CI&T Inc. (CINT) Earnings Call Transcript
September 3, 2025
Earnings Call Speaker Segments
[ Audio Gap] the Founder and CEO of CI&T. So it's going to be fireside chat, have some Q&A for you. But before we get into that, for those less familiar with the history of CI&T, would you mind introducing yourself and CI&T types of services you provide and types of clients you work with?
Sure. So thank you for having me, and good morning, everyone. So CI&T is a global digital specialist founded 30 years ago in Brazil. I'm Co-Founder and CEO for 3 decades now. We have been growing consistently through all these 3 decades. And now we have a global business, largest market is the U.S.A., followed by Brazil. Brazil and the U.S. represent roughly 90% of our revenue, and then we have emerging new markets in Europe and APAC represent 10% of our business. We are specialized on end-to-end digital solutions from digital strategy, customer-centric design and the full stack of software engineering. Now of course, everything boosted by AI. AI is a huge tailwind for our business because companies need to embed AI in everything they do. We are basically specializing the cohort of very large companies. So typical clients of CI&T are large consumer goods companies like Coca-Cola, ABI, PepsiCo, large retail companies in the U.S. and Brazil, large banks and other insurance companies and different players in the financial service industry. Basically vertically, main vertical is financial services, followed by consumer goods and retail and industrial goods.
So you mentioned AI, so let's just start there. And just high level, why do you think tech services companies are necessarily beneficiaries of the GenAI opportunity compared to, say, software AI platform pure plays? What do services providers bring to this that others cannot?
Sure. I think you can see this whole disruption. You have companies building the foundational infrastructure, foundational models and then specialized companies fostering specific tools. And we -- tech service companies are in the business of translating this new technology possibilities to the specifics of the company, so to the specific platforms, workflows and also to fill the gaps between this platform, its models and tools and the reality of a large organization. So we are in this game of really turn the potential of AI in real concrete results for large companies.
Understood. So I think that goes towards your CI&T FLOW platform. Would you mind talking to us about what that is? And then we'll get into some more around your usage of it, internal stakeholders versus, say, clients and the percent of revenue coming from them. But let's just start out with an overview of FLOW.
Sure, sure. So basically, 3 years ago, when this whole disruption started, we created our own CI&T FLOW platform. It's an end-to-end platform where our teams and our clients are building agents to really streamline the whole process of producing digital solutions. So a lot of use cases and agents around efficiency and also vertical use case focused on leveraging the potential of AI for customer experience, for data, for insights and so on. So basically, what we did, we create a safe, very secure, reliable environment for our clients, more than 150 clients to play AI and to play the hard game of adoption AI. It's a way to really foster a necessary reskilling of the whole workforce and also evolve in creating new layers of value around AI. So CI&T FLOW now is basically heavily used by CI&T and our clients. 90% of our teams and hybrid teams with our clients are using FLOW daily. That means that roughly 85% to 90% of our revenue now is somehow impacted by CI&T FLOW.
Understood. So with more 85% to 90% you're saying of revenue being impacted by FLOW, is there any variability in profit for those clients that are kind of more mature in the usage of FLOW versus those that are not?
Yes. We see a lot of correlation of expanding within our portfolio and the adoption of FLOW. FLOW is a huge differentiator for CI&T now. And I would say, in the last 2 years where we are turning this differentiation in growth for CI&T, as the main focus. Now we are experiencing new pricing models that potentially can also created some improvements in margins. But this -- the whole industry is, I would say, standardized in our time-mature model, especially for digital solutions. And there will be a normal transition time for estimating 2 to 5 years when you're going to see a more different set of pricing models, not only time-mature fixed price, but outcome based and even consumption based, and we are talking about agents. So there's a lag from the possibilities of AI-driven new business and pricing models and the reality of large organizations where they have to adapt the procurement practice to this new reality. So probably we're going to see this incremental change on -- this is almost mandatory because of the new possibilities around AI, but it will take a few years and probably companies that know how to play this new game of AI will have some opportunities to leverage margin scalability.
