Ladies and gentlemen, thank you for standing by, and welcome to the EPAM Systems Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, David Straube, Head of Investor Relations. Please go ahead, sir.

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. Let me start from taking a look back to 2020, which we all know was a very different year for all of us, to say the least. In preparation for today call, I briefly reviewed what we were thinking and what we were sharing during the last year, starting from 12-months back and then nine, six and just three-months ago. I think it tells an interesting story. February last year, still full of hope for another practically normal year for us with 20-plus percent organic growth, focusing on our adaptive enterprise story and in short, looking optimistically into 2020. Just three-months later, we are still reporting 26% constant currency growth for Q1. We, like everybody else at the time, didn’t understand at all where we would end up and what we would have to do to go over this very uncertain and very fast worsening situation. The situation, when more than 30% of our client portfolio experienced some form of revenue impact, we practically had to reorganize ourselves on the line and to start preparation for a very defensive play for protecting as a first priority will be in power people and ensuring continued liquidity and viability of our business. When thinking about the time now, I really would like to share again our deep appreciation to the thousand EPAMers who did everything possible to support each other as a company, to our clients for trusting us with their most critical issues, and to our many extended communities around the world. At that point, we really didn’t know how the 2020 would end up for us and for our clients. In another three-months, to our surprise, we saw the first signs of some stabilization and client realization…

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 and increased 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…

Thank you. [Operator Instructions] Our first question comes from Ramsey El-Assal with Barclays. You may proceed with your question.

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 pretty good level volatility on a quarterly basis and even on annual versus across our verticals. And again, we believe that with still with our size, which is definitely growing, this type of volatility depending on one, two, three, four, five large accounts could be still in place. So it is, I think, difficult to say. And if you look at it quarter-by-quarter, it was changing champions practically all the time. So I think in general, it would be something similar at least for this year. And there is unpredictability, but some industries which is the most impacted by COVID might actually start to invest even more like we see in retail, for example, or even travels might start investing more to prepare for common work. So sorry, but 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’m thinking of things like travel. 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. And if I sort of break it into two components, we expect that SG&A will go up somewhat as a percentage of revenue. So I think we exited the full-year at about 16.4%. I think for the full-year of 2021, you would be looking at something heading towards 17%. And 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. But 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. That will include traditional sort of headcount additions and all the infrastructure that is required to attract talent and bring talent into the company. But then it also will include an expansion in geographies, Poland, India, Mexico, maybe other places in Latin America and other places in Europe. And so those investments, at least probably in 2021, have a somewhat negative impact on gross margin. With the idea that they are subscale at this point, we need to grow them rapidly. And then as they get closer to scale, they will have more consistent profitability. And so the guide kind of incorporates, again, 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 so much.

Thank you. Our next question comes from David Grossman with Stifel. You may proceed with your question.

Good morning. Thank you. I wonder if I could just follow-up, Jason, on your comment about the geographic diversification. How much of that, if any, is related to some of the unrest in Belarus over the last kind of year, 1.5 years? And can you just remind us about how a new facility or how it ramps you know what is the typical trajectory of gross margin as you ramp a new geography?

Okay. Let me, David, start from Belarus because, yes, definitely, there is some influence on what is happening there, similar like it was very much impacting how we sink in involve diversification on our global delivery events in 2014 around Crimea and kind of Russian-Ukrainian conflict. So then we accelerated our presence in Central, Eastern Europe and India and Latin America. And during this period between 2014 and 2020, we definitely were moving to this direction. And I think we continue to move to this direction. So there are multiple new centers, which we are opening, and there are different cost structures there. So I will pass to Jason to comment on specific.

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

In general, we expect very similar future, which we experienced like in 2015 and 2016.

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

I think, again, there is some slight impact, and also sometimes hard to predict at this point, because you learn on the way. But again, we have much, much more practical points that we have had like five, six years ago. And on top of this, if there is more significant impact on margin that it would come from different tax situation changes across the globe as well, so that might be a bigger impact. But it is completely unpredictable.

