CI&T Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 11, 2026

Key Takeaways

  • Positive Sentiment: Q2 revenue reached a record $142.8 million, up 21.9% organically and above guidance, marking the company’s seventh consecutive quarter of double-digit organic growth. Management raised full-year revenue guidance to $566 million–$578 million, or 15.5%–18% organic growth.
  • Positive Sentiment: AI deployment demand is broadening, with the commercial pipeline up 40% year over year and approximately 35%–40% of demand tied to agentic software development initiatives. The Anthropic Claude Partner Network and Mistral AI partnerships are intended to support new enterprise wins and vertical solutions.
  • Positive Sentiment: New value-based pricing models are improving monetization, with 30% of first-half new engagements using these structures and adjusted gross margin expanding sequentially from 30.6% to 32.4%. Management said these models can generate margins 3–15 percentage points above traditional time-and-materials work as adoption increases.
  • Negative Sentiment: Adjusted EBITDA margin fell to 13.3% as CI&T increased commercial spending to capture AI demand, while Brazilian real appreciation created an additional headwind; adjusted EPS declined to $0.07 from $0.09 year over year. Management expects sequential margin improvement and guided to a full-year adjusted EBITDA margin of 15%–17%, but acknowledged that a portion of the higher sales investment will remain structural.
  • Neutral Sentiment: Growth was broad-based, led by Latin America, financial services, and technology and telecommunications, while consumer goods declined 9% and North American growth slowed to 10.2% amid what management characterized as temporary seasonality and contract-renewal timing.
AI Generated. May Contain Errors.
Earnings Conference Call
CI&T Q2 2026
00:00 / 00:00

Transcript Sections

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Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thank you for joining us for CI&T second quarter of 2026 earnings call. I am Eduardo Galvão, Director of Investor relations. Joining me today to discuss our quarterly results are Cesar Gon, our Founder and CEO, Bruno Guicardi, founder and President for North America and Europe, and Stanley Rodrigues, our CFO. Before we begin, I would like to remind you that our remarks today will include forward-looking statements. These statements, including our business outlook, are based on the management current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. We caution you not to place undue reliance on these forward-looking statements, as they are valid only as of the date when made. Additionally, we will discuss certain non-GAAP financial measures. We believe these provide a more comprehensive view of our underlying operational performance.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

For a full reconciliation of these measures to the most directly comparable GAAP metrics, please refer to the tables in our earnings release. Today's session is being recorded and all participants are currently in a listen-only mode. Following our presentation, we will host a Q&A session. To participate, please submit your question via email to investors@cint.com. The full presentation deck is available on our investor relations website, and a replay of this call will be posted shortly after we conclude. With that, I am pleased to hand the floor over to our Founder and CEO, Cesar Gon.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thank you, Eduardo, and good afternoon, everyone. Global AI spend is projected to hit $2.6 trillion this year, up 47% year-over-year. Yet, according to MIT, roughly 95% of AI initiatives still show no measurable business return. That gap is where I want to begin today. We published two papers this quarter that get at why. The first argues that most companies are optimizing the wrong variable, chasing incremental task efficiency instead of asking where AI can return 10 times rather than 10%. The second paper calls it organizational hallucination, the confident belief that a company is transforming when it is actually just experimenting. In both cases, the constraint was never the technology. It is the organization's capacity to absorb it. That gap is exactly where CI&T plays, and it is why we build our business around two things.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

AI deployment, installing real capability inside a client's core, and AI monetization, capturing, together with our clients, the productivity gains and business impact that AI deployment creates through value-based commercial models rather than headcount. Everything you will hear from us today, the robust and sustaining revenue growth, and the increase in our sales investments to foster momentum given the AI opportunity, is the same thesis playing out inside our own business. This quarter's numbers reflect that opportunity and the deliberate choices we are making to capture it. We delivered record revenue of $142.8 million, up 21.9% organically and above our guidance. Broad-based across geographies, industry verticals, and client cohorts. Growth was increasingly fueled by new client wins and by initial engagements scaling into large partnerships. Our new commercial models are also letting us capture a greater share of the value we create.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

That shows up directly in adjusted gross margin, which expanded from 30.6% in the first quarter to 32.4% as this model scaled. In the first six months of 2026, 30% of new engagements were under new value-based pricing models, and we project this gross margin expansion to accelerate in the coming quarters. Our adjusted EBITDA margin in the quarter was 13.3%, reflecting our deliberate choice. 2026 is a transition year, one where we invest in our commercial engine to turn this AI deployment opportunity into durable, profitable growth in 2027 and beyond. As a result, our commercial pipeline is now 40% larger than in the first half of 2025. In short, our top line shows the demand is solid, our gross margin shows monetization is working, and this year's commercial investment is what lets us compound that advantage going forward. Here we go again.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

The second quarter of 2026 marks our seventh consecutive quarter of double-digit organic growth. At a time when parts of our industry are consolidating through acquisitions, buying growth rather than building it, we have extended this streak without a single M&A deal, prioritizing our capital allocation toward our own transformation and our sales effort and growth engines. This embodies one of our cultural tenets. We play the infinite game. We are not optimizing for a single quarter. We are building a company designed to keep compounding for decades. This consistency reflects a structural shift in client demand and CI&T's ability to capture it. The case studies that follow show how this AI deployment momentum is translating into tangible business outcomes.

