand, is right. We do not totally overpay our people. We try to stay in line with market, and it's a constant battle and dance. And as Jochen said, it's different countries. We do have countries more trending towards the 30% and then we take countermeasures we have countries still at 10%. So this is usually also I'm highly coupled let's say, how liquid the market is and to say it all in a positive way. If there is 30% attrition, we also are able to recruit a lot of people because people are ready to jump and ship fast. So it goes in both directions.

The next question is from the line of Johannes Ries from Apus Capital GmbH.

Yes. Also again, congratulation for the outstanding results. Maybe also some questions from my side, if I may. Maybe starting with your success in the U.S. and U.K. and Canada, why are winning so many [indiscernible] are so successful? Is it depend only on your Brazilian business? It's also some currency or maybe supports there included. Maybe you can give a little bit of light on the success? And then on the margin side, if you calculate, right, still a huge margin difference between the Americas, U.K. and APAC and Continental Europe, especially if I put maybe EUR 5 million or so of others, which normally should account in the result of Americas and U.K. So it may be a difference of 4 to 5 percentage points in EBITDA margin. What is the reason? And can you maybe close the gap going forward? And another question regarding the tax rate. With the tax rate stay in this year around 25% because it depends also a little bit where the results are created, if you call [indiscernible] going faster in Americas and U.K., this have maybe an impact. And maybe coming back to the question of Andreas before, do you see any indirect impact from Ukraine-Russia crisis on you regarding maybe said banks are hit indirectly on the business? And -- or is asking important sense of pressure so huge on the banking sector, let's say, nevertheless, we'll go on with the digital project because it's not a question of short-term, maybe a concern, it's more a question of long-term survival?

