CI&T Q4 2024 Earnings Report

CI&T EPS Results

• Actual EPS: $0.08
• Consensus EPS: $0.44
• Beat/Miss: Missed by -$0.36
• One Year Ago EPS: N/A

CI&T Revenue Results

• Actual Revenue: $112.34 million
• Expected Revenue: $646.68 million
• Beat/Miss: Missed by -$534.34 million
• YoY Revenue Growth: N/A

CI&T Announcement Details

• Quarter: Q4 2024
• Date: 3/12/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, March 12, 2025
• Conference Call Time: 4:30PM ET

CI&T (NYSE:CINT), Inc. provides strategy, design and software engineering services to enable digital transformation. The firm's solutions and services include Digital Strategy, Customer-Centric Design and Top-of-the-Line Software Engineering. The company was founded by Cesar Nivaldo Gon, Bruno Guiçardi Neto and Fernando Matt Borges Martins on June 7, 2021 and is headquartered in Sao Paulo, Brazil.

CI&T Q4 2024 Earnings Call Transcript

Presentation

[Eduardo Galvão, Director - IR at CI&T]

Welcome to CINT earnings call for the fourth quarter and full year of 2024. I am Eduardo Galvao, Director of Investor Relations at CINT. Joining me today are Cesar Gon, our founder and CEO, Bruno Giacardi, 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. After that, there will be a Q and A session.

[Eduardo Galvão, Director - IR at CI&T]

If you'd like to submit a question, please send it via email to investors@cint.com. The presentation is available on the company's Investor Relations website and the replay will be available shortly after the event is concluded. Some of the matters we'll discuss on this call, including our expected business outlook, are forward looking statements. They're subject to known and unknown risks and uncertainties, which could cause actual results to differ from those expressed on this call. We caution you not to place undue reliance on these forward looking statements as they are valid only as of the date when made.

[Eduardo Galvão, Director - IR at CI&T]

During this presentation, we will comment on certain non IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non IFRS measures in the earnings release for more details. Our agenda for today includes an overview of our 2024 highlights followed by some of our business cases. We'll then talk about our people and our financial results. At this time, I'll pass it on to Sazah Gon to begin our presentation.

[Eduardo Galvão, Director - IR at CI&T]

Sazah?

[Cesar Gon, CEO at CI&T]

Thank you, Gavon, and good day, everyone. Before discussing our quarterly results, I would like to acknowledge a significant milestone in our journey, CINT's thirtieth anniversary. Founded in 1995, CINT began with a bold vision to become a globally recognized leader in tech services. Over the past three decades, we have successfully navigated various market conditions and economic shifts, proudly achieving thirty consecutive years of growth. Today, we are a global force of 7,000 passionate CI interiors across 25 countries, collaborating with some of the world's most admired brands.

[Cesar Gon, CEO at CI&T]

That's why I'm so thrilled to share that Forrester Research has recently recognized CINT as a leader in modern application development services, a right on time honor as we mark thirty years of innovation and growth. Looking ahead, our continued success rests on three strategic pillars. First, artificial intelligence, reshape industries with CIT as a protagonist through CIT flow. Second, our culture of excellence, driven by top tier talent, our key advantage. And finally, our client centric approach, blending expertise and innovation to create lasting value and long term relationships with our clients.

[Cesar Gon, CEO at CI&T]

Now moving on to our financial highlights for the fourth quarter of twenty twenty four. We are proud to report a record net revenue of R 656,500,000.0 reais, representing a 25.6% increase compared to Q4 twenty twenty three. At constant currency, net revenue grew 14.7% year over year. This remarkable growth was driven by the outstanding performance of our top 10 clients, whose revenue increased 40% in q four twenty twenty four versus the same period in the previous year. These clients have been leveraging CINTFlow, our AI powered platform, to accelerate their digital transformation journeys.

[Cesar Gon, CEO at CI&T]

On the profitability side, our adjusted EBITDA margin reached 19.5, surpassing the industry average. In addition, adjusted net profit totaled BRL 78,000,000, reflecting a 41.3% year over year increase. For the full year of 2024, we reached a net revenue of R2.368 million dollars representing a six point zero percent increase compared to 2023. At the constant currency, net revenue grew by 1.3% year over year. We concluded the year with a robust adjusted EBITDA margin of 18.7%, demonstrating consistent operational efficiency over the years.