Video Narrator

MRV, Latin America's largest home builder. Now it is rebuilt how it speaks to the world. Five brands, one voice. CI&T, with Adobe, laid the foundation for a new digital experience, then handed over the keys. The marketing team runs it alone now. No scaffolding, no outside help left on site. Three months in, the traffic tripled. 117% more people at the door. MRV brought the ground. CI&T brought the blueprint. The windows opened on their own. Let me show you some facts. A leader in market share in a country the size of a continent. A presence in over 350,000 retail points. More than 150 million pairs out there, in motion. Alpargatas, home of Havaianas and Rothy's. A full day at our HQ in Campinas, Brazil, mapping the digital terrain together. From AI-powered commerce, to the journeys that turn products into seamless experiences.

Video Narrator

I don't see my technology partner as complementary. I see him as an integral part of my team.

Video Narrator

Some journeys are better walked with the right partner. Alpargatas and CI&T.

Video Narrator

I think brands that are going to be successful in this new age are brands that have solid foundations, whether it's data foundations, awareness of customer behavior. Because it's not necessarily about speed to market, but how fast you can learn, and pivot, and build experiences that really matter and resonate for the customer.

Video Narrator

The agentic enterprise isn't coming, it's here, and it just got a bold ally. CI&T just joined Anthropic's Claude Partner Network. Our engineers, now certified in Claude. Claude Code wired into CI&T Flow. 30 years across the globe, now setting the standard for how the world's largest enterprises deploy AI. Options generated, outcomes decided. This is the power of a partnership of a global AI deployment partner boosted by Anthropic. We've got your back.

Video Narrator

A quick recap of our quarter. First, we launched "Organization Hallucination," a new pocket book by the CI&T team with chapters from Cesar Gon and Silvio Meira on why companies invest in AI and keep solving the wrong problems. Then came "The Wrong Math of AI ROI," a paper from the CI&T team, our CFO, Stanley Rodrigues, and Co-Founder, Bruno Guicardi. Its bottom line, AI won't transform your organization, you will.

Video Narrator

Business Complexity Points, BCP, went open source. 10 years of work with Itaú, one of Latin America's largest banks, now free for everyone on GitHub. The Retail Tech Report: Agentic Edition landed next, led by Melissa Minkow, our Global Director of Retail Strategy, on how agentic AI is already reshaping retail. We were around the clock at the biggest stages in AI and innovation this quarter. We introduced the ESG Consumer Index 2026, a sharp read on what people now expect brands to prove. And one milestone stands out. We're the first software company in Latin America with SBTi-validated net zero targets. Climate action measured by science, not marketing. Beyond that, a partnership with Mistral AI, a pioneer in open-weight AI, to power the next generation of agentic enterprises. That's our quarter. Explore more at our website.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

These case studies demonstrate how our agentic SDLC and CI&T Flow are resetting the baseline for enterprise productivity and speed to value. I will now hand over to Bruno to discuss how we are scaling this hyper-productivity through our global delivery model and our evolved talent strategy.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

Thank you, Cesar. Good afternoon, everyone. I am glad to share our operational and talent progress for this quarter. We closed Q2 2026 with roughly 8.1 thousand professionals. With voluntary attrition at 10.1%, continue to trend towards some of the healthiest levels in our history. At the center of this workforce are our 6,700 AI builders, the result of reskilling 100% of our professionals to work AI natively. That matters right now. Recent independent research mapped a widening gap in the market for AI deployment talent, with demand for engineers who deploy AI at the enterprise scale growing roughly 50% year over year. Most of our industry is racing to hire into an increasingly scarce pool of talent. We did not have to. We built it from within ahead of the market.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

