CINT CI and T Inc

CI&T (NYSE: CINT, “Company”), a global digital specialist and fast-growing technology company, today announces its results for the first quarter of 2024 (1Q24) in accordance with International Financial Reporting Standards (IFRS). For comparison purposes, we refer to the results for the first quarter of 2023 (1Q23) and the fourth quarter of 2023 (4Q23).

First quarter of 2024 (1Q24) operating and financial highlights

• Net Revenue was R$523.5 million compared to R$610.0 million in 1Q23 and R$522.6 million in 4Q23, a sequential growth of 0.2%.
• Net Profit was R$22.4 million compared to R$43.6 million in 1Q23.
• Adjusted EBITDA was R$84.3 million compared to R$116.5 million in 1Q23. The Adjusted EBITDA margin was 16.1%.
• Adjusted Net Profit was R$41.7 million compared to R$62.4 million in 1Q23. The Adjusted Net Profit margin was 8.0%.
• CI&T ended 1Q24 with 6,083 CI&Ters compared to 6,111 at the end of 4Q23.

Cesar Gon, founder and CEO of CI&T, commented, "Our first quarter of 2024 has been truly transformative as we continue to make tremendous strides in our journey to becoming an AI-first company. By integrating AI into our operations and fostering a culture of efficiency and innovation, we capitalize on the amazing opportunities for value creation in this next chapter of the digital revolution. As early results, we are pleased to announce a 70 basis point revenue growth above our guidance in 1Q24 and to guide at least a 350 basis points sequential increase in 2Q24, resuming our growth trajectory. We anticipate this momentum will accelerate in the following quarters, leading to a period of resurgent growth in 2024 and beyond."

Comments on the 1Q24 financial performance

The net revenue was R$523.5 million in 1Q24, a decline of 14.2% compared to 1Q23, or a reduction of 12.1% at constant currency. Compared to 4Q23, net revenue grew 0.2%. The geographic distribution of net revenue for 1Q24 was 41.6% from North America, 42.5% from Latam, 11.7% from Europe, and 4.2% from Asia Pacific.

The cost of services provided in 1Q24 was R$355.9 million, 12.7% lower than in 1Q23, and the gross profit was R$167.6 million. The adjusted gross profit in 1Q24 was R$178.4 million, with an adjusted gross profit margin of 34.1%, 1.0 percentage point lower than in 1Q23.

In 1Q24, selling, general and administrative (SG&A), and other operating expenses were R$114.4 million, a reduction of 2.1% compared to 1Q23. ​​This reduction can be primarily attributed to the non-recurring M&A expenses incurred in 2023, partially compensated by business restructuring expenses and increased sales efforts to resume growth in 1Q24.

In 1Q24, the adjusted EBITDA was R$84.3 million, a reduction of 27.7% compared to 1Q23. Adjusted EBITDA margin was 16.1% in the quarter, a reduction of 3.0 percentage points compared to 1Q23, mainly due to the decline in the gross profit margin and higher SG&A expenses as a percentage of net revenue.

In 1Q24, net financial costs were R$12.4 million, 38.1% lower than in 1Q23, mainly driven by lower net foreign exchange volatility in the comparable period, and lower net debt position and interest rates.

Income tax expense was R$16.8 million in 1Q24, 17.9% lower than in 1Q23. The income tax paid (cash effect) was R$3.3 million, equivalent to a cash tax rate of 8.4%.

The net profit was R$22.4 million in 1Q24, compared to a net profit of R$43.6 million in 1Q23. Adjusted net profit was R$41.7 million, a decrease of 33.1% compared to 1Q23. The adjusted net profit margin decreased from 10.2% in 1Q23 to 8.0% in 1Q24, mainly due to lower Adjusted EBITDA, partially compensated by lower net financial costs and tax expenses, as explained above.

As of 1Q24, we are adding back stock-based compensation expenses to calculate Adjusted Net Profit, a non-IFRS financial measure, to align comparability with our main peers. For more details, please refer to the Non-IFRS Financial Measures and Reconciliation tables below.

Cash generated from operating activities was R$130.3 million in 1Q24, 11.8% higher than in 1Q23, due to an improvement in working capital, specifically in trade receivables.

Business Outlook

We expect our net revenue in the second quarter of 2024 to be at least R$542 million on a reported basis, equivalent to a 3.5% growth compared to 1Q24. It assumes an average FX rate of 5.04 BRL/USD in 1Q24.