[Cesar Gon, CEO at CI&T]

Our cash generation from operating activities totaled BRL 467,000,000 in 2024, a strong indicator of the strength and resilience of our organic operations. We are excited about the momentum we have built and remain focused on driving sustainable growth as we continue to deliver solid results for our clients and stakeholders. Now let's explore some inspiring client success stories that highlight the diverse applications of AI.

As Mondelez keeps empowering people to snack right, our partnership has been helping them to make the best with the best data. By integrating data across multiple lines into a single platform, we've enabled real time visibility and increased manufacturing line efficiency, allowing even more time for strategic actions. We're excited to continue our journey helping Mondelez to drive growth and lead the future of snacking. 85% increase in product additions. This is the impact of project V treat.

Natura, one of the leaders in Latin America's beauty and cosmetic sector, is transforming the order capture experience for over 1,000,000 sales consultants from Natura and Avon. Project Vitrini is a personalized platform powered by AWS's robust infrastructure and CINT's digital expertise resulting in an increase in cart additions and over 13,000,000 monthly searches with its smart search feature. As we expand globally, VITRINE is set to enhance consultants' experiences worldwide. CINT, AWS, and Natura together in the journey of shaping the future of beauty through technology. The company Mitsui Sumitomo, part of the largest insurance group in Asia, faced a crucial challenge.

High licensing costs for an essential tool in orchestrating mass quotations. The need to remain competitive and update its calculation rules required an efficient and cost effective solution. We were called upon to address this scenario and develop a solution that reduced costs, optimized performance, and simplified maintenance for this vital operation. The benefits of the new solution were remarkable. The company saw a drastic reduction in annual licensing costs, which decreased from approximately $1,000,000 per year to a one time investment of about $500,000 for the project with CINT.

In addition to a meager monthly cloud cost, the modernization envisioned by Mitsui Sumitomo and executed in partnership with CINT resulted in significant annual savings and improved efficiency in quotation process, reducing calculation time by 54% by eliminating high costs and technological modernization.

Motability Operations is the largest vehicle leasing company in The UK. It operates the Motability scheme where people receiving a qualifying mobility allowance can choose an affordable and accessible vehicle. They play an essential role in connecting their 800,000 disabled customers to work, health care, education, and independence, providing standout value. Each year, more than 250,000 vehicles come to the end of their lease and are sold into The UK Dealer market by MFL Direct, Motability Operations remarketing brand, on its ecommerce platform. Recognizing the need for a transformative upgrade, MFL Direct collaborated with CINT and marketing agency, Braleno, to rebuild NFL Direct legacy website.

Our goal was clear, make purchasing easier and more intuitive for dealers.

From the outset, our relationship with CINT has been an absolute game changer. They have helped us deliver a new MFO grade platform that allows dealers to buy cars in just one second. Their expertise and insights have allowed us to deliver technological solutions that deliver real value to our customers in the e commerce space. More recently, they've helped us rebrand our website and deliver a new fresh look and feel with great user experience, but also has allowed us to deliver inspected vehicles where dealers bid on vehicles, which has been a game changer for our dealer customers. The work we've done together has been absolutely phenomenal and they really have helped us take ourselves to the next level.

And I couldn't speak more highly of them.

Costa Coffee, a leading name in The UK's coffee landscape, joined forces with CINT to redefine its store management approach and elevate the customer experience. In January 2024, a dynamic journey began as CINT and Costa Coffee united with a shared mission to craft a groundbreaking tool to empower store managers with actionable insights. Their goal was clear, to develop a user friendly interface that would engage the users, streamline operations, and boost sales and customer satisfaction. With a commitment to simplicity and a user centric approach, CINT and Costa Coffee introduced the store compass. This innovative performance tool aggregates vital store data and KPIs ranging from sales figures to customer feedback into a single intuitive interface.

The result, store managers gain a crystal clear real time overview of their business, allowing them to make informed decisions at the drop of a hat. The store compass is more than just a tool. It's a cultural shift. By focusing on personalized recommendations, it allows managers to increase efficiency and drive sales while significantly reducing the time spent accessing data, whether it is net promoter scores or sales. Store managers can now benchmark their performance against similar stores in their region, fostering a culture of continuous improvement.