Revenue per AI builder continues to grow, reaching over $80,000 in Q2 2026 on a last 12-month basis, an increase of 7% year over year. This is a direct result of AI monetization and value-based pricing, providing operating leverage and contributing to the expansion of our gross margin. Our momentum is being reinforced by a strategic partnership we announced this quarter, one that speaks directly to the role CI&T plays for large enterprises. We joined Anthropic Claude Partner Network, certifying more than 1,000 AI engineers on Claude and working with Anthropic to help set a new standard for how AI gets deployed inside the world's largest organizations. CI&T already runs Claude Code extensively inside CI&T Flow, and this partnership expands that work into a joint go-to-market motion with a focus on co-developing industry solutions for financial services, retail, consumer goods, among other verticals.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

It is designed to open new enterprise accounts and expand our pipeline into verticals we are co-developing, directly feeding our commercial momentum. Large enterprises need a partner who can take frontier models into complex, regulated, mission-critical environments and deliver production-grade outcomes. That deployment layer is exactly where CI&T operates, and this partnership makes us the connective tissue between the leading model providers and the world's largest organizations. That embedded engineering capability is exactly what enables us to play where the real value is shifting in the AI era. This chart from Forrester is the clearest way we have found to show clients why. Most of what is being sold as enterprise AI so far sits on the left side of this chart, automating individual tasks with copilots and agents, augmenting existing workflows end to end. It is a productivity story. Efficiency gains on the top of an operating model that stays the same.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

The disruption is what Forrester calls the process chasm. Cross it, and the business case changes entirely, from efficiency to new revenue and margin structures, and ultimately to growth, relevance, and the long-term perpetuity of the business itself. CI&T built two offerings specifically for the two quadrants on the right side of that chasm. The one I want to walk you through now, the one gaining the fastest traction with our clients today, is Agentic Enterprise Reinvention. Agentic Enterprise Reinvention is how we help established enterprises redesign the core of their operations, moving from legacy ways of working to agentic-native operations. We don't stop at advisory or isolated use cases. We install real operational capacity inside existing value streams, and we stay until it runs on its own. In practice, that means bringing 60%-80% of a core end-to-end process onto an agentic journey in months.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

Three things differentiate this from traditional systems integration. Who delivers it? Small, senior for deployment engineering teams. How we find the value? Three decades of lean-based process transformation, along with our industry expertise, give us the insight into where reinvention pays off. How we get paid? Increasingly outcome-based, with fees tied to business results, not to hours billed. It compounds. Once we reinvent one core process, it becomes the reference architecture for the rest of the enterprise, giving every account a natural land and expand path. That means revenue that scales with the impact we create for clients, not with headcount. Now, I will hand it over to Stanley to comment on our financial performance.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

Thank you, Bruno, and good afternoon, everyone. Let me walk you through our financial results for the second quarter of 2026. As Cesar mentioned, we delivered record net revenue of BRL 142.8 million, up 21.9% year-over-year, entirely organic, and 14.1% at constant currency above our guidance of at least BRL 140 million. This performance reflects the strength of our go-to-market execution. Through the quarter, we saw our sales pipeline expand and our conversion rates improve, the direct payoff of deliberate commercial initiatives, and the tangible results of our AI deployment delivers for our clients. Beyond the headline number, what matters is how evenly this growth is spread across our footprint. This slide shows the composition of our growth, and the message is clear: our momentum is not carried by any single vertical or client. Every region contributed. Latin America was the largest engine, expanding 32.1% year-over-year.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

New markets grew 26.3%. North America added a consistent 10.2% on a large mature base. Financial services, our largest vertical, continued to grow strongly, up 36% year-over-year. Technology and telecommunications accelerated to 68% growth, a robust turnaround from the contraction we saw just a year ago. Others grew 25%, life science 16%, and retail and industrial goods 11%. The one exception is consumer goods, where demand has been softer, a headwind we view as temporary. The composition by client cohort tells an equally healthy story. Clients outside our top 10 grew 24.1%, outpacing the 19% growth of our top 10, reinforcing that our momentum is not dependent on any single account. Taken together, this confirms that our AI deployment is a global catalyst, driving deeper penetration across every region and every client tier we serve.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

As you may recall from our last quarter's call, we said that our new engagement models gained traction. They would begin to expand our gross margin, and that is exactly what we are seeing. This quarter, our adjusted gross margin expanded sequentially from 30.6% in the first quarter to 32.4%, an increase of 1.8 percentage points as those models lift the value we capture per engagement. That said, on a year-over-year basis, adjusted gross margin declined, driven by a foreign exchange headwind as our productivity gains offset the impact of the payroll tax resumption. Looking ahead, we expect gross margin to continue improving over the coming quarters as adoption of these models broadens across our book of business, a core driver of the profitability expansion we are working toward. Adjusted EBITDA was $19 million with a 13.3% adjusted EBITDA margin. The year-over-year compression reflects two main factors.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

