CI&T, Inc. (Brazil) Q1 FY2026 earnings call

• Strategic Positioning & Growth Vectors

  • CI&T has positioned itself as a tech-integrated business solutions partner, pursuing two core AI-driven growth vectors: AI deployment (revenue expansion via IP-based solutions and AI adoption engagements) and AI monetization (margin expansion via new pricing models that capture a greater share of AI-generated productivity gains)
  • The firm's proprietary agentic SDLC framework fundamentally shifts software delivery by prioritizing decision-making over task completion, with reported productivity gains of 2x to 20x for enterprise clients across healthcare, financial services, and education, through augmented, coordinated, and eventually autonomous software delivery stages
  • 60th consecutive quarter of double-digit organic growth, with broad-based demand across all core geographies and industry verticals, as clients move beyond AI experimentation to full enterprise AI transformation

• Operational & Talent Updates

  • Ended Q1 2026 with over 8,000 global professionals, including 6,600 AI builders; 13.3% year-over-year headcount growth, which remains below 15.5% constant currency revenue growth, driving rising revenue per professional
  • Voluntary attrition is 10.3%, a recent historical low, with a 4.1 Glassdoor score (highest among peer group) and 19 consecutive years of Great Place to Work recognition; 52.2% of the global workforce comes from underrepresented groups, supporting responsible AI navigation
  • Launched the 2025 Global ESG Report, aligned with the UN Global Compact, with 100% renewable energy across Brazilian operations, a golden seal from the Brazil GHG protocol, and social impact projects reaching over 100,000 people

• Partnerships & Recognition

  • Recognized as a 2026 Google Cloud Partner of the Year for Databases in Latin America, and named one of the IT Forum 100+ Most Innovative Companies
  • Maintains deep strategic partnerships with major cloud and technology providers including Adobe, Databricks, AWS, and Microsoft, with co-branded AI events and summits across global markets

CI&T does not break out performance by product segment, but reports geographic and client cohort performance: Latin America revenue grew 33% year-over-year, North America grew 16% year-over-year, new markets grew 11% year-over-year. The top 10 client accounts grew 18.9% year-over-year, and the $5M-$10M client cohort expanded from 15 to 18 clients in the quarter. Nearly all industry verticals grew at double digits, with the consumer goods segment remaining stable. In Q1 2026, 20% of new sales were based on new value-based pricing models. Overall, Q1 2026 net revenue was $136.6 million, 23.2% year-over-year organic growth (15.5% in constant currency). Adjusted EBITDA was $20.8 million, a 6.3% year-over-year increase, with a 15.2% margin (17.4% on an FX-neutral basis). Adjusted profit was $10.2 million, a 6.2% year-over-year increase, with an adjusted net margin of 7.5%. Adjusted diluted EPS was $0.08, an 11.8% year-over-year increase. Operating cash flow was $13.5 million, equal to 65% of adjusted EBITDA.

• Q2 2026 revenue guidance is set at a minimum of $140 million, representing 19.5% year-over-year growth (13.9% in constant currency)
• Full-year 2026 revenue guidance was increased to a range of $556 million to $575 million, implying organic growth of 13.5% to 17.5% (15.5% midpoint). Of the 150 basis point upward revision to guidance, 100 basis points come from pure organic momentum and improved pipeline conversion, while 50 basis points come from higher-than-previously-expected positive FX impact
• Full-year 2026 adjusted EBITDA margin guidance is maintained at 17% to 19%, with sequential margin expansion expected throughout the year, driven by accelerating adoption of value-based pricing models that allow CI&T to capture a greater share of AI-generated business value

• Unfavorable foreign exchange fluctuations (specifically Brazilian Real appreciation against the U.S. dollar) created a 200+ basis point headwind to Q1 2026 margins, though this impact is expected to attenuate over the coming quarters, and is already fully incorporated into the full-year 17% to 19% EBITDA margin guidance range
• Increased Brazilian payroll taxes created an additional headwind to Q1 2026 profitability
• Geopolitical uncertainty (including the Middle East conflict) was asked about, but management noted no material impact on client decision-making or demand to date, given CI&T's client base of large, stable industry-leading enterprises

Q: Gustavo Farias (UBS) asked for an update on the pipeline contract mix (time & materials vs outcome/value-based models), how much of Q1's margin miss was expected, and whether full-year margins would come in at the lower end of the guided range. / A: Management reported 20% of Q1 new sales are now value-based models, a mix of output, consumption-based, and outcome-based contracts, with the share growing gradually as long-term existing contracts renew. Management maintained the full-year 17% to 19% EBITDA margin guidance; Q1's headwinds from FX and Brazilian payroll taxes were already incorporated into the range, with sequential seasonal margin expansion expected in the second half of 2026. 150 basis points of the full-year guidance upgrade came from 100 basis points of organic momentum and 50 basis points of favorable FX, and margins will expand as AI monetization scales.

Q: Puneet Jane (JP Morgan) asked how AI costs are integrated into time & materials contracts, and how their margins compare to traditional people-based models. / A: Management noted that even existing time & materials contracts can be repriced to reflect AI capabilities, as clients are open to adjusting pricing for the much higher impact delivered. The much larger 3x to 7x productivity gains delivered by agentic SDLC create room for higher margins on all contract types, with the clearest gains coming from a shift to value-based models. Management also reported no visible impact from Middle East geopolitical uncertainty on client spending, given its base of large, stable enterprise clients.

Q: Stephen Ju (Wetbrush) asked for a long-term target for value-based pricing penetration, and whether AI-driven productivity will lead to headcount reduction. / A: Management expects the shift to full value-based pricing penetration across new sales will take approximately 18 months, as the firm's existing portfolio of long-term contracts gradually renews. The firm's strategy is to capture share in the growing AI builder market; management plans to continue growing headcount even as revenue per headcount increases, and does not anticipate near or long-term headcount reduction.

Q: Luke Morrison (Canaccord) asked what drove Q1 gross margin compression, and what the margin profile of new value-based contracts looks like. / A: Management confirmed nearly all Q1 gross margin compression came from FX (over 200 basis points) and typical Q1 seasonal salary adjustments, with no incremental unplanned AI investment drag. New value-based contracts deliver 3 to 15 percentage points higher contribution margin than traditional models, and gross margin improvement will be visible starting next quarter. Gains from higher margins will be partially reinvested in go-to-market expansion to sustain strong organic growth.

Q: Sasa Medina (Morgan Stanley) asked what share of the current pipeline uses value-based pricing, and how margins on these contracts compare to traditional software. / A: Management noted that 30% of the current pipeline (by value) uses new value-based pricing models, with 100% of pipeline growth tied to AI deployment. Value-based contracts deliver significantly higher gross margins, moving CI&T toward a more scalable, profitable business model. Higher margins will be partially reinvested in go-to-market to accelerate expansion, so margin growth will be gradual. The full-year guidance increase reflects stronger underlying demand, not just a pull-forward of growth into the first half.