In just under six months, the store compass was co created, designed, and deployed across 1,500 stores around The UK with overwhelmingly positive feedback from store managers. Today, nearly 70% of Costa Coffee employees engage with the app weekly, spending an average of two minutes. Together, CINT and Costa Coffee have brewed a recipe for success.

We are proud to be recognized as a leader in the Forrester wave for modern application development services. But what truly sets CINT apart in the MADS marketplace? It's our unique approach to driving cultural behavioral change.

We focus on scaling agility. We also emphasize adaptability. We help our clients embrace uncertainty and adapt quickly in the rapidly changing marketplace. Our side by side approach empowers clients, increasing their skills and knowledge through cross pollinated teams. Finally, we foster an AI first culture within organizations.

This recognition reaffirms our commitment to cocreate transformative solutions, helping our clients navigate their modernization journeys.

Global retail sales set to reach $24,900,000,000,000 this year, including $5,300,000,000,000 in e commerce. The industry is ripe for transformation. Based on that, NRF two thousand and twenty five wasn't just a conference. It was a glimpse into retail's future, and we were at the forefront. The Big Idea session featuring insights from Melissa, our global director of retail strategy, and Scott Devlin, The Vitamin Shoppe's CIO, showcased how AI is reinventing product search and personalization.

With the prediction that 20% of US and EMEA retailers will launch customer facing AI this year, we're in line with the industry's pulse. Let's navigate retail innovation together as we empower our clients to confidently thrive in the AI era. GenAI Pulse is our quarterly thought provoking paper that offers a glimpse into the future with real insights from leading brands already living in the era of AI. Since its beginning, the publication has shown the transformation in enterprise through the rise of generative AI in modern business applications. Get your free download today and be ready for the next chapters of GenAI Pulse.

Over 70,000 attendees participated in the Web Summit two thousand and twenty four, where we shared insights on AI transformation. Bruno, our cofounder and president, gave a keynote on preparing for the AI tsunami with insights for companies on how to start and thrive with AI strategies and key lessons from our journey to 80% Gen AI adoption.

To start where you can create impact. Fact. Where you can create impact fastest, the more safe way.

At the corporate innovation summit, Paula, CEO of box eighteen twenty four, and our EVP, Solange, led discussions on overcoming innovation hurdles. This is our commitment. Help businesses to navigate this new

Following the success of the Brazilian edition of CINT's next gen internship program, we are excited to announce that applications are now open for the Colombian edition. Let's continue developing the first generation of AI native coders.

[Cesar Gon, CEO at CI&T]

I hope these stories illustrate the impact we create for our clients. Now I would like to invite Bruno to share insights on our global delivery model, the evolution of CIIT flow, and our talent strategy.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

Thank you, Sazir. Good evening, everyone. It's a pleasure to be here once again. We finished the year with over 6,900 C9 tiers, reflecting a 13% year over year growth. We have been utilizing AI to enhance our onboarding and training processes, which has been key in maintaining a strong utilization rate throughout the year.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

In 2024, we focused on promoting from within, cultivating a dynamic culture of opportunity, and empowering our teams to grow and embrace new challenges. As a result, our voluntary attrition rate stands at 10.7%, while the leadership attrition rate remains very healthy at 3.5. As we enter 2025, we are excited to welcome 450 new trainees, reinforcing our commitment to strengthening our team and cultivating the next generation of technology leaders. This program enriches our organizational culture and prepares the AI professionals of the present. We have had over 10,000 applications, and we will develop the first generation of AI native coders.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

Another group will also join us in Colombia in the second half of this year, broadening learning and growth opportunities for young talents in the region. Now let me comment on one of our AI powered offerings, which has been a key driver of our recent revenue growth. In 2024, the role of AI in application modernization has evolved from being a nice to have to an essential tool for success. Legacy platforms slow down agility and are hurdles to innovation, and our clients are turning to AI to overcome those challenges. AI brings great value to modernization efforts, greatly reducing risk and errors while we're increasing efficiency and speed in the process.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