The first is the appreciation of the Brazilian real against the US dollar, which we have flagged before. On an FX-neutral basis, adjusted EBITDA would have been $20.8 million, a 15.6% margin, giving a clearer view of our underlying performance. The second factor is deliberate, and it reflects two distinct components related to our sales efforts. Part of it is a targeted investment specific to 2026, including scaling our agentic SDLC initiative to capture the current acceleration in demand for AI deployment. This is not a permanent addition to our cost base. The other part is structural, an expansion of our commercial organization to support new offerings, practices, and vertical initiatives, as well as commission expenses, which will remain part of how we go to market going forward.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

Together, these investments are funding the 40% pipeline expansion year-over-year, as Cesar mentioned, and higher conversion rate already showing up in our top line. This is a conscious trade-off between near-term margin and durable, higher quality growth. Importantly, the underlying trend is encouraging. Our adjusted gross margin expanded sequentially, showing that the pressure at the EBITDA level comes from our deliberate investments and external headwinds, not from our core delivery economics, which are in fact improving. Looking ahead, we expect our adjusted EBITDA margin to improve sequentially while these investments position us to fuel growth into 2027 and beyond. Moving to our bottom line, adjusted profit was $8.7 million in the second quarter with a 6.1% margin. This reflects the same two main factors I just described on EBITDA. The appreciation of the Brazilian real and our deliberate investment in growth.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

Adjusted diluted earnings per share was $0.07 versus $0.09 in the prior year. We see this as an investment cycle, not a new baseline. As these investments continue to fuel our growth into 2027 and beyond, we expect profitability to recover and our capital discipline to keep amplifying returns for shareholders. This quarter, that discipline included repurchasing $2.8 million in shares, continuing our ongoing buyback program even as we invest in growth. Combined with these repurchases, our weighted average diluted share count is down 3.6% year-over-year, meaning each remaining share now carries a larger claim on our future earnings.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

I will now turn the call back to Cesar to discuss our business outlook and the strategic path forward for the remainder of 2026.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thanks, Stanley. We continue to see an improving demand environment as enterprises increase their spending on AI deployment. We are pleased with the evolution of our AI monetization efforts through new value-based commercial models. For the third quarter of 2026, we expect revenue of at least $145.7 million, a 14.4% increase over the third quarter of 2025, or 12.3% at constant currency. For the full year, we are raising our revenue guidance to the range of $566 million-$578 million, implying organic growth of 15.5%-18%. Our revised outlook includes a positive FX impact of approximately 400 basis points. Alongside that, we now expect adjusted EBITDA margin for the year in the range of 15%-17%, reflecting deliberate investment in the commercial engine that drives demand and accelerates monetization with sequential margin improvements through the second half as planned.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

This is a forward-leaning choice to move first on AI deployment and expand our wallet share. To be clear, this doesn't trade away financial discipline. Profitable cash generative growth is still the bar we hold ourselves to. What we are building is a company that scales revenue with less headcount and grows more profitable as the new commercial models mature. With that, we are ready to begin the Q&A session. Thank you.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

All right. We'll now begin the Q&A session. 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 Puneet Jain from JPMorgan. Hi, Puneet.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Hey, thanks for taking my question. I want to follow up on margin guidance, like the cut of around 200 basis points. I understand a lot of it's discretionary investments and then currency. Can you break down the impact for us? How much of the incremental impact is FX versus investments, and why should we expect the level of investments to go down? We're still in very early stages of AI build-out, AI ramp-up. Why won't this level of investment stay where it is into next year and beyond?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

I may start here. Puneet, thanks for the question. Puneet, let's take the full picture here. If you see seven quarters of double-digit growth, growing four times faster than our peers. We are gaining market share, we're gaining wallet share, which means we are deepening relationship with our clients. We have this broad-based, you see growth in the top 10 clients, outside the top 10 clients. You see growth in all the regions. You see growth in most of the segments except by one. Everything is pure organic.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Yeah.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

We have a pipeline growing 40%. Everything is funded by this investment that we've been making ahead of the pack, and specifically in this second quarter. It's an answer to this surge in demand for AI deployment. Then we reshape and redesign our go-to market, and that's what you see in the second quarter. Going forward, we see part of this investment, we're reducing along throughout the quarters, which is specifically the agentic SDLC deployment. But the other half, I would say, we will continue to see there. It's more structural. If you see from last year's quarter sales, it's 8% of net revenue. This quarter, we are talking about 12%. Going forward, we will be pretty much in between. This will be more than compensated by what you see in the gross margin as this will continue to improve.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Also we will have operating leverage on top of SG&A as a whole, sales as well, and as a consequence, that's why you see EBITDA growing. Everything already counting on this deep pressure from the effects. Everything's compounding there.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Got it. No, that's helpful. On your top line, it seems like the financial services vertical is doing really well, including the top client that's up nicely sequentially in this quarter. How broad-based that growth in financial services is, and your expectations for rest of the year there for that vertical?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Sure, I can get this one. You're right, financial service was the second fastest vertical for us. We grew 36% year-over-year in financial services. We grew across the board, retail 11%, tech and telco 68%, life sciences 16%. We see, by the way, only consumer goods, minus 9%. It's a solid grow around all the not only verticals, but if you look at our top 10 clients, even if you exclude our top one client, it's still a very high growth, 16% year-over-year among the top 10, excluding the top one that grew solid too. Basically we will continue to see, we are forecasting expansion across the board in all the verticals in the top 10 clients and also the whole cohort of clients.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