Yes. So 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, I think that is when you kind of get to a more appropriate scale and again, more kind of 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 our customers? Do you sense that they are getting more comfortable with a more distributed work models so that it would allow you to maybe operate more satellites or just give you access to a broader talent pool in a more fragmented workforce that may not be working in a centralized location? Any insights into kind of how those cost savings get shared with the client or maybe it is just too early at this point, but just curious if you have any updates on how this is evolving.

I think it is two different questions, like in general, definitely. First of all, like prediction of changes was like multiple years ago. Even internally, we started very specific programs how to establish a much more flexible environment for people and to support high distribution, but not to lose in quality and how to find the right talent like in any locations around the world. And we started this like practically three-years ago here. And COVID become a real accelerator for this source, and we felt probably a little bit more prepared than we expected before. And that is one part of the story. And clearly, client-by-client there are different situation. But for sure, there are more acceptance than it was 12-months ago. And it helps to experiment and kind of to build additional proofs for much more distributed model. That is all happening. On another side, when you are talking about cost factors, it is also has a multiple attributes there because there are simple thinking that which cost will be saved, but you have to invest more in this distributed virtual infrastructure. Sometimes it is increase in wage inflation because acceptance of distributed model becoming bigger, and actually, competition for the talent growing as well. So there are too many moving parts right now to say how it would change the cost model.

Great. Alright. And just if I could just one more in. During the pandemic, you focused more on the top 20. That is where the growth was coming, and maybe you saw more opportunity there. Below the top 20 historically has been a pretty important contributor to your overall growth rate. So I’m just curious, you talked about gaining share in your prepared remarks and some new logo wins of larger clients and gaining wallet share. Should we expect the top 20 - is this the new normal for you in terms of where the growth is coming from or do you expect kind of the same distribution that we saw pre-pandemic returning sometime over the next several months?

Yes. I think, David, one of the things that is been interesting about this year is that we have had a number of customers that have bolted right from modest revenue in 1 quarter to being in the top 20 within three or four quarters. And so some of what I think Ark’s talked about in the last couple of quarters where clients are feeling the need to really accelerate their investments and rapidly make the investments that allow them to transform the business, means that they move from being outside the top 20 and almost immediately into the top 20. And I think that does kind of distort the top 20 growth rate. I do think that you will see some growth from some of the larger customers in the top 20 in fiscal year 2021. And at the same time, internally, when we look at the statistics for new logo revenues, in new customer revenues, which are customers that began generating revenue within the last 12-months. We are seeing that those are increasing as a percentage of total revenue. I think that sort of shows up in the concentration metrics, particularly as we move from Q2 to Q3 to Q4 in the 2020 fiscal year.

And I think top 20 is a change in a lot as well, so some companies which come in exactly from below top 20 and becoming one of them, and there are good level of volatility at the top.

Okay, great. Thank you very much.

Thank you. Our next question comes from Surinder Thind with Jefferies. You may proceed with your question.

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

Yes. So we haven’t traditionally forecasted new customer revenues. Instead, we kind of look at the trends kind of historically. But I think as Ark pointed out at the end is that we are seeing a lot of customers begin their journey with EPAM and very rapidly move into the top 20. And so again, it is interesting, as many of you have noted, is that we are already seeing growth again in our Travel and Hospitality. And it is not because travel has improved, but because there are retailers and consumer goods companies who are making quite significant investments right now to revisit their business while either to expand an existing e-commerce strategy, to create one, to find different ways to connect with customers, to deliver products with customers. So you are seeing a lot of lot of spending in that area. You are seeing a lot of spending in manufacturing, again, with more sort of a digital connection. And so I think you will see growth in some of these customers that are relatively small for us. But we also have a couple of large customers that we are expecting high levels of growth from in 2021.

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

I think there are definitely visibility to a number of large programs because I do believe that good number of clients already kind of analyze what did happen and create strategy out of this and actually very aggressively moving in the direction to make sure that they prepare for the next unexpected things which might happen. So I think there are a number of big programs, some of them much better shaped, but some of them will be shaped during the next one or two quarters as well. But from what we are seeing, again, it is a number of big engagement is increasing for us here.