Understood. Do you see -- you mentioned AI being a lot still for productivity gains. Do you see movement in the future for more revenue generation from AI? Or where is CI&T inflow in that journey?
Yes. I think this first 2 to 3 years, basically, the main opportunity was around efficiency, companies looking for opportunities to streamline the process, to reinvent workflows based on the new AI capabilities. But now we are seeing the beginning of what I think is going to be a huge source of demand, that's the reinvention of customer experience based on AI. I think new layer will be introduced, the way we interact with the machines with not only based on screens and buttons and the current paradigm, but more conversational, more intentional-based customer experience. And this is a huge transformation in the customer journey. So every single company will have to rethink and reinvent the whole layer of customer experience. This is a huge demand for companies like CI&T.
Understood. Now with that, in addition to the profit side, there's the questions around deflationary impact of AI on revenue. What are your thoughts on the evolution of volume versus price and like as AI becomes more prevalent?
Sure. I think if you look in a, I'd say, in a very macro way, if we look at IT services as 80% volume-based and value-added based or value-based, it's easy to see that AI will be deflationary for the volume base, but will be expansionary for the value base, and we are playing the value base. So things -- in the volume base, BPO help desk, system maintenance, maintenance, a lot of very commoditized, repetitive kind of work will be deflationary. But if you look, the opportunities around customer experience, leveraging the benefits of data, AI and even the AI transformation, how you change the culture, the mindset of your workforce to embrace AI, everything is about leveraging value. And I think we are very well positioned in the value based part of our industry.
Understood. And do you see differences in vertical adoption of AI? I know you've had strength in financial services. Talk to us about that.
Yes. It's clear that industry more heavy based on customer-facing industries and industry heavily based on data and tech are early adoptions of the benefits. The time to value of applying AI is much shorter. And when you go for more legacy industries or B2B industry, you're going to see a different curve of adoption. It's unavoidable for every single industry, but the pace will depend on the time to value. And clearly, financial services is probably the most aggressive adopter of AI, but you have a retail, even consumer goods with all the data. The opportunities around data and AI insights is huge. So different opportunities in different time lines depends on how exposed the vertical are to tech and consumers.
Understood. Switching gears to the market spend clients. So overall, how is client behavior? How is Q3 shaping up? You've had strong double-digit growth the past several quarters. So what are you seeing today?
We see a year of budget and demand stability. That is a very good scenario for playing our main game that is replacing low-performance competitors and getting more client share based on the differentiation we could achieve with CI&T FLOW and a new set of offerings we are creating around AI like legacy mobilization, customer experience renovation and so on. So I see a good scenario for growth, basically not because the budgets are increasing, but there is a lot of much more stability around budgets than last year.
Got it. And are you seeing any difference between those U.S. clients and the LatAm clients around spending patterns or project types or AI adoption?
I think Brazil and the U.S. are similar. I don't see a huge difference related to adoption. I see more meaningful difference based on vertical, not on geographies.
Got it. Got it. And same for tariffs. Is there any difference between how the 2 regions are addressing potential tariff impact or just generally macro environment?
So far, we see, of course, a lot of discussions and expected volatility regarding the macro environment, but I think mainly because we are playing this specific AI opportunity. Somehow, we see that things continue to move on because AI is, I think, #1 priority for every single client that we are talking to.
Got it. Got it. And regarding the sequential improvement in Lat Am, what are your views on the IT budgets there and just the industry overall, maybe some folks who are less familiar with that market?
Yes. What we see is stability. Maybe we're going to see a small increment for next year following the natural demand that companies need to continue to modernize their infrastructure, the tech infrastructure, they need to continue to evolve in the data strategy and so on if they want to leverage the huge potential of artificial intelligence. So basically, there is a lot of value also to be captured by efficiency. If you apply AI in the right way, you can open a space for innovation based on savings you can collect in the short term. So it's an equation of applying AI for efficiency and leveraging investment space for more aggressive innovation.