For the full year of 2024, we expect our net revenue growth at constant currency to be in the range of -2.5% to +2.5% year-over-year. In addition, we estimate our Adjusted EBITDA margin to be in the range of 17% to 19%.

These expectations are forward-looking statements, and actual results may differ materially. See "Cautionary Statement on Forward-Looking Statements" below.

Conference Call Information

Cesar Gon, Bruno Guicardi, Stanley Rodrigues and Eduardo Galvão will host a video conference call to discuss the 1Q24 financial and operating results on May 22, at 8:00 a.m. Eastern Time / 09:00 a.m. BRT. The earnings call can be accessed on the Company’s Investor Relations website at https://investors.ciandt.com or at the following link: https://www.youtube.com/watch?v=FA14fVjgLuY.

About CI&T

CI&T (NYSE: CINT) is a global hyper digital specialist, a partner in AI-powered digital transformation and efficiency for 100+ large enterprises and fast growth clients. As digital natives, CI&T brings a 29-year track record of accelerating business impact through complete and scalable digital solutions. With a global presence in nine countries with a nearshore delivery model, CI&T provides strategy, data science, design, and engineering, unlocking top-line growth, improving customer experience and driving operational efficiency. Recognized by Forrester as a Leader in Modern Application Development Services, CI&T is the Employer of Choice for more than 6,000+ professionals.

Basis of accounting and functional currency

CI&T maintains its books and records in Brazilian reais, which is the presentation currency of its unaudited condensed consolidated interim financial statements, and the functional currency of our operations in Brazil. CI&T prepares its unaudited condensed consolidated interim financial statements in accordance with IFRS, as issued by the IASB, and International Financial Reporting Standard No 34—Interim Financial Reporting (“IAS 34”).

Non-IFRS Financial Measures

We regularly monitor certain financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. These non-IFRS financial measures include Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit, Adjusted Net Profit Margin, Net Revenue at Constant Currency, and Net Revenue Growth at Constant Currency. They should be considered in addition to results prepared in accordance with IFRS, but not as substitutes for IFRS results. In addition, our calculation of these non-IFRS financial measures may differ from those used by other companies, and therefore, comparability may be limited. These non-IFRS financial measures are provided as additional information to enhance investors’ understanding of our operations’ historical and current financial performance.

CI&T is not providing a quantitative reconciliation of its forward-looking non-IFRS Net Revenue Growth at Constant Currency and Adjusted EBITDA to the most directly comparable IFRS measure because it cannot reasonably predict the outcome of certain significant items without unreasonable efforts. These items include, but are not limited to, stock-based compensation expenses, acquisition-related expenses, the tax effect of non-IFRS measures, foreign currency exchange gains/losses, and other items. These items are uncertain, depend on various factors, and could have a material impact on our IFRS-reported results for the guidance period.

We calculate Net Revenue at Constant Currency and Net Revenue Growth at Constant Currency by translating Net Revenue from entities reporting in foreign currencies into Brazilian reais using the comparable foreign currency exchange rates from the prior period to show changes in our revenue without giving effect to period-to-period currency fluctuations.

In calculating Adjusted Gross Profit, we exclude cost components unrelated to the direct management of our services. For the periods presented, the adjustments applied were: (i) depreciation and amortization related to the costs of services provided and (ii) stock-based compensation expenses.

In calculating Adjusted EBITDA, we exclude components unrelated to the direct management of our services. We calculate Adjusted EBITDA for the periods presented as Net Profit, plus net finance costs, income tax expense, depreciation and amortization, plus: (i) stock-based compensation expenses; (ii) government grants related to tax reimbursement in our Chinese subsidiary; (iii) acquisition-related expenses, including the present value and fair value adjustment to accounts payable for business acquired, consulting expenses, and retention packages; and (iv) business restructuring expenses, associated with employees' separation from acquired companies.

In calculating Adjusted Net Profit, we exclude components unrelated to the direct management of our services. For the periods presented, the adjustments have been made for (i) acquisition-related expenses (including amortization of intangible assets from acquired companies, present value and fair value adjustments to accounts payable for business acquired, consulting expenses, and retention packages); (ii) business restructuring expenses, associated with employees' separation from acquired companies; (iii) stock-based compensation expenses; and (iv) the tax effects of non-IFRS adjustments.