I think what is behind this is a solid increase in AI deployment demand, and also the fact that I think we did all the investments to capture this momentum, as [Estevão] mentioned, in our sales organization. We expand verticals reach across the board to really speed up growth and increase the wallet share in our portfolio and also increase the land in new clients. This is, I think it's the second time we are raising our revenue guidance and we continue to see a growing demand, and it's basically across the board. Of course, financial service will continue to be our number one vertical. I think the use case for efficiency and customer experience in the financial service, especially in the banking sector, is become very clear now in terms of impact.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

We see also other verticals evolving like retail with agentic commerce will be a big trend and it's already starting. Every single industry will have a set of very powerful use case to explore. We are preparing our offerings and teams to capture that.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Just to add to that, financial service grew 36% year-over-year while our top client grew 27%. So if you exclude the top client within that vertical, the other clients grew faster than that. So even higher than the 36% we see here.

Puneet Jain
Puneet Jain
Analyst at JPMorgan

Got it. Yeah. I was looking at on sequential growth basis, and it was up nicely at top client as well as rest of the financial services even on sequential growth. But I understand. So appreciate it. Thank you.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thanks, Puneet.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thank you, Puneet. Our next question comes from Steven from Wedbush. Steven, please go ahead.

Analyst at Wedbush

All right. Thanks, guys. Thanks for taking the question. I want to start on the agentic SDLC that you guys pointed out in the quarter. I want to ask specifically about the pipeline that you are seeing there, because you mentioned that you saw 40% year-over-year growth in the pipeline, but what percentage of that was specifically tied to agentic SDLC? Does this carry any higher average deal sizes? Can you talk a little bit about the metrics there?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Sure. I can start, Bruno, you can jump in. Well, I think roughly 35% to 40% of our demand, we articulate as agentic SDLC, especially transforming the current engagements we already have. Old traditional digital engagements now being reshaped as agentic SDLC engagements with different commercial models and different margin profile too. This is one specific offering where we are very, very competitive. I think we are 5-10 times ahead of our typical competitor. We have a lot of space for replacing underperforming competitors. I think the gap is increasing. We have been investing with CI&T Flow and all the reskilling of our teams a lot in the last three years. I see the gap of performance versus our competitors increasing. That give us a lot of room for replacing and then on our clients and also land on new avenues of growth.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

The second question we are- Sorry.

Analyst at Wedbush

That is specifically on the deal sizes for agentic SDLC versus your traditional deal sizes.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Yeah. We are seeing an increase in the deal size. We are not sure if it is a trend or just momentum. We see in the last two quarters, the size of the deals are larger. We are not sure yet if it is just a transition from previous recurring model or if it is a long-term tenet. We disclose the number. We have a 40% larger pipeline versus the same period last year, and with a very solid conversion rate. The deals are larger now, but not sure yet if it is a tenet. It depends on how the market evolves.

Analyst at Wedbush

Great. Got it. If I can ask a quick follow-up, I want to ask about the geographic split moving forward. Latin America was another solid quarter of growth at 32%. If you look in North America, though, it was a 600 basis point deceleration from 1Q 2026, where last quarter was 16% and this quarter was 10%. Is there anything to point out there from a demand perspective? Is there any sort of competitive displacement happening there? Anything that you would want to point out specifically within North America?

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

Let me take this one. No, just seasonality, Steven. I think we can expect that to be accelerating again, throughout the year. I think it was just Q2 seasonality, some gaps in contract renewals and other kind of situations, that were kind of ad hoc, nothing, systematic.

Analyst at Wedbush

All right. I appreciate the time. I will hop back in the queue.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thanks.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thank you, Steve. Our next question comes from [Brian Parraga] from TD Cowen. Hi, Brian. Please go ahead.