That is helpful. And then just final question and related to that, how does, I guess, some of these larger projects or the potential for larger projects impact your visibility and stuff as you kind of look out to 2021? When I kind of 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. But when you think about the forward guide, how should we think about the visibility into that, and then maybe where you end up in terms of - above that, the 23%?

I don’t know if you can share something which you don’t know from our message how we predict it. I think we were comfortable enough to return to our annual guidance cycles. And in kind of big picture, we are doing this very similar like we were doing this pre-COVID. And while there are some bigger program happening, we also become bigger. So it is in some way, very rational from our point of view. So I think, again, our visibility and predictability methods right now very similar to what we were doing like in pre-COVID times.

Okay. Thank you.

Thank you. Our next question comes from Jason Kupferberg with Bank of America. You may proceed with your question.

Hey. Good morning guys. I just wanted to start with kind of a big picture question. We recently did a CIO survey that showed a meaningful decrease in the percentage of enterprises who believe that they are largely done with their digital transformational journey. And we think that is because they just continue to find more parts of their business that can be digitized, so the runway basically keeps getting longer. And I’m just wondering if that is a dynamic you are observing within your client base provide the digital journey kind of continues to get extended as the scope of digital transformation efforts broaden out?

So you are saying that based on your research, most of the clients saying that they are already done with this?

Well, we are saying there is actually a decline in the percentage of enterprises saying that they are largely done, because the runway is getting longer as they find more areas to digitize, and I’m wondering if you are observing that.

I don’t think we do because like - I think it is -.

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

Oh, decline in - yes okay.

Right.

So it is actually broad, I men - okay. I think we see this as well. It is also very difficult to kind of talk about it when asking what it does mean digitizing because this is not a very well-defined area and different clients thinking differently around this. But definitely, cloud migration and modernization, it is a huge change in the last several years. While everybody is talking about it for almost a decade, the real impact as we all see happening during the last several years. And I think COVID is a huge accelerator of all of this. And from this point of view, we definitely see much more interested and much more audience to focus on this, and kind of related to previous questions, which we answered for them too.

Right, right. Okay. And Jason, can you just tell us a bit about the assumptions you are making for utilization and pricing in the 2021 guidance?

Yes. So utilization, I think, is fairly consistent with utilization that we exit with here in Q4. And so we are not expecting a significant uptick in utilization. And we are not expecting unless didn’t come in as expected that we’d see a significant decline. What we are seeing, as Ark indicated, is wage inflation. Historically, I think I have talked about 4% to 5%. Wage inflation in 2020 was probably more in the 5% to 6% range and probably would stay in the5% to 6% range in 2021, and so maybe a somewhat elevated level of wage inflation. And pricing is, again, it is kind of a mixed environment where newer engagements, particularly with the high demand for resources and again the robust demand for the type of work that we do provides some opportunities. But there are probably some existing customers, particularly in still impacted sectors of the economy, who are a little bit less open to the idea of a 2021 rate increase, that are signaling to us that they are more open and quite open to a 2022 rate increase.

Okay, it makes sense. Thank you.

Thank you. [Operator Instructions] Our next question comes from Maggie Nolan with William Blair. You may proceed with your question.

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

Definitely, There is some preparation for this. And for those who are wishing us for - since IPO days like you remember that we were very heavily concentrated practically in a couple of countries. And while we still have consideration in these countries, right now, it is much, much smaller portion of this, so which we prove that we can do it and can scale in different locations. And right now, we are looking at a second kind of degree of geographies, which is not necessarily very new for the global market, but might be relatively new for us. And that includes like our acceleration, for example, in India, our acceleration in Latin America. But also in a number of countries across our traditional locations. And again, the criteria usually, there is IT infrastructure there. There are some talent which was built out, attracted by competitors, but also the quality of university system. In some situation, when there is a kind of natural migration due to geopolitical situation, we select in some countries which would be much more comfortable for people as they decided to relocate as well. And partially 2020 was kind of a combination of these two things.

