CI&T Inc Q2 FY2025 earnings call

• Cesar mentioned that CI&T adapts to clients' needs using expert teams and the CI&T FLOW platform, offering Tech Integrated Business Solutions. - Bruno discussed AI initiatives, highlighting CI&T FLOW's central role in enterprise-wide AI adoption and the three core offerings: hyper-efficient teams, AI-led modernization, and AI-first transformation. - Stanley presented financial performance, including revenue growth, organic growth at constant currency, regional performance (LatAm +26%, NA +7%), adjusted EBITDA of $21.5 million with a 18.4% margin, and cash generated from operating activities for the first half of 2025 amounting to $33.7 million.

Revenue reached $117.2 million, representing an organic growth of 12.3% at constant currency compared to the same period last year. Revenue from LatAm increased by 26% year-over-year, North America grew by 7%. Revenue from the top 10 clients grew by 12%. The adjusted EBITDA margin was 18.4%, and the adjusted profit margin stood at 10.4%.

• Third quarter 2025 net revenue expected at least $124.4 million, with a sequential step-up and at least 10.5% growth at constant currency year-over-year. - Full year 2025 organic growth at constant currency is expected to be between 10.5% and 15%, and adjusted EBITDA margin guidance remains in the range of 18% to 20%.

Forward-looking statements are subject to known and unknown risks and uncertainties which could cause actual results to differ from those expressed. Market uncertainties and other factors could impact business performance.

Q: Can you talk about like adoption of CI&T FLOW among your clients and internal stakeholders? How much of those projects or revenue include some portion of FLOW-driven services?

A: The adoption of CI&T teams regarding CI&T FLOW is reaching 90% of our team, so approximately 9% of revenue now has some influence of AI and CI&T FLOW.

Q: Are you seeing any differences in AI adoption across different verticals?

A: Financial services are ahead in AI investments due to high ROI. In Brazil, there's a new customer experience trend with chatbots and WhatsApp. Retail and consumer goods need to modernize legacy systems before fully leveraging AI benefits.

Q: Was that in part due to the year being halfway done, you're having more visibility, which allows you to be less conservative or is demand from customers shaping up generally better than expected?

A: The new outlook is supported by consistent first half performance and a strong commercial pipeline, with pipeline 25% higher than the same period last year and a healthy conversion rate.

Q: If you could break it down between the components of new engagements, both new clients and the ramp-up of current clients and also the price, what comes from price component?

A: 90% growth is from expansion within the current portfolio, 10% from recently acquired clients; Latin America growth is driven by fast AI adoption in Brazil.

Q: Can you talk about the EBITDA margin drivers on a year-over-year basis in the second quarter and the path to hitting the guide in fiscal '25?

A: Sequential improvement, seasonality, efficiency gains from AI, disciplined cost management, and strategic hiring preparing for second half demand contribute to EBITDA margin drivers, with confidence in achieving the guide.

Q: How would you say -- is there any difference between your U.S. client base and how that's trending relative to Brazil today?

A: Financial services in Brazil are more urgent with AI, while the U.S. consumer goods sector has different AI adoption dynamics.

Q: We hear from some channel checks that the evolution of AI is probably having a deflationary impact in top line growth trends of this industry going forward. So just wanted to check if you agree with this information and if you could share with us how you think about the evolution of volume and price going forward in the following quarters?

A: Don't see deflation, as CI&T is leveraging AI to replace poor-performing competitors and shift to value-based pricing tied to business outcomes; volume will increase with AI-driven digital solution production.

Q: Have you had any trends where clients thought they could do it themselves and then have circled back to CI&T because it was too complex and they needed help?

A: Some clients are afraid of AI complexity, but CI&T partners with clients to expand their AI capabilities, helping with adoption and reskilling across different archetypes