Our clients are seeing exponential reductions in modernization timelines, enabling them to accelerate time to value and stay ahead of their competition. We are at the forefront of this transformation with our Cintiq Flow platform, which modernizes legacy systems and unlocks innovation. Through generative AI, Cintiq Flow is driving significant efficiencies and speed gains. The platform minimizes risks by automating error prone, time intensive tasks and ensures reliability when migrating old systems to modern application architectures. Our AI powered modernization solutions are contributing to stronger sales pipelines and revenue growth as more clients recognize the need to replace outdated systems that are killing efficiency.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

Now let me hand it over to Stanley to comment on our financial results.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Thank you, Bruno, and good afternoon, everyone. I'm pleased to share our financial performance for the fourth quarter and full year 2024. In the fourth quarter of twenty twenty four, our net revenue achieved a record 656,500,000.0 reais reflecting a 25.6% increase compared to the fourth quarter of twenty twenty three. On a constant currency basis, our net revenue grew a robust 14.7% year over year. This strong double digit organic revenue growth exceeds industry averages underscoring our competitive position and operational effectiveness.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

For the full year 2024, our net revenue totaled 2,368,000,000 reais, marking a 6% increase year on year. Net revenue at constant currency increased by 1.3% compared to 2023. In 2024, net revenue from North America grew by 7.5 compared to 2023, driven by the successful expansion of large clients that we onboarded in recent years. In Latin America, revenue increased by 6.2% year over year, largely supported by clients in the financial services vertical. When analyzing our revenue by industry vertical, we saw particularly robust growth in the retail and industrial goods sectors, which recorded an impressive 70% year over year increase.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Revenue from the consumer goods sector rose by 14.9% compared to 2023. Additionally, revenue from financial services increased by 5.7% in 2024, primarily driven by our clients in Latin America. For the full year, our top client and top 10 clients accounted for 841% of our net revenue respectively. At CINT, we aim to be the partner of choice for our clients, scaling our engagements as they mature to expand wallet share and foster long term partnerships. In 2024, our focus has been on organic revenue growth and optimizing our client base by targeting large accounts with significant technology investments.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Our top 10 clients, each generating a minimum of $10,000,000 in revenue, experienced a year over year revenue growth of 9.7% in 2024. This increase underscores the efficiency and value we provide to our largest clients. We are particularly excited about the onboarding of new large clients with long term commitments in the digital space. Our strong pipeline and conversion rates affirm that we are on the right path. Moving on to our financial metrics.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

In the fourth quarter of twenty twenty four, our adjusted EBITDA reached R128 million, reflecting a 23.7% increase year year with an adjusted EBITDA margin of 19.5. For the full year, adjusted EBITDA totaled R442 million, a 2.4% increase compared to 2023, resulting in an adjusted EBITDA margin of 18.7%. We have been diligent in managing costs and expenses, allowing us to enhance our sales initiatives while effectively diluting general and administrative expenses. As a result, we have consistently delivered strong profitability metrics in recent years. In the fourth quarter of twenty twenty four, our adjusted net profit reached 78,000,000 reals reflecting a 41.3% increase compared to the same period in 2023.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

The adjusted net profit margin improved from 10.6% to 11.9% in the fourth quarter of twenty twenty four. For the entire year, our adjusted net profit was R241.8 million, an 8.9% increase from 2023 with the net profit margin reaching 10.2%. This improvement was primarily driven by a reduction in net financial expenses, given the lower net debt position and a lower income tax rate. In 2024, we generated 467,000,000 reais from our operating activities, a 12.7% increase from the previous year primarily due to improved working capital management. This translates to a cash conversion to adjusted EBITDA ratio of 105% underscoring our strong capacity to generate cash from organic operations.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Our free cash flow defined as net cash from operating activities less CapEx reached BRL317 million in 2024, up 16.9% compared to 2023, representing a free cash flow conversion to adjusted net income ratio of 131%. This robust cash generation enables us to pursue strategic priorities to accelerate our growth. Before I pass it over to Cesar to discuss our business outlook, I want to provide an update on a commitment we made earlier this year in the first quarter twenty four. Starting with our 2024 annual report on Form 20 F, we will be transitioning our presentation currency from Brazilian reals to US dollars. This change aims to better align our financial reporting with the global nature of our business operations and support our growth strategy as we continue to expand our presence in key markets.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Cesar, back to you.