Got it thank you. And then if we take a look at some of your client buckets, the top 20, there was good growth there, maybe with the exception of the slight sequential decline in the top 5. So any comments on what is going on there? And then when you think about the outside of the top 10, last year, that was a nice growth driver for the Company. This year, it is trailed a little bit kind of the consolidated company growth. So is there any dynamics there that we should be aware of or any thoughts about how to kind of reinvigorate that client relationship, those client relationships in that bucket as you navigate the recovery from COVID?

Yes. So that is fair. So I think that we still think about the business very much as a diversified portfolio, whether we are looking at industry verticals or customers. And I think Ark said it at the very beginning of the call, which is, it is a little bit hard to predict which customer is going to drive the growth with absolute certainty in a given fiscal year. We certainly are seeing some customers in the top 20 that we think are still going to have high levels of growth. We are seeing a few that are going to slow down. One thing I could call out is that we have had very high growth with large customers in the business information media space. We continue to have very significant relationships with a number of those clients who are now very much in our top 10. We think that we might not see as much growth in fiscal year 2021 certainly as we saw in 2020. We have got growth coming from some new manufacturing customers. We have got some growth coming from some IT customers with more of a health care flavor to them. And so again, I think you are going to see a little bit more of a return to the EPAM traditional growth rate in the below 20, but it may not be quite the way it was three or four-years ago because I do think as we continue to have established relationships with large companies and are seen as that as a vendor that can get things done inside those companies, you do get growth inside those portfolios.

Alright. Thanks Jason and thanks Ark.

Hey thank you.

Thank you. Our next question comes from Bryan Bergin with Cowen. You may proceed with your question.

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 here the last couple of months? Did you feel like you are nearer ceiling level to comfortably add? And how should we be thinking about the pace of headcount expansion in early 2021 before you scale some of these newer regions?

So clearly, we have invested in our capability or our capacity to add additional headcount. And so as we get bigger, as we make those investments, we talk about this is the biggest incremental growth that we have had in the history of the company. But clearly, we are putting in place a structure that allows us to continue to do that. But clearly, Q4, we are kind of catching up from Q2 and Q3. And so right now, we might not have as much headcount growth expected as we, for instance, enter Q1. But again, we are running at a hotter level than we have in past years, in part because we are seeing that the demand is very strong and we are putting an infrastructure in place that allows us to meet that demand.

I think very often the challenge is not just to grow, but actually to grow responsibly to make sure that you keep in balance between demand and supply. And this is almost like a through those stuff. Form this point of view, that is one of the key kind of challenges which we try to navigate.

Okay. I guess following on that, can you comment on the cash position and M&A receptiveness you know how are you thinking about M&A as a component of the geographic expansion?

Right. So I talked about this, I think, every quarter, and I’m going to add something to what I have said in the past. So the M&A pipeline, quite active in our discussions with potential acquisition targets. And at this point, we are quite advanced in our discussions with several companies. And so I do expect that we will be talking more about that in the not-too-distant future. We continue to have a focus on capabilities. But also, geography would probably play a role as well. And the focus might be on helping us with kind of end markets, so again, more customer facing. But in some cases, we may use an acquisition to get us an established position and a management team in a country that we don’t have as much experience in. So I think you will kind of see both of those things in 2021.

Okay. Thank you.

Thank you. Our next question comes from Ashwin Shirvaikar with Citi. You may proceed with your question.

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. And you provided a lot of detail on that from a delivery perspective. My question is from a revenue perspective, if you can provide specifics with regards to how you are thinking about future globalization of the EPAM footprint from a revenue perspective? You continue to have the vast majority of our revenues come from North America and Europe, any thoughts on diversification? And Jason, your comments on M&A, is that more of a geography focus or capability focus?