Analyst at TD Cowen

Hi, guys. Thank you. I wanted to ask on tech and telecom. It is a really strong growth number there in the quarter, the second consecutive really strong growth number. I guess first, is this being driven by a handful of large transformational wins or are you seeing broader demand there in the client base? Maybe just give us more detail on what is driving that, because there has been some peers that have had more challenging results in that vertical. How should we think about that going forward as we go through the second half?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Sure. Thanks, Brian. Great to see you here. First is telco. I think we have some big telcos as clients and we are getting a lot of traction with them, especially around agentic SDLC. Again, it resonates with, I think, the level of differentiation we are being able to showcase in terms of productivity. The second is a new trend that is because we combine tech and telco, but it was majority telco.

Analyst at TD Cowen

Okay.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Historically, CI&T was not a we do not have really a lot of demand from the techie companies, but it is happening now. I think it is also correlated with the AI deployment demand. Now we have some big tech companies increase their spending with us. It is also correlated with the partnerships we are announcing. Probably you saw not only the typical hyperscalers, Amazon, Google and Microsoft, but also the new big players, especially Anthropic. It is a new revenue source for us and we are forcing. We are very happy to see this also adding to our growth.

Analyst at TD Cowen

Okay. Understood. Just a follow-up on the margin recovery path. To achieve that full year EBITDA margin target, it looks like you would have to meaningfully improve from just over 14% in the first half. Can you just categorize what are the biggest drivers of that improvement as you go through the second half? How much is coming from commercial model benefits versus moderating investment spend versus potentially moderating FX headwind?

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

Well, Brian, thank you for the question. I may start here and, Bruno, if you may add. Again, if you see, Brian, as a comparison, for example, we have a 2.2 more or less percentage point effect from the effects if you compare to second quarter 2025. So pretty much we are in line there, and that includes our efficiency gains that compensates the tax resumption in the payroll in Brazil. So you see there efficiency gains rolling. Going forward, what we have, we continue to see conversion, more and more conversion of the new models that they have higher margins, playing at the gross margin level. So at the gross margin level, you will see improvement sequentially.

Stanley Rodrigues
Stanley Rodrigues
CFO at CI&T

Going down the P&L, we will see a leverage, operating leverage on top of the SG&A. In sales specifically, as we do not have in the coming quarters, the agentic SDLC investment component that we saw heavier in the second quarter, you will see an alleviation there. Of course, we do have a structural sales part that will remain there. But again, the combination of better gross margins and the operating leverage will bring the EBITDA sequential improvement that it is implied in the guidance that we provided. Now, Bruno, if you could add more colors there.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

Yeah, I would just say that the seasonality of the sales investment that was done in Q2. That will stop in kind of a halfway. So from the 8-12 percentage points on the revenue. So it was, if you look at where we were last quarter, it was 8%, now we are 12. So we think we are going to see kind of a long term will be around 10. So that is another 2%, probably not in Q3, but certainly for the long run. But that kind of peak will kind of recede a little bit.

Analyst at TD Cowen

Okay, understood. Thank you.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thank you, Brian. Our next question comes from Maria Clara from Itaú. Hi, Clara. Please go ahead.

Maria Clara
Analyst at Itaú

Hi, everyone. Thanks for the opportunity. I have two questions here. The first one more related on more color on the increase in pipeline. Can you please comment which industries have been outperforming, if you already see a trend of new clients gaining more traction? Also if you could please comment about the evolution of the new monetization formats within those new potential deals. The second question is a follow-up about the gross margin expansion. Stanley just mentioned that those new monetization formats are already helping the gross margin expansion. Can you please elaborate more on that? What is the profitability boost here coming from those models and the profitability expansion potential in the long run? Thank you.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Sure. Let me start with your second question. We basically are introducing four new price-based models, fixed price with higher margin output base. It's a kind of two-point model, price per consumption, and then outcome-based. This model depends on the way we combine, are giving us 3% to 15% of points higher than the traditional time material. Depends on the mix. We have something in this range. It's a very significant improve in our contribution margin. As I mentioned, 40% of everything we sold this year was already based on this new model. As we execute this contract, that's why we are foreseeing this expansion in gross margin. Our effort are showing that this trend are increasing the new commercial models in our engagements will continue.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

This is what we are working on, and we believe that this is a better way to play the AI deployment game and really align the purpose of the engagements with our clients. We are seeing a lot of good reception from our clients. This is, I think I gave you a range on what we are expecting as an incremental improvement in our gross margin ahead. The second is regarding how we see the demand and the pipeline expansion. We are putting everything under this AI deployment umbrella. That is basically we can group this demand in three set of offerings. The first is adoption. AI adoption is a big trend, particularly when we see opportunities around the software engineering agentic SDLC, as we mentioned.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

