CI&T, Inc. (Brazil) Q4 FY2024 earnings call

• CI&T celebrated its 30th anniversary, founded in 1995, and was recognized by Forrester as a leader in modern application development services.
• Strategic pillars: AI via CI&T FLOW, top-tier talent, and client-centric approach.
• Fourth quarter and full year financial highlights, including record net revenue and strong profitability metrics.
• Client success stories showcasing AI applications, global delivery model, and talent strategy with 13% y-o-y headcount growth.
• Focus on organic growth, large accounts, and CI&T FLOW platform driving revenue growth through AI-powered modernization.

For the fourth quarter of 2024, CI&T reported a record net revenue of R$656.5 million, a 25.6% increase compared to Q4 2023. At constant currency, net revenue grew 14.7% year-over-year. The full year of 2024 saw net revenue of R$2,368 million, a 6.0% increase compared to 2023, with constant currency net revenue growth of 1.3%. North America net revenue grew 7.5% in 2024, driven by large client expansions. Latin America revenue increased 6.2% year-over-year, supported by financial services clients. Retail and industrial goods sectors had a 70% year-over-year revenue increase. The top 10 clients saw a 40% revenue increase in Q4 2024. Adjusted EBITDA in Q4 2024 was R$128 million with a margin of 19.5%, and full year adjusted EBITDA was R$442 million with a margin of 18.7%. Adjusted net profit in Q4 2024 was R$78 million, up 41.3% y-o-y, and full year adjusted net profit was R$241.8 million, up 8.9% y-o-y. Cash from operating activities in 2024 was R$467 million, up 12.7% from 2023.

• First quarter 2025 net revenue expected at least $110.5 million, 12.6% constant currency year-over-year growth.
• Full year 2025 organic net revenue growth at constant currency in the range of 9%-15% year-over-year, midpoint 12%, and adjusted EBITDA margin 18%-20%.

• Geopolitical macro uncertainty and tariffs, but stable demand from large clients and stronger pipeline.
• Consideration of M&A to speed up organic growth but focus on organic revenue growth.
• Payroll tax changes in Brazil starting in 2025, but proactive measures in place to minimize impact through productivity gains and cost-saving measures.

Q: Puneet Jain from JPMorgan asked about client spending pause due to geopolitical macro news and differences in outlook across regions.

A: Cesar Gon responded that there's stable demand from large organizations despite macro uncertainty, with a stronger pipeline (~30% higher) than last year.

Q: Vitor Tomita from Goldman Sachs asked about sales expenses and capacity utilization.

A: Cesar Gon mentioned continuing to invest in sales with a strong pipeline, and Bruno Guicardi stated utilization rate is expected to remain strong at 85%-89%.

Q: Thiago Kapulskis from Itau asked about guidance, FX assumptions, and organic growth.

A: Stanley Rodrigues explained FX stabilization considered in guidance, and Cesar Gon mentioned strong growth in North America and Latin America with stable Europe.

Q: Bryan Bergin from TD Cowen asked about 2025 outlook shape and Gen AI impact.

A: Cesar Gon said consistent growth with good visibility but caution on macro volatility, and Bruno Guicardi discussed AI demand split between horizontal and vertical use cases.

Q: Ernesto González from Morgan Stanley asked about North America and Europe weakness.

A: Bruno Guicardi stated Europe affected by geopolitical/economic environment, but North America had regular seasonality with small volatility.

Q: Gustavo Farias from UBS asked about Brazil payroll taxes and AI project profile.

A: Stanley Rodrigues said payroll taxes addressed through productivity gains, and Bruno Guicardi discussed massive backlog in data/application modernization for AI.