[Cesar Gon, CEO at CI&T]

Thank you, Istani. Before diving into our business outlook, let me first provide a recap of our growth trajectory in 2024. We set out to achieve consistent sequential growth overcoming the challenges of 2023. Our unique AI approach and CI and T flow were key drivers accelerating our recovery and position us for sustainable expansion. As we close the year, we are proud to have delivered on this commitment and setting a strong exit rate for continued growth in 2025 and beyond.

[Cesar Gon, CEO at CI&T]

Now let me comment on our business outlook. For the first quarter of twenty twenty five, we expect net revenue of at least $110,500,000 reflecting a 12.6% year over year growth at constant currency. This outlook corresponds to 4.5% growth in U. S. Dollars and 23.7% in Brazilian reals as we expect Q1 to mark the peak of FX impact throughout 2025 based on the volatility curve of 2024.

[Cesar Gon, CEO at CI&T]

For the full year of 2025, we project organic net revenue growth at constant currencies in the range of 9% to 15 year over year. The midpoint of this range of 12% translates to an 8.4% increase in US dollars and a 16.8% growth in Brazilian reals. In addition, we estimate our adjusted EBITDA margin for 2025 to be in the range of 18% to 20%. To conclude, I want to express my deep appreciation for our team's dedication and resilience. The way you have embraced our AI first transformation over the past two years is truly extraordinary.

[Cesar Gon, CEO at CI&T]

Together, we will continue to navigate change and drive C and T forward, shaping a future defined by innovation, collaboration, and impact. This brings us to the end of our presentation. We may now begin the q and a session.

[Eduardo Galvão, Director - IR at CI&T]

I'll announce each participant's name. Once you hear your name, please unmute your line and ask your question. Then when you're done, please mute your line. The first question comes from Pune Jain from JPMorgan. Hi, Puneet.

[Eduardo Galvão, Director - IR at CI&T]

Please go ahead.

[Puneet Jain, Associate - Equity Research at JP Morgan]

Hey, thanks for taking my question and good quarter. Let me ask, Cesar, like there have been like lot of concerns around like, the geopolitical macro news over the last few months. Are you seeing any pause or any caution in your client spending over last, few months? And And if yes, then are there any differences in your outlook across U. S.

[Puneet Jain, Associate - Equity Research at JP Morgan]

Versus other regions like Brazil or Europe?

[Cesar Gon, CEO at CI&T]

Thank you, Pune. First and thank you for your question. Overall, we continue to see, let's say, stable demand from our cohort that is particularly large, very large organizations despite this ongoing macro uncertainty and even the recent discussions around tariffs. So and stability is good for us because it's a favorite environment for our strategy for replacing underperformed competitors with our AI driven solutions. So and one point that I continue to see is a shift toward AI driven solutions, so reinforcing our focus on AI.

[Cesar Gon, CEO at CI&T]

And to give you a data point, right now, we have a stronger pipeline compared to the same period of last year, roughly 30% higher. So we this is for me is a promising leading indicator for 2025. So we continue to be cautious, but in our cohort of clients, we see stability.

[Puneet Jain, Associate - Equity Research at JP Morgan]

So no incremental delays or pause in your pipeline?

[Cesar Gon, CEO at CI&T]

Not yet.

[Puneet Jain, Associate - Equity Research at JP Morgan]

Good. That's good to know. And then can you review your use of cash?

[Puneet Jain, Associate - Equity Research at JP Morgan]

Like it's been a while since you pursued, you completed an M and A. Your peers have been very acquisitive adding assets in data, AI, one of the strategic areas that you mentioned. Can you share, like, what should we expect for use of cash in 2025?

[Cesar Gon, CEO at CI&T]

I can start and then Stan can complement. First, I think we made a strategic decision to focus last year 2024 on transforming CIG into an AI first company. And I think this focus has been a key driver of our organic growth. By the way, organic growth has always been our primary value creation engine and we will continue to be. So but moving forward, we may resume M and A as a way to speed up our organic growth.

[Cesar Gon, CEO at CI&T]

So our folks would be targets that help us to expense, particularly in The U. S, leveraging our nearshore capabilities in Brazil and Colombia and adding new high potential clients to our portfolio. Regarding capital allocation in Istana, you want to complement that?

