Earnings call transcript Q4 2022

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Eduardo Galvao

Good morning, everyone. Welcome to CI&T Earnings Call for the Fourth Quarter of 2022. I am Eduardo Galvao, Investor Relations Director at CI&T, and it's a pleasure to be here again to talk about our results. With me on today's call are Cesar Gon, Founder and CEO; Bruno Guicardi, Co-Founder and President for North America and Europe; and Stanley Rodrigues, our CFO. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. be session will investors analysts there only. that, a for question-and-answer and After

to please the a e-mail you'd the replay submit If like shortly available question, website investors.ciandt.com. The after is will be Relations is to presentation send available Investor on concluded. company's event at The investors@ciandt.com. via it

including, results other SEC. are to reliance and we'll as such, and from valid the annual those factors matters the to call, unknown time of we our and reports statements, and We on only from this file earnings expressed with limited of on In this on of made. including These report time discussed Risk you subject forward-looking undue uncertainties to the and but because our place described call. in not to Some in to statements Form they're discuss as actual when our differ XX-F. risks caution expected those Factors on risks uncertainties, materially business not outlook release may cause are forward-looking section those date could the

the this measures tables During comment non-IFRS to certain measures of evaluate we'll our for refer Please non-IFRS on to financial more appendix in business. the financial details. presentation, reconciliation

our our today and agenda Our about cases. deep financial for ESG session. be followed of After financial then strategy a results. there highlights, We'll will by on people on some dive talk our quarterly includes the an Q&A update business our presentation, and successful

begin invite Gon to I presentation. Cesar Now, our

Cesar Gon

with a be you day, Good Thanks, everyone. here It's to Eduardo. today. pleasure

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enjoyed you selection. hope stories, and our client news highlights I

to invite address Bruno ESG I management Now, our and talent strategies.

Bruno Guicardi

again tiers, of be we X,XXX addition good and about XXXX, our Cesar, have Since talk here tripled operations. X,XXX our Thank net ended much We you, an over and of selling morning, with people It's mark team. to outstanding everyone. pleasure a XXXX pretty a to people. our global

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remains different XXXX guaranteeing in The basis. and was trending Our people XX% compared attrition from delivery. our XX% XXXX, rate below a of acquisitions adding end down our X%, complementary expertise to quality consistency and technologies. we In at on XXXX in the continues monthly industry in in global and leadership geographies, bright X attrition strengthened presence with verticals

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and a our key governance with Today, share at environmental, social progress second matter us. CI&T we is for and to goals of proud and initiatives, stakeholders of ESG all our front. pillar report, the published in able detailing being our our actions a ESG is

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conclude the of We also achievement than initiatives We more creating equitable is world. our year. greenhouse our impacted XX,XXX measure during social first with our people more with vision It gas fantastic the inventory to removal aligned and in a a emissions conservation and operation. this X, these carbon restorations Brazilian biomes. And XXX% Brazilian footprint X neutralized we supporting and our carbon via of year, company's X the the for of early scopes projects, nature-based

expand operations the U.S. and committed gas we XXXX, in inventory our to For our are to U.K. the greenhouse emissions

comment Now, I results. our invite to financial on Stanley

Stanley Rodrigues

I'm Bruno, you XX% net to results. net revenue BRLXXX performance our variation, of Starting was our XX% with you, XXXX, compared of million, quarter to our in everyone. with year-over-year, Thank and revenue an glad FX here of the talk good morning, fourth grew XXXX. financial our the about the to be quarter fourth eliminating increase

'XX and as in the third quarter. XX.X% higher in the Our quarter of lower due points Adjusted quarter the million, better the rate the to the than the percentage $XXX.X a of from higher to quarter XX.X% X.X in 'XX. fourth fourth improved adjusted EBITDA XX.X% percentage a SG&A margin expenses in points to EBITDA quarter 'XX fourth compared SG&A and quarter utilization reduction margin adjusted expenses revenue. 'XX was Sequentially, XX% due percentage was to EBITDA X.X fourth

same impacted the mainly 'XX, the fourth X.X% reduced 'XX -- variation quarter BRLXX profit the the in 'XX, margin to in net XX.X% in that was adjusted QX a the in QX The profit exchange due than comparable in X.X% to the I negative financial foreign expenses. adjusted from million of net our XXXX. million quarter BRLXX.X higher period

our deep dive results. in let's annual Now

full the BRLX.X XXXX, contribution was from the revenue billion, which organic For our was year impact negative the net XX% growth compared was in translation X.X%. XX% was of to of companies The foreign a currency XX.X% XXXX, growth acquired XXXX. and