Cautionary Statement on Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact that may be deemed forward-looking statements include, but are not limited to: the statements under Business Outlook, including expectations relating to revenues and other financial or business metrics; statements regarding relationships with clients; and any other statements of expectations or beliefs. The words “believe,” “will,” “may,” “may have,” “would,” “estimate,” “continues,” “anticipates,” “intends,” “plans,” “expects,” “budget,” "scheduled,” “forecasts” and similar words are intended to identify estimates and forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. You should read this press release with the understanding that our actual future results may be materially different from our expectations. These statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such statements in this press release. Such risk factors include, but are not limited to, those relating to: the ongoing war in Ukraine and the economic sanctions imposed by Western economies on Russia, as well as the conflict between Israel and Hamas, and their impact on our business and industry; the impact of competition on our business; uncertainty regarding the demand for and market utilization of our services; our ability to maintain or acquire new client relationships; general business and economic conditions; our ability to successfully integrate the recent-acquired business; the impact of pandemics, epidemics and disease outbreak; and our ability to successfully implement our growth strategy and strategic plans. Additional information about these and other risks and uncertainties is contained in the Risk Factors section of CI&T's annual report on Form 20-F. Additional information will be made available in our Annual Reports on Form 20-F, and other filings and reports that we may file from time to time with the SEC. Except as required by law, we assume no obligation to and do not intend to update these forward-looking statements or to update the reasons why actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Unaudited condensed consolidated statement of profit or loss

(In thousands of Brazilian Reais)

 

 

Quarter ended March 31,

 

2024

 

2023

 

 

 

Restated

Net revenue

523,509

 

 

609,991

 

Costs of services provided

(355,948

)

 

(407,861

)

Gross profit

167,561

 

 

202,130

 

 

 

 

 

Selling expenses

(46,250

)

 

(45,554

)

General and administrative expenses

(68,112

)

 

(71,222

)

Impairment loss on trade receivables and contract assets

(1,787

)

 

(1,605

)

Other income net

160

 

 

324

 

Operating expenses net

(115,989

)

 

(118,057

)

 

 

 

 

Operating profit before net finance costs and income tax expenses

51,572

 

 

84,073

 

 

 

 

 

Finance income

10,703

 

 

20,664

 

Finance cost

(23,056

)

 

(40,632

)

Net finance costs

(12,353

)

 

(19,968

)

 

 

 

 

Profit before income tax

39,219

 

 

64,105

 

 

 

 

 

Current

(8,437

)

 

(13,401

)

Deferred

(8,373

)

 

(7,070

)

Total income tax expense

(16,810

)

 

(20,471

)

 

 

 

 

Net profit for the year

22,409

 

 

43,634

 

 

 

 

 

Earnings per share

 

 

 

Earnings per share – basic (in R$)

0.16

 

 

0.33

 

Earnings per share – diluted (in R$)

0.16

 

 

0.32

 

 

 

 

 

Weighted average number of basic shares

137,385,836

 

 

133,834,456

 

Weighted average number of diluted shares

140,078,180

 

 

137,279,821

 

Unaudited condensed consolidated statement of financial position

(In thousands of Brazilian Reais)

 

Assets

March 31,

2024

 

December 31,

2023

 

Liabilities and equity

March 31,

2024

 

December 31,

2023

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

360,296

 

211,638

 

Suppliers and other payables

20,196

 

 

21,690

 

Financial Investments

-

 

3,164

 

Loans and borrowings

133,680

 

 

112,719

 

Trade receivables

312,016

 

471,951

 

Lease liabilities

15,708

 

 

17,862

 

Contract assets

250,998

 

147,620

 

Salaries and welfare charges

210,748

 

 

196,396

 

Recoverable taxes

38,400

 

23,588

 

Accounts payable for business acquired

110,180

 

 

13,365

 

Current Tax Assets

4,255

 

17,483

 

Current Tax liabilities

1,744

 

 

2,602

 

Derivatives

7,135

 

9,620

 

Other taxes payable

14,294

 

 

15,275

 

Other assets

28,991

 

27,072

 

Contract liability

29,632

 

 

48,079

 

Total current assets

1,002,091

 

912,136

 

Other liabilities

15,844

 

 

27,290

 

 

 

 

 

 

Total current liabilities

552,026

 

 

455,278

 

Recoverable taxes

742

 

959

 

 

 

 

 

Deferred tax assets

19,407

 

18,284

 

 

 

 

 

Judicial deposits

7,471

 