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Yes. Puneet, additionally to any M and A that may happen in the near future, we are continuing our investments towards the R and D, meaning our AI platform flow, which, as Cesar mentioned, has been delivering outstanding results, so driving efficiency, leveraging our growth. So, of course, we will continue investing in that. Also, given the high cash generation we project for this year, we also see that a good way to provide return to shareholders is via share buybacks. So preventing dilution from stock options, compensation or even increasing earnings per share, for example.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

We also are prioritizing paying down debt, reducing interest payments. I would say those are the main items.

[Puneet Jain, Associate - Equity Research at JP Morgan]

Okay.

[Puneet Jain, Associate - Equity Research at JP Morgan]

Thank you, Kudrem.

[Eduardo Galvão, Director - IR at CI&T]

Thank you, Pune. The next question comes from Vitor Tomita from Goldman Sachs. Vitor, your line is open.

[Vitor Tomita, Analyst at Goldman Sachs]

Hello, and thanks for taking our questions. So I have two questions from my side. The first one is a bit of a follow-up on the question by Puneet on on cash deployments. You also, enlarged quite a bit your sales capabilities in 2024, with more dedicated sales teams. Should we with, should we see the level of selling expenses and sales investment in q four as a good guide for 2025?

[Vitor Tomita, Analyst at Goldman Sachs]

Or do you see room to invest further in customer acquisition to, to further boost the growth as well? And our second question would be, related to capacity utilization. If you could give us a bit more color on how that is trending at the moment. I recall from the opening statements that you mentioned it was strong going well, but if you could give us a bit more color on that, it would be great. Thank you.

[Cesar Gon, CEO at CI&T]

Thank you, Vitor. I will start with the first question and then Bruno can handle the second one. Yes, you are right. We in the last couple of years, we have been enhancing and expanding our sales structure and our sales approach across all four regions we operate. We will continue this process.

[Cesar Gon, CEO at CI&T]

It's paying off. I think we have a much more strong pipeline and commercial pipeline and visibility due to, of course, our effort and differentiation around AI and flow, but also a more proactive and intense sales effort. So in general terms, you will continue to see increasing investment around sales and of course take advantage of the efficiency we are gaining with AI and also diluting our G and A expense as we expand. Bruno, can you handle the second part of?

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

Your question is around utilization rate, right, Victor?

[Cesar Gon, CEO at CI&T]

Yes.

[Vitor Tomita, Analyst at Goldman Sachs]

Yes.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

We estimate utilization rate to keep at a very strong level as we finished Q4. So we see good levels of utilization rate between 8589%.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

And there's a natural oscillation there, a seasonal oscillation over the quarters, but that's what we estimate to be in 2025 as well. So we don't see any differences there coming from 2024.

[Vitor Tomita, Analyst at Goldman Sachs]

Very clear. Thank you very much.

[Eduardo Galvão, Director - IR at CI&T]

Thank you, Vito. Our next question comes from Thiago Kapuskis from Itau. Thiago, go ahead.

[Thiago Kapulskis, Head of Global TMT Sell-Side Research at Itau BBA]

Hi, everyone. Thanks a lot for jumping to ask questions. I have two questions as well and all related to the guidance, right? So just want to get a little bit more sense of the puts and takes in the full year guidance. In the Q1, you guided for a dollar of $5.8.80 something.

[Thiago Kapulskis, Head of Global TMT Sell-Side Research at Itau BBA]

Just want to understand if you have the same assumptions for the dollar, which has been very volatile, right, during this period over the past few months. And also trying to understand a little bit if you are what you're considering in terms of activity in The United States more specifically, right, given one of the questions that is happening here. So anything, any color would be interesting. And also one very last point as well, if you could give us color on the organic growth involved on that guidance, that would be interesting as well. Thank you.

[Cesar Gon, CEO at CI&T]

I can start, Tony. I can complement.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Go there, Gordan.