XX%. constant X.Xx the a revenue XX% revenue revenue XXXX net net of recording XXXX, period. the at And CAGR of the was the currency is net in growth So --

down high-growth me components the break Let profile. our of

XXXX, continuously in XXX% was to our clients rate existing retention with value revenue net demonstrating our creation. through ability our relationship Our strengthening

doubled added new accounts, land an with as from expand to BRLX our clients strategic XXXX, engine our above in these The of million million. to we the BRLXX also more on addition about to based addition, over that clients strategy The diversify revenue logos growth BRLXX organic the clients has our our Analyzing for our valid up than years you ramp engagements XXXX. combined M&A to contributed half XXXX coming and are XX multimillion generating of which cohort X than our of approach additions. contribute is In see million more of revenue annually can growth and during robust. generating will growth accelerate accounts million our been number of new than with And portfolio numbers This analogous revenue time. net more base. our

should are mentioned those revenues XX%. faster to emphasize revenue including and client should like top XX U.S. the Thus, our to by of in our Europe, end how recent regions. would share economies, we U.S. the client we while our share. organically geography I growth and our XX% speed evolve of and evolve from breakdown top about growing XXXX, time over X in terms we that within expect coming the Cesar of up acquisitions and already Europe

teams in of margins solid XXXX. office an metrics, the the already by our EBITDA lower adjusted acquired Now to million, the BRLXX.X driven including XX.X% talking of result back associated profitability our strengthening a adjusted was the G&A was IPO. expenses, The XX.X% our of about and companies compared in with EBITDA margin the increase our year, increase impact from

time. over fixed should Most and be and diluted general these of administrative are expenses

property expenses In quarter compared profitability. a the expenses approach. In of anywhere we lower lease 'XX, have working as BRLXXX.X quarter in committed position leases addition, mode on of so been margin year XXXX quarter X.X%. was Thus, to debt real net opportunities fourth 'XX. -- we as revenue our expect the benefit incremental XX.X% to in while forward. In of we adjusted reduction mainly SG&A operating operating, And acquisition. that end reduced And environment the the our our going the hybrid we already higher a fully cost to work from 'XX, -- at the noted from estate the optimize was are was the than leverage structure percentage and based third XXXX, for net flexible the fourth such million, our to and we the adjusted finance XXXX, optimize profit Enter the profit

organic BRLXXX activities, cash mentioned dedicated generated operating As activities of foster a the our concluded of of in year integration position would If excluding now We the our we have XXXX. previous from financial XXXX, operating with BRLXXX.X we we and are in in we taxes, million to outflows, million wave earnings and the cash net year, operating call, our acquired taxes. generation, our been million net from cash generated In in we companies. last sound cash of analyze BRLXXX.X to M&A, cash first acquisition-related ended growth. the

Now, to I comment back invite please. Cesar, Cesar business our outlook. on

Cesar Gon

Stanley. you, Thank

growing level with digital and increase technology Nevertheless, the economic of a their a for As initiatives. continue regarding we to situation I high remains number of hold. are import companies mentioned, bullish in the unserved to advancements global investment

investments digital we a attitude programs. As for see the initiatives. new more noted define our But opening regarding budget conservative clients in XXXX, keeping we in current consistency their

increasing to less and sharing to more room on focus and willingness opportunities of near more including also a We a digital low for efficiency and the drop low-performance CI&T tolerance efficiency, services. replace see for performance competitors,

first projecting be we this XX% are we for macro quarter a to year-over-year. least the in expect BRLXXX XXXX also at net our revenue of throughout And sequential reflecting growth projections, million, scenario growth year. the our So

XXXX, for So revenue XX% we full to year-over-year. FX-neutral year XX% range growth net expect of the of in the

We adjusted our margin XXXX, margin level. expect year full our the XX% to maintaining at for be least EBITDA of current

is current demand environment. the the and Our we on conditions XXXX outlook based the in reflects market uncertainties see

thank partners our and and clients, I tiers stakeholders, and investors, our vision sincerely CI for our shared commitment support Finally, goals. to continued long-term

for and all today. session. now begin our you the presentation Thank Thank attending call you. We our Q&A conclude may