7,280

 

Loans and borrowings

660,269

 

 

614,744

 

Restricted cash - Escrow account and indemnity asset

29,779

 

29,061

 

Deferred tax liabilities

77,659

 

 

68,465

 

Other assets

1,168

 

1,027

 

Lease liabilities

25,395

 

 

27,037

 

Property, plant and equipment

34,926

 

38,584

 

Provisions

9,696

 

 

9,620

 

Intangible assets and goodwill

1,691,283

 

1,669,865

 

Accounts payable for business acquired

30,802

 

 

122,689

 

Right-of-use assets

35,936

 

39,695

 

Other liabilities

14,067

 

 

7,807

 

Total non-current assets

1,820,712

 

1,804,755

 

Total non-current liabilities

817,888

 

 

850,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Share capital

37

 

 

37

 

 

 

 

 

 

Share premium

983,194

 

 

980,893

 

 

 

 

 

 

Treasury share reserve

(4,143

)

 

-

 

 

 

 

 

 

Capital reserves

176,774

 

 

174,153

 

 

 

 

 

 

Retained earnings reserves

376,649

 

 

354,240

 

 

 

 

 

 

Other comprehensive loss

(79,622

)

 

(98,072

)

 

 

 

 

 

Total equity

1,452,889

 

 

1,411,251

 

 

 

 

 

 

 

 

 

 

Total assets

2,822,803

 

2,716,891

 

Total equity and liabilities

2,822,803

2,716,891

 

Unaudited condensed consolidated statement of cash flows

(In thousands of Brazilian Reais)

 

 

March 31,

2024

 

March 31,

2023

 

 

 

Restated

Cash flows from operating activities

 

 

 

Net profit for the period

22,409

 

 

43,634

 

Adjustments for:

 

 

 

Depreciation and amortization

21,876

 

 

25,053

 

Loss (income) on sale and write-off of fixed assets

326

 

 

(95

)

Interest, monetary variation and exchange rate changes

18,410

 

 

24,584

 

Unrealized gain on financial instruments

(243

)

 

(4,544

)

Income tax expenses

16,810

 

 

20,471

 

Impairment losses on trade receivables and contract assets

1,787

 

 

1,605

 

Provision (reversal of) for tax and labor risks

76

 

 

(273

)

Share-based plan

3,772

 

 

5,393

 

Changes in present value of accounts payable for business acquired

1,063

 

 

1,589

 

Others

10

 

 

41

 

Changes in operating assets and liabilities

 

 

 

Trade receivables

166,683

 

 

49,460

 

Contract assets

(101,257

)

 

(18,900

)

Recoverable taxes

(7,119

)

 

245

 

Suppliers

(319

)

 

(11,672

)

Salaries and welfare charges

12,177

 

 

(7,628

)

Contract liabilities

(19,587

)

 

(12,657

)

Other receivables and payables, net

(6,603

)

 

256

 

Cash generated from operating activities

130,271

 

 

116,562

 

Income tax paid

(3,303

)

 

(6,808

)

Interest paid on loans and borrowings

(7,019

)

 

(15,534

)

Interest paid on lease

(820

)

 

(1,148

)

Net cash from operating activities

119,129

 

 

93,072

 

Cash flows from investment activities

 

 

 

Acquisition of property, plant and equipment and intangible assets

(11,175

)

 

(4,247

)

Redemption of financial investments

3,164

 

 

1,474

 

Net cash used in investment activities

(8,011

)

 

(2,773

)

Cash flows from financing activities

 

 

 

Exercised share-based compensation

921

 

 

478

 

Payment of lease liabilities

(5,707

)

 

(5,919

)

Proceeds from loans and borrowings

49,801

 

 

-

 

Proceeds from settlement of derivatives

2,728

 

 

2,839

 

Payment of loans and borrowings

(8,924

)

 

(19,432

)

Payment of installment related to accounts payable of business acquired

-

 

 

(1,235

)

Repurchase of treasury shares

(4,143

)

 

-

 

Net cash from (used in) financing activities

34,676

 

 

(23,269

)

Net increase in cash and cash equivalents

145,794

 

 

67,030

 

Cash and cash equivalents as of January 1st

211,638

 

 

185,727

 

Exchange variation effect on cash and cash equivalents

2,864

 

 

(1,207

)

Cash and cash equivalents

360,296

 

 

251,550

 

Net Revenue Distribution

 

Net Revenue by industry

(in BRL thousand)

1Q24

1Q23

Var.