[Cesar Gon, CEO at CI&T]

No, you can start.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Okay. Yeah. Well, thank you Thiago for the questions. With regard to FX, as Cesar mentioned in the voiceover, we understand that we are at the peak of that scenario of devaluation of reais. So for 2025, we are considering that stabilization.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

And of course, given that we have our business continue to have a mix of different currencies underneath, right? So we have reais, we have U. S. Dollars and hard currencies in the top line, while we have a different mix in the cost. So those are not changing, and that's why we are always guiding using the constant currency, which better translate the actual increments on the business.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

So with regard to the guidance we are providing, 12% constant currency for the full year is fully organic growth, right? Cesar, if you want to add there.

[Cesar Gon, CEO at CI&T]

Sure. In terms of regions, we are guiding very strong growth in our two main regions, North America and Latin America, mainly The U. S. And Brazil and more stable outlook for Europe mainly due into cautions regarding geopolitical and macro and a good expansion in Asia Pacific too. So but mainly our two main regions, the larger region will be driving our growth.

[Thiago Kapulskis, Head of Global TMT Sell-Side Research at Itau BBA]

Sounds good. Thank you very much for the answers guys.

[Eduardo Galvão, Director - IR at CI&T]

Thanks Thiago. Our next question comes from Brian Bergin from TD Cowen. Brian, please go ahead.

[Bryan Bergin, Managing Director at TD Cowen]

Hey, guys. Good afternoon. Thank you. First question on the outlook for 2025, and really kind of the shape of the year. So what we see we're guiding for first quarter, nearly at the midpoint of that constant currency range for the full year, 12 plus.

[Bryan Bergin, Managing Director at TD Cowen]

I'm curious as you go through 2Q through 4Q as we think about cadence of 2025, is there anything that is an important consideration? And at the same time too, when you think about your 2025 guide visibility, do you have a sense of what's contractually committed versus what you have to still go get in pipeline?

[Cesar Gon, CEO at CI&T]

Okay. Thanks, Brian. Basically, I think we are consistent with our historical growth engine. So in seasonality, we are projecting a solid Q1 with a good year over year constant currency growth at 12.6%. And we are forecasting continue our sequential expansion from Q2 on our in a very good pace.

[Cesar Gon, CEO at CI&T]

Regarding our visibility is we have a good visibility. We are working with a reasonable range in our full year guidance. So we consider that we are very conservative, but in a good way also counting on a very strong commercial pipeline as I mentioned before. So good visibility, but some cautions regarding maybe an intensified volatility. So, top range of our guidance is driven by our solid commercial pipeline, while the low range reflects caution in case of intensified macro volatility.

[Bryan Bergin, Managing Director at TD Cowen]

Okay. Okay. Very good. And then a second question here is on GenAI impact in client engagement. So where you are further along in the usage of GenAI and AgenTic Solutions in your delivery, how is that impacting the commercial or the contracting terms in those engagements?

[Bryan Bergin, Managing Director at TD Cowen]

Is it different than what you've seen historically? Maybe just give us some color there.

[Cesar Gon, CEO at CI&T]

Sure, Brian. I think, as expected, AI progress is progressively become embedded in all aspects of digital project development now, whatever for efficiency, for customer experience or even for data and decision making. So what we see in our demand is, I would say half of our demand is applying AI for speed up legacy and application modernization, cloud migration, several data engagements like preparing the foundation to a future AI driven world. And the second part, the second half of the demand is about improving customer experience journeys for consumers now with the new possibilities around AI, designing and build new digital products and also a growing number of user cases using GenAI focused on hyper personalization like the ones we showcased during our presentation. So half we classify of the demand based on AI, we classify as horizontal demand and half we classify as vertical demand.

[Cesar Gon, CEO at CI&T]

And I believe it will remain along the year.

[Bryan Bergin, Managing Director at TD Cowen]

All right. Thank you, guys.

[Eduardo Galvão, Director - IR at CI&T]

Thanks, Brian. Our next question comes from Ernesto Gonzalez from Morgan Stanley.

[Ernesto González, Equity Research at Morgan Stanley]

It's one on our end. We saw some slight sequential weakness in North America and a little bit more in Europe. Could you please walk us through what you saw in each of those markets right up to the third quarter?

[Ernesto González, Equity Research at Morgan Stanley]

Thank you.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

I can take that one. In Europe, as Cesar mentioned before, we're seeing the I think being shaped by the current geopolitical and economic environment in Europe that's been with dealing since beginning of twenty twenty four. But North America is for North America is just regular seasonality and volatility, but it's small. We don't consider that critical going forward to 2025. As we mentioned, we're going to get a strong growth coming from that region.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

That's our biggest region at this point.