Eduardo Galvao

you you, announce today. done, Thank Thank now participant Then please all joining each it, We'll and for your us mute your Sasha. you're begin when name mute line the I'll ask Q&A session. hear you your question. please line. once

First from Ashwin question Citi. comes from

Ashwin Shirvaikar

if revenue in you with how Thank that. how organic the inorganic? given you the the your if are projection can for start question revenue for 'XX incremental more do you terms And could regions, growth all you breaks now see of on is that metrics presentation. you My various across in various down provide opportunity versus diversified,

Cesar Gon

you, Good you. Thank Sure. Asha. to see

components. you giving I think by let me start the

Our geographies. but this what in coming acquired -- XX% year-over-year to and I And year. the -- also, on for organic XX% terms And companies a will Europe. it's quarter year an and percentage since -- points incremental fact growth last there And forecasting be what it of projected sequential continue as that think those and amazing now regarding increase the along in is marketing estimated I is of from based are M&A. growth are think are U.S.A. traction geographies, seeing we X conditions, we for we I specific on more year, we XXXX think

growth. have we new So this opportunities for acquired upselling, for organically plan platforms cross-selling expanding

year. So along basically, expansion a we sequential expecting the are

Ashwin Shirvaikar

have the with well mentioned other we kind the visibility time December slowed follow-up assumptions things clients, as in you normalizing. underlying down started maybe maybe in your look with was February, currently that quiet. And spoken things have look own January But how Okay. as macro you frame, at of characterize is the at that taking dramatically very you have companies Many a have? conversations both your would that the

things say Any as things actual as forth. are up. and up set out we on so on color be Are so you have seeing Some you that that started get picking visibility visibility a… would budgets go and can provide picking

Cesar Gon

and clients, the is half for Based my see conversation our they can you Sure, obviously sure. have I demand macro -- the basin in on with believe there of plans. the

would saying in number that investment start to the consumer increase first, the and to think trends we companies their still lot bullish regarding technology imperative bets, of are of in growing continue a advancements, for I digital. behaviors, we their I see

is much full with is I I glass open editor on a less for move I and performance I low noted, initiatives. lot the and focus think then think during opportunity. secular of opportunities digital This lot I because of this conservative vision regarding say, of a global room the what the saw digital process programs, we low-performance they developed investment clients. this of define in would CI long-term as efficiency. reinforce but a and increased budget January, situation our we current adds digital I think our vision the uncertainty for economies. willingness December see is as Tel a more tolerance Nevertheless, competitors, that a could -- efficiency early economic CI&T for we the regarding services of drop also year to budget not that see on, half of new as resonated XXXX, in including And nearshoring And their could first replacing consistence. they and keeping the more are now

this think among clients. efficient we prospectus are a way the way our for fostering is I in good we are positioning the

Eduardo Galvao

Ashwin. Thank you,

Next question of from DuPont comes Tyler from America. Bank

Tyler DuPont

seeing new existing visibility Ashwin's have changes For little projects? into deeper any elongations change are there for client client or a seen looking be contracts example, any would with are bit in or dive what to clarity Just question. those contracts? Particularly, you Any clients helpful. delays in you in

Cesar Gon

Tyler. the you, nature I Thank case. of is too. I will this use changing What one, the see get in

initiatives, X prevalence proven there's of on I long-term more call Horizon say, on would We and case. and more, technology. we over that name think great X Horizon digital use a focus experimental initiatives I Horizon

if experience, insurance for banking, concrete going banking services, like vertical, things you online financial you're and So go customer open companies a focus is to now. that training on see finance

reality, if serves Of same the so if blockchain you're go in see of would are on. the initiatives use retail, concrete, marketplaces. more trading going X vertical for protease. that Horizon proven e-commerce, to you going this lots remainder in have and case course, and see of you're horizon, customer And say, consumer AI, And forward course, to more you omnichannel, read I a goods like

So the note a change strategy when expand on again, very of I of from that engineering, evidence approach results success. we digital main to really prop results, CI&T then combined concrete is real pragmatic that see cycles with short resonate more and think design

Tyler DuPont

follow-up the – you if Great. revenue are that. and a just I within clients and And regarding locos winning current can base between new to appreciate willing opportunities environment? curious speak existing just on to strategy. upselling given the upselling take client contribution the as those just mix the to go-to-market how cross-selling I’m cross-selling the market