A lot of productivity gains to be captured and speed to value to be captured, just reinventing the ways of work in the digital software space. The second is our IP-based solutions. That is things like our modernization studio where we can streamline the conversion of a legacy system into modern AI-based architecture. The same for data. Data is a huge demand for us regarding preparing our clients for the AI age.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Reducing the fragmentation and create the right infrastructure around data. Then you have the specific use case, by industry efficiency or customer experience. I mentioned before some for financial services, there is retail, and for every single industry, we now see a set of powerful use cases to explore. Finally, I think what is new, probably what I mentioned is 85%-90% of this increased demand. We have a new trend in our pipeline that Bruno mentioned during the call. We are launching the Agentic Enterprise Reinvention services. It is a new line of services, very transformative, where we help our clients not just improve current workflows, but to really reinvent core process around AI. This is always an outcome-based engagement. This is a new trend, and probably we will see this being more relevant in the future in our pipeline.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Basically AI deployment in these three groups.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

If I may add, Cesar, I think we are very excited with the consumer experience element there that Cesar mentioned. Because if you were hearing those calls for the last two years, we have been telling a lot that this will come, right? The first phase of AI demand was solely focused on efficiencies and operational excellence, right? Only internal, where the user of AI was only our clients' employees, right? Now we are seeing the first big scale programs geared towards consumers and customers of our clients, which is very exciting for us because it is a completely new type of demand. A demand that we predict that will be exponential as clients build more confidence into the models and the results that they are getting. This is a new tsunami of demand that will come and will come for the ones that are better positioned, and I think we are.

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

We are the ones that actually been very successful on those initial work streams with the internal implementations. And position ourselves very well to actually take on this new one that is upcoming and with a lot of potential for growth.

Maria Clara
Analyst at Itaú

Just a very quick follow-up on that, Bruno. Do you foresee any sign of potential acceleration from this next step of AI revenues potentially in 2027?

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

I think this area of consumer experience has a lot of potential too, for exponential growth, right? Again, as clients get more confident about the results and exposing those experiences and embedding agentic into the customer experience, that has a lot of potential for growth.

Maria Clara
Analyst at Itaú

Thank you. Very clear.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thanks, Clara. Our next question comes from Gustavo Farias from UBS. Hi, Gustavo.

Gustavo Farias
Gustavo Farias
Analyst at UBS

Hi, everyone, and thanks for the opportunity. Two questions. First one, on the AI deployment demand, I would like to unpack it. If you could shed color on how much of it is AI deployment per se versus the legacy modernization required for this AI deployment. How much of the guidance raise was supported by those new partnerships with Anthropic and Mistral AI that you announced recently? My second question, just to follow up on the margin outlook. First of all, I wanted to confirm if these investments in agentic SDLC are mostly concentrated in the second quarter. First of all, how do you think of this structural expansion in the commercial department or commercial effort? If it is a multi-year effort or if we could expect normalization to happen next year. Thank you.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thanks, Gustavo. I will start with the first one. It is roughly 30%. We put legacy monetization, data monetization inside the AI deployment umbrella because these are our foundational investments companies, large companies need to do if they want to fully explore the potential, the reinvention potential of AI. So 30% is toward this legacy data and system monetization. The second, I think Stanley mentioned we are expanding from 8% percentage of revenue, our sales effort, to 12% along this year. But for next year, we plan to stabilize around 10%. I think this will be more than offset by the new gross margin we are already seeing in our engagements based on the new offerings and commercial models. I think it is a sustainable long-term invest to keeping accelerating our growth and increase our wallet and market share.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Roughly, we went from 8-12, and half is a transition of current SDLC engagements to AI agentic model and new commercial models. Part of this is a bigger, a more strong global reach, new vertical geographies and capabilities we are introducing in our sales. We will use our better gross margin and the dilution of our G&A as part of the puzzle of scaling CI&T in a very profitable way. In the end, I think why we are very excited is we are building a company that really can scale revenue faster than headcount and also can grow more profitable as our new commercial models mature, and it's clear now that it's going to happen. We are very excited with this improvement in our typical pre-AI business model.

Gustavo Farias
Gustavo Farias
Analyst at UBS

Very clear. Thank you, Cesar.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thanks, Gustavo.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thanks.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thanks, Gustavo. Our next question comes from Luke Morison from Canaccord. Hey, Luke, please go ahead.