[Ernesto González, Equity Research at Morgan Stanley]

Clear. Thank you.

[Eduardo Galvão, Director - IR at CI&T]

Thanks, Ernesto. Our next question comes from Gustavo Farias from UBS. Gustavo, go ahead.

[Leonardo Olmos, Executive Director at UBS Group]

Hi, guys. Can you hear me?

[Eduardo Galvão, Director - IR at CI&T]

Yes.

[Eduardo Galvão, Director - IR at CI&T]

Yes.

[Leonardo Olmos, Executive Director at UBS Group]

Well, good night. Thanks for taking my questions. I have two on my end. The first one, regarding, specifically, some new legislation, in Brazil, impacting LatAm. If you could comment on, the effects, of, the return of payroll taxes, and how you are seeing the reactions from clients, if you're able being able to pass through this to prices, and what to what extent is this embedded in your guidance for 2025?

[Leonardo Olmos, Executive Director at UBS Group]

And my second question, regarding what Cesar mentioned about AI related projects, efficiency related versus more client facing projects, let's call it. What kind of scenario of those profile of projects, AI related projects, are you considering for 2025? How are you seeing this evolving going forward? Thank you.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

Well, I may take the first question. Gustavo, thank you. Thank you for the question. With regard to payroll taxation in Brazil, it started in 2025, and this is a program that will progress increasing the tax through for four years through up through 2028, right? So this gradual approach allowed us to prepare proactively and engage in discussions with our clients in advance.

[Stanley Rodrigues, Chief Financial Officer at CI&T]

We are fully committed in minimizing this impact through productivity gains and cost saving measures, And we are really on track to deliver our EBITDA margin that we guided that is 18% to 20% in 2025. Meaning that with your point, we are fully considering those aspects already in our guidance. Meaning that we through all these those initiatives I mentioned, we are already dealing with this change in Brazil with no impact.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

I can take the second one on the profile of the demand. Gustav, thanks for the question because that's I think it's a big opportunity for us there. So one could think that I know that there's a small amount of infrastructure that needs to be done to prepare for this new world of AI, right, so in terms of data and applications. And, the reality is that there's just a massive amount of backlog there, you know, that our clients still have, you know, in in data and applications sitting in a very old infrastructure that needs to be modernized in order for them to actually real accelerates towards a Gen AI future. So and that profile, I think, will give us a little a couple years of demand in terms of just the preparation infrastructure needed to be put in place for that future.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

So and I don't see that profile changing very fast going forward. That's to make it simple.

[Leonardo Olmos, Executive Director at UBS Group]

All right. Thanks for the answers and congrats on the results.

[Bruno Guicardi, Co-Founder and President - North America & Europe Operations at CI&T]

Thank you.

[Cesar Gon, CEO at CI&T]

Thank you, Gustavo.

[Eduardo Galvão, Director - IR at CI&T]

So that concludes our Q and A session. I'll now invite Seza to proceed with his closing remarks. Seza?

[Cesar Gon, CEO at CI&T]

Thanks, Eduardo, Bruno, Stanley. Thank you all for joining us in our call. I'd like to extend my gratitude again to all CI and Ters across the globe for your hard work and achievement in this quarter. And a special thanks to our clients for choosing CI and T as a partner to co creating this exciting new chapter of AI driven innovation. Stay well.

[Cesar Gon, CEO at CI&T]

See you soon.

Participants

Executives

• Eduardo Galvão, Director - IR
• Cesar Gon, CEO
• Bruno Guicardi, Co-Founder and President - North America & Europe Operations
• Stanley Rodrigues, Chief Financial Officer

Analysts

• Puneet Jain, Associate - Equity Research at JP Morgan
• Vitor Tomita, Analyst at Goldman Sachs
• Thiago Kapulskis, Head of Global TMT Sell-Side Research at Itau BBA
• Bryan Bergin, Managing Director at TD Cowen
• Ernesto González, Equity Research at Morgan Stanley
• Leonardo Olmos, Executive Director at UBS Group