Thank you, Johannes. So let me take the 2 questions up. One, regarding the possible indirect effect from Ukraine and the secret behind our growth in U.K. [indiscernible] and I hope you don't tell this to a competitive [indiscernible]. So let me first go on this -- sorry. So -- let me first go on the Ukraine effect. It's obvious, it's an unclear situation, let me say this very generically. But let me give you the different movements we have seen in the last days and it's really about the last days. So we've seen 2 contradictory movements. We have seen big banks and you can imagine these are the ones who are heavily exposed to Russian assets and Russian business. Those type of banks are rather kind of putting everything on hold. They, for example, say, let's freeze the change the bank business because we now need to sort out our own business strategy first. So as much as you're right, digital transformation is not stopping, but they need to sort out. Do we continue doing business in Russia or not and what does it mean? And therefore, they control their cost and simply stop. Second, those type of banks are usually logically, also heavily engaged with competitors of us who operate from Ukraine, Russia and Belarus, which also -- and these banks are obviously not Russian banks, but American banks, which also put them under pressure. So they rather stop. Then we have banks who are less exposed to Russia, but they were using competitors from those countries, and they are of the insurances and other market players. And they are now heavily nervous that these competitors may not be able to deliver currently because they are from Ukraine or maybe they are not allowed to buy from them anymore in the future like Belarus or Russia because of sanctions. Those type clients rather call us, or say could you please jump in immediately and help us. Obviously, this is operational risk for the client. Obviously, this means we also have to check whether we can do that and along with our own priorities. As we are not interested in staff augmentation and pure labor arbitrage and we, for sure, we'll see how we can help the clients. But let's say, if the margins are not attractive, it's not a long-standing business, we might only help them as much as needed. And then there is a third situation we do see currently we've also our own team in Poland is helping refugees coming from the Ukraine, et cetera, et cetera. But we also see that people who were working for our competitors are resigning even in safe countries like Hungary or Poland because they do not want to continue working for a Russian or Belarus employer. And they obviously apply to us. So -- which we clearly take them on board because they're looking for people. So I would say it's too early to say where this goes. And I would say we will -- and obviously, with the supply chain effects on other clients like automotive clients who have to stop production. Obviously, they were not top digital transformation just because of that. But if this goes on for long, this could have budget effects. So honestly, too early to tell. I would say, if you really want to get one answer, I would say it's rather positive for us than negative. But again, you don't know. Same with COVID, first is a moment of instability, volatility, uncertainty and then maybe after a quarter, it stabilizes and people know what they're going to do and so on, but we watch that very carefully, obviously. Now your question about the secret sauce of our success in U.K. and APAC. I see you like that answer. So the secret sauce is actually not secret. We always made it very public. We -- especially when we went to APAC, it was very clear that we cannot just go there and say, "hey, hello, [indiscernible] we do IT services, how about doing a project? Because the clients say politely please queue behind all others. And obviously, then it would be a price war, which we definitely would not win. So we rather went into APAC with a strong focus on our domain skills, which is digital banking. We close partnerships with very, very advanced core banking platform providers like Thought Machine or Mambu, different technologies behind. One is more DLT-based, one is more classic, but both focus on enabling clients to either build a greenfield digital bank or modernize their legacy applications. Plus we walked in with a strong focus on cloud first, so we positioned us into that corner into that niche in APAC. Also because in Hong Kong and Singapore and also in Malaysia now, they were issuing new banking licenses exclusively for greenfield digital banks. And we simply catch that trend, and we were the new kid on the block, you could say. And the other -- the usual suspects we are running around in these markets, we're rather focusing on the big projects and the big legacy parts and labor arbitrage, and we were the cool kind of company with deep knowledge, ability to deliver. Interesting enough, our prices were above our competitors. And clearly, our euro-based sourcing from Poland and Spain was noncompetitive pricewise to India. But for the client, it was much more important to get a partner who knows how to do it, who has done it, who was committed and plays on [indiscernible] level. And this is a trend we, by the way, see all over in the world, and that's also the reason. And then obviously, as we were the one who delivered the first Neobanking project in APAC, like Box, and now with Al Rajhi Bank in Malaysia, we are one of the -- probably -- I would not say the only one, this is always a bit to tool out, but it's not even a handful of suppliers who can deliver those type of business. And this has now helped us to win business in U.S. It's helped us to win business in Europe, and it will help us to continue to rise. And that also helped us in U.K. We see a clear trend that the clients were in the past, let's say, the last 5 years ago, definitely in the last 10 years, they were favoring large, large suppliers, really large suppliers who had hundreds of thousands of employees and predominantly in India because it was about price, it was about day rate. So the clients favor that. And we always had a hard, let's say, a hard [indiscernible] battle to win. But now clients have understood with digital transformation and all the words around agility that they need to take control themselves that they have to develop their own IP. Hence, they rather prefer partners were not so big that they feel they take control over them, but they rather can deal with a partner on a nice level. They rather need smaller teams than just 3 buses full of people, which some of our competitors simply deploy when they get an order. And clients still obviously want to benefit from labor arbitrage your question whether we were supported by currency exchange rate effect positively. Definitely, we benefited on the EBT side, but our clients do not buy from us because of labor arbitrage. If they purely focus on labor arbitrage, they go to the other suppliers, but we benefit from labor arbitrage. So therefore, the secret sauce is simply a very strong focus, taking the right niche, our deep domain skills, our deep tech skills and our, I would say, our unparalleled ability to deliver and accelerate the delivery for our clients. So we took [indiscernible] in 18 months life. For Malaysia, we now promise less than 12 months based on the experience. And that is pure money for the clients because every month client goes live earlier. They save money more than they ever can do in any negotiation with any supplier. And that's what we promise and we live up to, and that is the pure secret.

The other two questions, margins between business and segments. I think I've said it before, let me repeat compare between the segments. For example, we deliver into the U.K., which is in the segment, Americas, U.K. and APAC. From Poland, Poland is in the segment Continental Europe. Poland receives part of the margin because of transfer price policies, which are compatible to the OECD standards, which means part of the profits that the Americas and especially the U.K. region generates pops up in Poland and Spain in our nearshore delivery centers. This means you can't compare those 2 margins against each other. What we can do is compare Americas U.K. over time and compare Continental Europe over time. But don't compare the 2 segments, please. That would be wrong. And the second question was tax rate, 25% in '21, it will be 28% in '22. That's our guidance for the tax rate, 28%.

