• Net Revenue: BRL622.2 million, a 17.6% increase year-over-year.
• Constant Currency Net Revenue Growth: 9% year-over-year.
• Top 10 Clients Revenue Growth: 25.3% year-over-year.
• Adjusted EBITDA Margin: 19.5% for the third quarter of 2024.
• Cash Generation from Operating Activities: BRL295 million for the first nine months of 2024.
• Headcount Growth: 6,700 employees, reflecting a 10.5% year-over-year increase.
• Adjusted Net Profit: BRL56.5 million, a 32.9% increase year-over-year.
• Adjusted Net Profit Margin: Increased from 8% to 9.1% year-over-year.
• Cash Conversion to Adjusted EBITDA: 94% for the first nine months of 2024.

• Warning! GuruFocus has detected 9 Warning Signs with CIXXF.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CI&T Inc (NYSE:CINT) achieved a record net revenue of BRL622.2 million in Q3 2024, marking a 17.6% increase compared to the same period in 2023.
• The company reported strong growth among its top 10 clients, with net revenue up 25.3% year over year.
• CI&T Inc (NYSE:CINT) concluded the quarter with a solid adjusted EBITDA margin of 19.5%, reflecting a 24.2% increase compared to the previous year.
• The company onboarded 520 new employees globally, enhancing its talent acquisition process with AI to support high-growth ambitions.
• CI&T Inc (NYSE:CINT) has successfully integrated its CI&T/FLOW platform into over 75% of its teams, with more than 100 clients embracing the platform since its launch.

Negative Points

• The effective tax rate increased to 38.7% for the first nine months of 2024, compared to 36.5% in the same period of 2023, due to business restructuring and loss-making in emerging regions.
• Despite strong revenue growth, the company faces ongoing macroeconomic uncertainties, particularly in the US market.
• The company is still in the early stages of realizing financial impacts from its CI&T/FLOW platform, with potential margin improvements yet to be fully realized.
• CI&T Inc (NYSE:CINT) is competing in a highly fragmented market, primarily against traditional IT services and consulting companies.
• The company anticipates that significant demand for AI-driven business use cases may not materialize until 2026, as infrastructure modernization is still in progress.

Q & A Highlights

Q: Can you discuss the employee growth and utilization rates given the high demand? A: Bruno Guicardi, President - North America and Europe: The headcount is growing in line with revenue growth, and the market is stable, making it easier to manage compared to the pandemic years. Utilization rates remain healthy, between 85% and 90%, aided by AI-based learning tools for faster onboarding.

Q: What factors contributed to the margin improvement and guidance raise? A: Stanley Rodrigues, Chief Financial Officer: The margin improvement is due to productivity gains from cost management and operating leverage as growth resumes. We are also investing in hiring, training, and AI initiatives. The EBITDA guidance was raised to 18%-19% due to these factors.

Q: How is AI, specifically CI&T/FLOW, driving results and what are the expectations for IT budgets in Brazil? A: Cesar Gon, Chief Executive Officer: CI&T/FLOW has enhanced our offerings, allowing teams to be significantly more productive, which resonates well with clients. In Brazil, we see stability and visibility in tech and digital budgets, with good signs for 2025.

Q: Can you elaborate on the sustainability of top client performance and the impact of CI&T/FLOW on profitability? A: Cesar Gon, Chief Executive Officer: We see room to continue growing with top clients by replacing underperforming vendors. CI&T/FLOW is expected to improve margins by reducing non-quality costs, though it's early to quantify the impact.

Q: What are the key drivers of CI&T's outperformance compared to peers? A: Cesar Gon, Chief Executive Officer: Our outperformance is attributed to the rapid adoption of CI&T/FLOW and AI, enhancing our offerings, and an improved sales structure, which allows us to address market opportunities more aggressively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.