Luke Morison
Luke Morison
Analyst at Canaccord

Hey, guys. Good to see you. Nice job with the quarter. I got a couple of questions here. The first, I guess on just consumption pricing and the new pricing model you guys are rolling out, the agent computing unit model. Just as I think about sort of the underlying cost of running these models keeps falling, token costs are falling. If you are billing on consumption and the unit cost drops every year of that pricing model, how do you stop that from becoming a deflationary force and a deflationary revenue line over time?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Luke, it is not a simple question. All these curves are moving, right? The cost per token is drastically reducing. But as the capabilities of the model increase, we are using more tokens. But now we have the advent of different options regarding open weights models, like we are now investing a lot of on the Mistral partnership. So we have different alternatives, depends on the scenario. But in the end, our price per consumption model is important as an alternative for our clients. But we do not see this being the majority of our commercial model. It will be relevant, but also always combined with other models. We are not betting everything on a SaaS ACU model. We just want to have a portfolio of models and then combine by engagement by client in the most proper way.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

But this is a long and complex game on adjusting pricing and cost structure around this. I think luckily, it is just a small part of our bets.

Luke Morison
Luke Morison
Analyst at Canaccord

Yep, fair enough. Makes sense. Then maybe just dovetailing, you mentioned Mistral there. You have partnered with multiple frontier model providers on different terms at this stage. Obviously, I think that Mistral alliance is attractive to different types of clients and different geos. But just how should I think about staying model agnostic versus going deep with one? To what extent do your clients care what is sitting underneath your platform in Underflow?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Bruno, want to try?

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

I can take this one. Yes, they care, Luke, because they're sensitive terms on privacy and data controls, right? So they care. Flow is an agnostic platform, right? So Flow at this point is connected to more than 37 models and can control that complexity for clients, right? But for us, we have to be agnostic and multi-model because we have more than 200 clients in different geographies and different sectors where the main providers there have different types of footprint, right? So we have to work with our clients and what's best for them and help them throughout that complexity in respecting their requirements for compliance and security, right? So that's the positioning that we are in and helping even with the FinOps that implies, right? So, what are the models that are best for certain tasks, right?

Bruno Guicardi
Bruno Guicardi
Founder and President for North America and Europe at CI&T

That's a knowledge that we built over the almost four years with Flow and automating many different type of work streams. That's what we're helping our clients with, and I think that's what driving a lot of those conversations and the deal flow that we're seeing.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thank you.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thanks, Luke. Our next question comes from Cesar Medina from Morgan Stanley. Hi, Medina.

Cesar Medina
Cesar Medina
Analyst at Morgan Stanley

Hey, thanks for taking my questions and congrats on the results again. Boring question, but can you confirm what you mentioned that 40% of your revenues in the first half are linked to this new pricing mechanism? If that is correct, how much is this on the pipeline?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Yeah. 40% of the new sales, Medina. Thank you for your question because we measure bookings and also revenue. I mentioned in our last call, 40% now of everything we sold in the first half of the year are now based on new revenue. We have a lot of long-term contracts that we are converting more incrementally to this new model. I estimate that it will take around 18 months to have everything repriced in the new model as we renew and we compound the new sales with the renew of the current engagement.

Cesar Medina
Cesar Medina
Analyst at Morgan Stanley

What you are saying is.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

That's why we are saying the increase in our gross margin will be sequentially, incrementally, sequentially along the next quarters because we have the new sales pushing for the new margin level, but also an effort on converting, let's say, legacy engagements into the new commercial models and margin potential.

Cesar Medina
Cesar Medina
Analyst at Morgan Stanley

To make sure, do you expect within the next 18 months you will be 100% under the new revenue scheme, no less?

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Yeah. But considering the new is a combination. There's part of what we do that is time material is very appropriate. Even FDEs, the now famous Forward Deployed Engineers are time material by design. It's not 100% in a single model. We see a combination of five different, even in a single engagement, normally we have two or three components. We will be living in this new territory in terms of contribution margin in a timeframe of 18 months if we can, under the current market conditions and if we continue to succeed on our journey of introducing these new models.

Cesar Medina
Cesar Medina
Analyst at Morgan Stanley

Okay. Thank you so much, and congrats again on the results.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Thanks, Medina.

Eduardo Galvão
Eduardo Galvão
Director of Investor Relations at CI&T

Thanks, Medina. That concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar to proceed with his closing remarks.

Cesar Gon
Cesar Gon
Founder and CEO at CI&T

Sure. Thanks, Bruno, Stanley, Eduardo. Thank you all for joining us again today. I need to thank all CI&Ters around the world. Thank you for your hard work and dedication, and I am glad that you are seeing our transformation happening. Of course, a special thank you for our clients and to trust CI&T as the AI deployment and innovation partner. That is it. We will see you soon. Stay well. Bye-bye.

Executives
    • Eduardo Galvão
      Eduardo Galvão
      Director of Investor Relations
    • Cesar Gon
      Cesar Gon
      Founder and CEO
    • Bruno Guicardi
      Bruno Guicardi
      Founder and President for North America and Europe
    • Stanley Rodrigues
      Stanley Rodrigues
      CFO
Analysts
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