Okay. Super. So maybe one short follow-on -- 2 short follow-on. Smart technologies, how strong has this grown if you had 38% for digital transformation. You mentioned RotoSmart Technology had a strong growth. And What are the strongest drivers? How much also blockchain is now, which was also in the Gartner chart in the hype coming down, and it looks now it gets a real business, how strong is this a driver and all the other technologies like [indiscernible] for robotics. And so next to AI, which is maybe the biggest point.

Well, the business with Smart Technologies was if you compare this to 2020 was actually growing in line with our revenue growth. So it didn't grow more. Why? These are rather point solutions. So it's not that you do a 10 million euro or dollar project with AI. You probably do maybe it's EUR 1 million, maybe it's only EUR 200,000 because it is an element of a larger program. It's an element of a larger solution. So by definition, the absolute number in a certain way is not so relevant. What is more relevant that we do that, that we have those projects. And then when the client is ready to go into the big transformation projects, they usually use those type of technologies in addition. You're right that DLT blockchain that was quite a hype, even I thought it would go faster. And then classic Gartner score, right? You have the depression moment. It's now definitely coming back with NFT tradings. People look for custody solutions. We are supporting one client in Switzerland to build a custody solution for NFTs and clear this is based on DLT technology. We also have built a green bond issuance platform for the stock exchange in Singapore based on DLT. So we see DLT more and more coming up. I personally believe that the technologies, AI and DLT, will rise. But again, if you compare this with cloud, it's a different league, yes. Cloud is all over and using cloud means you have to change the way you run your business. You have to change the way how you do IT and you can change the way how you do your processes. AI and DLT -- and AI is more specific solution and DLT is, let's say, should only be used in processes where you deal with unknown participants. And most processes in clients are with known participants because it's with the people in the company or with their own clients. So I do see growth in both technologies and percentages might be impressive. But again, the absolute numbers are still small.

Super answer. Maybe really last question regarding the longer-term margins ambition. You had in the past also longer-term plans. It's out of my head if you renewed this. And if there is a longer-term plan or how could maybe the profitability go with all the uncertainties you have from today's view, you mentioned attrition wage increases and price increases on the other side. But have you -- any plan or any target where you can go maybe in the next 2, 3, 4 years?

I put away the question and answer it together with the next round of question because looking at the cost, we should give at least a bit more opportunity for questions. And I'll come back to Johannes, okay?

[Operator Instructions] Our next question is from the line of Lukas Spang from Tigris Capital GmbH.

Yes. altogether. My question is also on the direction of the margin. If I compare your outlook in terms of margin from October last year compared with today's outlook. I see you are guiding a higher EBIT -- EBT margin, so 8.0% compared to 7.5%. But adjusted EBITDA margin is a little bit lower, 11.1% versus 11.5%. So what is behind this development, we see now in the margin compared to October.

Here we go. Yes. First of all, welcome. I'm happy to answer that one. I was trying to explain when I was in the profit and loss statement that we do see relevant costs moving from the depreciation line into the other operating expenses. This has been happening, and it is ongoing. Next move we're going to do. We're going to do SAP from the cloud. So far, we depreciate SAP licenses. It is in depreciation line. From the moment on, we use SAP in the cloud, it's a monthly fee. It will be other operating cost, which means we have a bit of a cost move into the EBITDA, burdening the EBITDA and we only see lower costs than on depreciation. So there might be -- that's why when you look at EBIT and EBT, do you see the improvement? And only part of it comes from a smaller amortization, it mainly comes from the business side. So currently, we see the improvement at least for '22 coming on EBT -- EBIT level. And you do see we're now 0.5% higher than what we had guided 4 months ago, 3 months ago. On the EBITDA side, we're lagging a bit. I believe the EBITDA will come back because over time, this move between depreciation and other costs will come to an end and the EBITDA margin will improve again. So '22 is the EBIT, EBT year and EBITDA will come back in '23.

So there are no more questions at this time. I hand back to Marika Lulay or Jochen Ruetz.

Thank you very much. Thanks for questions. And as usual, you know that if you have further questions, please contact our Investor Relations colleagues. And then also thanks Jochen for all the explanations and looking forward seeing you in the Q1 earnings call, which is somewhere in May. And wish you a nice day, at least, it should get its sunny outside. I hope wherever you are, it sunny as well. And let's also hope that the world becomes less volatile and a bit more stable in the next month.