I will answer first, and I’m sure Ark have something to say as well here. So I think in some cases, the market investment that is more customer focusing may still be in places like Western Europe. I think in terms of longer-term expansion, I do think that APAC continues to be an opportunity for the company. As you know, most of the revenue does out of Western Europe and North America. And we still are, I would say, underpenetrated in Asia Pac. So longer term, I think that is definitely an opportunity. I think you are beginning to see slightly elevated growth rates in APAC. And I think that, particularly, there is interesting opportunities in the Singapore market. And so I think kind of longer term, I think you will see greater revenue. But I’m not necessarily expecting that to show up in a material way in 2021, but more kind of in future years.

Yes. I think from general direction, North America and Western Europe is by far the main priority. The rest of the markets, which Jason mentioned, priority is how to serve our global clients in these markets and establish ourselves a little bit better. And that is what was happening during the last probably seven, eight-years when we came to China because of UBS, for example, and starting to expand. So I think it would be growth in APAC even with some local clients, but again, it is not going to be really significant. But the growth with the global clients, which we serve in North America, Western Europe and extension to different markets from APAC, to potentially Latin America is, well, very much anticipated. And with our size, we have almost unlimited opportunity in the markets where we are.

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, that was key capability set that you guys added. I was curious if you could shed more light on how that performed through the course of 2020, particularly given - was it was it more that the discretionary nature perhaps of that was impacted or was it that clients look to you to adapt more so? So if you can talk how you see that evolve and how you see that affecting your future investments?

Yes. I think we try to illustrate today with a couple of examples. But in general, it is definitely in my material statement, say, it is a journey and we did a number of acquisitions to build experienced consultancy capabilities. We build in business consultancy capabilities at this point organically. And we do believe that we have a very good foundation for technology consulting capabilities. And the more important for us, how to bring them all together and create, in some way, the Continuum of offering linking these to engineering. That is why, like in the past, we stated multiple times that we are not even looking on specific line of service and consulting to separate from our traditional engineering, but actually the real strong point and from this point of view, I think during the last two years, we saw a very positive impact. And I think 2020, to our surprise, being such a range in difficult year, actually triggered multiple wins where we entered new clients through very different point for us from the past and in return started much more significant programs for ourselves with a big potential. And also, we had a couple of wins against top consulting firms in the world, which making us kind of much more comfortable thinking about the direction which you selected. So there are very good signs that it is moving forward well right now.

Got it. Thank you guys.

Thank you. I would now like to turn the call back over - our next question comes from Arvind Ramnani with Piper Sandler. You may proceed with your question.

Great. Hey congrats on another terrific quarter. The demand environment seems quite robust across your portfolio. Are you seeing pricing strength as the overall demand environment improves?

Yes. I think there are opportunities with some of the newer engagements. And particularly, you are right, when there is strong demand and supply is a little bit more challenged, that produces opportunities. But I think with some of the long-standing relationships, it is a little bit more mixed, right. It kind of depends on where they are in terms of their own demand, and a lot of people still have some uncertainty. And so we still see pricing opportunity. But maybe a little bit cautious on the ability to tick up rates as frequently as we have in the past. And that is important kind of what informs the guidance with the midpoint of that range being 17% adjusted IFO.

Great. Great. And I had a question operationally, how are you thinking about staffing in a post-pandemic environment? Clearly, last year, there were probably kind of fewer vacations and high levels of productivity. But when you look at the next 12-months to 18-months, there could be like elevated levels of vacation and time off and things of that sort. Are you kind of anticipating planning sort of your staffing levels to account for some of this?

Yes. Thank you. It is a very, very interesting question, which triggered a lot of internal debates. Like on our management calls, we discussed it, the executive team going for vacation for 6 months or nine-months after this. But in general, we definitely put in the model a lot of source, and we are projecting accelerated vacations, assuming that COVID really will give up more than we are seeing right now. But yes, it is one of the moving parts right now. But our current model anticipated some increased vacations afterwards [indiscernible] will be done.

Great, terrific. Thank you and good luck for 2021.

Thank you. I appreciate it.

Thank you. I would now like to turn the call back over to Arkadiy Dobkin for any closing remarks.

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

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.