Cesar Gon

our net and impressive million. year clients -- XXXX our BRLX add new above of with Sure, expansion XXX% long-term rev XX year, an retention reached Tyler. clients we along portfolio, revenue was could the in

we because logos XX% So based million I logo, X -- X clients would current probably we was emphasize growth results way single year the in even the comes land is current with of is, say, our important XX%, a max mix be short and X, will were of combination new though term, important, that's expansion of we on good the every the the discipline to quarter revenue new on XX% same And terms you relevant for XXXX expand. relationship be to will from basically in seeing game that sustainable the -- in the but not always it's this for long-term growth. the very add year are

portfolio. business adding reinforce of them, keeping this and you the also to on expansion discipline commercial uncertain as portfolio So but the logos a current time special of the direction moment only the new our course, supporting need where of is development not to --

Tyler DuPont

helpful. very That’s

Cesar Gon

Tyler. Thank you,

Eduardo Galvao

Next from from Jain question Puneet JPMorgan. comes

Puneet Jain

had during existing and strong this quarter. you like expansion So in clients client very new addition

third better metrics considering like than backdrop throughout were environment of with In going be clients macro part of sequential fact, we big do deteriorating growth quarter. metrics that the to last those what what those QX. a that to view is sign they quarter, How were both in CI&T beyond drove against

Cesar Gon

Sure.

mentioned, I for question. As thank Pune. you Great see to you, your

we way was for digital I change and – years, us, the you think also, our strategy, this normally, there’s new and for in of engagements – of think point at the last mentioned, full the with of use entry Year. engagements starting the I there New half strategy, CIN we stack in if And I the software the noraly kind nature and design is with the case. look As follow then

to in I XX% think in – and probably not clients’ way moving good of good XX% performance, turnaround was was replacing engagements a really regarding that perspective. our

regarding driving digital is adding to running what of transferred method are we are really or – XX% are meaning approach doing see CI&T we we portfolio. now replacing to and but engagements efficiency already that and So innovation CI&T approach probably now XX%

So I main engagement. efficiency more in the year on focused probably – of or of efficiency turnarounds There’s digital the that this would last initiatives engagements say and main where this and beginning point the are difference. is the new

Puneet Jain

near And and share for hiring pressure, you for this term? year? margins Like for expect also expect what And puts the can should various takes do what supply pricing, utilization inflation, wage we over you rates?

Cesar Gon

one can this right. I think it’s tally get

Stanley Rodrigues

Yes. the inflation, pressure lower year. Well, previous regard to we see pressure Pune, to with compared

things that you terms price the of margins see in throughout improved we first because quarter, salary the Brazil. we settling field. again when in have -- we recall, adjustments. in adjustments we And as this have have our We the down in may we the operation, seasonality So margins in year,

the You Brazil, price that adjustment contract. know clause have in we built-in the also in

adjust price navigate and So in once -- clients high functionalities, we a -- our in new flexibility our type negotiating add with digital that of see, year, engagements set talking about as and we terms we we this of to contracts. have

environment that. a see we So normal for

have this clients. each we efficiency an our in adjust value of us in conversations on, also of is course, for the our Of going prop proposal all to opportunity and

-- the good see we a in for So that year in perspective manner.

Puneet Jain

from hiring, your we for term? What near flattish it. what to And about expect like basis XQ. trends for net we was should should Got XQ a expect sequential over headcount hiring on the

Bruno Guicardi

take that We can one.

So similar to the seasonality.

we speeding slower, is that right? next usually the QX see quarters. So So up sequentially over

easier So -- downturn, all going economic course, it's the and geographies probably market, And than been to board QX you're we in we hire, across with of course, to the of of operate. [indiscernible]. see in kind the more QX additions has that QX,

that's that's new there. competitive, the easier. still just reality So easy, but It's

Puneet Jain

answer. Yes. I appreciate that

Cesar Gon

we Thank question, Eduardo, Thank forward hard will attention. the and and foundations for journey team, confident our value work to CIN Stay Well, I continue time you you, all Puneet. Bye. our results solid, across our that everyone, joining proud all the your we Confident I'm of for Thank and our the today. our and seeing think look the me well, Stanley, for you growth Sure. your work are reflect -- Bruno talent quarter. and we to tiers are creation with stakeholders. of for support. globe. and you again next for once Thanks,

CI&T (CINT) 8 Mar 232022 Q4 Earnings call transcript