1Q24 x 1Q23

Financial Services

147,720

174,783

-15.5%

Consumer Goods

110,002

116,156

-5.3%

Technology and Telecommunications

60,628

125,060

-51.5%

Retail and Industrial Goods

91,058

75,814

20.1%

Life Sciences

54,372

63,281

-14.1%

Others

59,729

54,897

8.8%

Total

523,509

609,991

-14.2%

Net Revenue by geography

(in BRL thousand)

1Q24

1Q23

Var.

1Q24 x 1Q23

North America

217,945

263,386

-17.3%

Latin America

222,682

240,616

-7.5%

Europe

61,127

73,726

-17.1%

Asia Pacific

21,755

32,263

-32.6%

Total

523,509

609,991

-14.2%

Top Clients

(in BRL thousand)

1Q24

1Q23

Var.

1Q24 x 1Q23

Top Client (1)

33,839

67,425

-49.8%

Top 10 Clients

215,116

270,461

-20.5%

(1)

The top client considered in one period may differ from that disclosed in another period.

Reconciliation of various income statement amounts from IFRS to non-IFRS measures

 

Net Revenue

(in BRL thousand)

1Q24

1Q23

Var.

1Q24 x 1Q23

Net Revenue

523,509

609,991

-14.2%

Net Revenue at Constant Currency

536,299

609,991

-12.1%

Adjusted Gross Profit

(in BRL thousand)

1Q24

1Q23

Var.

1Q24 x 1Q23

Net Revenue

523,509

609,991

-14.2%

Cost of Services Provided

(355,948)

(407,861)

-12.7%

Gross Profit

167,561

202,130

-17.1%

Adjustments

 

 

 

Depreciation and amortization (cost of services provided)

8,032

9,410

-14.6%

Stock-based compensation

2,757

2,376

16.0%

Adjusted Gross Profit

178,351

213,916

-16.6%

Adjusted Gross Profit Margin

34.1%

35.1%

-1p.p

Adjusted EBITDA

(in BRL thousand)

1Q24

 

1Q23

(Restated)

Var.

1Q24 x 1Q23

Net profit for the year

22,409

43,634

-48.6%

Adjustments

 

 

 

Net financial cost

12,353

19,968

-38.1%

Income tax expense

16,810

20,471

-17.9%

Depreciation and amortization

21,876

25,053

-12.7%

Stock-based compensation

3,772

5,393

-30.1%

Government grants

(71)

(140)

-48.9%

Acquisition-related expenses (1)

1,350

2,124

-36.4%

Business restructuring (2)

5,758

-

0.0%

Adjusted EBITDA

84,258

116,504

-27.7%

Adjusted EBITDA Margin

16.1%

19.1%

-3p.p

(1)

Include present value and fair value adjustments on accounts payable for business acquired, consulting expenses, and retention packages.

(2) Associated with employees' separation from acquired companies.

Adjusted Net Profit

(in BRL thousand)

1Q24

1Q23

(Restated)

Var.

1Q24 x 1Q23

Net profit for the year

22,409

43,634

-48.6%

Adjustments

 

 

 

Acquisition-related expenses (1)

12,144

14,836

-18.1%

Business restructuring (2)

5,758

-

0.0%

Stock-based compensation (3)

3,772

5,393

-30.1%

Tax effects on non-IFRS adjustments (4)

(2,335)

(1,446)

61.5%

Adjusted Net Profit

41,749

62,418

-33.1%

Adjusted Net Profit Margin

8.0%

10.2%

-2.3p.p

(1)

Includes amortization of intangible assets from acquired companies totaled (R$10,794) thousand in 1Q24 and (R$12,712) thousand in 1Q23, present value and fair value adjustment on accounts payable for business acquired, consulting expenses and retention packages.

(2)

Associated with employees' separation from acquired companies.

(3)

As of 1Q24, we are adding back stock-based compensation expenses to the Adjusted Net Profit calculation. Thus, comparison with previously reported numbers will differ.

(4)

As of 4Q23, we are contemplating the tax effects on non-IFRS adjustments as part of the Adjusted Net Profit calculation. Thus, comparison with previously reported numbers will differ.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240521341471/en/

Investor Relations Contact: Eduardo Galvão investors@ciandt.com

Media Relations Contact: Zella Panossian ciandt@illumepr.com