Are you able to give us any examples of the type of work you're doing with companies, call it, specific verticals, just in general in specific verticals or pick a client and don't disclose them?
Yes. Basically, we see two kinds of demand, part of is horizontal demand, basically legacy modernization, speed up moving systems to the cloud, improve the overall security and customer experience layer and so on. This is, I would say, half of our demand. And then there is vertical opportunities where we are getting specific kind of problems related to the market or B2B or B2C opportunities to really speed up customer adoptions, consumer experience that we will leverage through using a new kind of customer service experience based on chatbots or improving the e-commerce experience based on the new possibilities around capturing the intention of the consumers and turn it in a streamlined way to convert in sales. So basically, this is what we call vertical demand. This is more specific to the industry, to the customer. And everyone is still in the run of preparing the whole digital infrastructure for this new game.
Got it. You mentioned winning share from competitors. And are there specific types of competitors that you're running into a lot and winning share from? Are you seeing more digital pure plays? Are these the big system integrators? What type of companies are you winning share from?
I think companies that were not prepared to play the adoption of AI in their workforce. I think we were very pioneer since day 1. We started reskilling 8,000 people to be heavy users of AI, reshaped our workflows, our daily activities, not only our tech teams but our non-tech teams, our designs, our leaders, our project and product managers. And this is paying off in a very strong way because now we see that the kind of methodology we create for this reskilling is now being requested by our clients. Everyone is now seeing the potential of AI but facing the challenge of how you leverage your workforce capabilities and engagements around AI. So we have also a specific offering around adoption. It is based on our own experience on reshaping our own team capabilities.
Are you training your teams by vertical? Or like does FLOW go by vertical? Or how are you thinking about this in terms of like go-to-market and industry focus versus, say, like a horizontal capability?
I would say that the reskilling is very horizontal and our go-to-market is very vertical based. So this is a combination of creating the foundational capabilities and also convert or translate that for specific industries and clients.
Got it. And what's working well with your top client? Obviously, it's growing very nicely. So talk to us about them, types of work you're working on for them generally, if possible.
Sure. Our main client is a huge financial service company in several different businesses, and they are executing a huge AI-based digital transformation across the board, and we are the main partner for that. So we are leveraging our methodology and CI&T FLOW as a way to really translate the new possibilities in speeding customer value in a very concrete way and going from one business unit to another. And this has sequentially improved the way we are supporting them in this huge transformation.
Have you seen other success with other top 10 clients or maybe even smaller kind of getting that initial proof of concept and then moving forward with more land-and-expand opportunities?
Yes. I think we have a very good penetration of CI&T FLOW and our AI-driven services in our top 10 clients. We are growing in the current -- even if we remove the top 1 or top 10, the rest of our top 10 clients are growing 10% year-over-year. That's huge. And this is basically because we are showing them concrete ways to getting efficiency and improve their value capture around AI.
Got it. What are you seeing in terms of pricing environment with clients today?
I think it is stable. We see opportunities around new pricing models. But as I mentioned before, it will depend on, let's say, a reeducation of the procurement areas of our clients, of huge clients to understand the new possibilities of evolving from time mature or fixed price to different models, especially outcome-based, consumption-based models.
Do you have clients using outcomes based?
Yes.
You got it.
We have. We have several clients. It's not relevant yet, but it's clearly a curve that will continue to evolve along the next years.
And in terms of growth for the year in terms of visibility, are you able to break down kind of contractually committed for fiscal '25 versus, say, what's still in the pipeline and go get and need to achieve?
For 2025, basically, our guidance is based on our committed revenue. Pipeline is -- conversion of pipeline would add on top of that. But conversion of pipeline from now on is really important to allow us to project a very strong 2026.
Got it. And in terms of switching gears from growth in clients to profitability, can you just talk to us about your EBITDA margin drivers that you have at your disposal?
I think our EBITDA margin is following the seasonality curve that is normal for CI&T with higher cost in the Q1 based on salary readjustments in Brazil. And then along the year, we have price adjustments, especially in our Brazilian reais contracts. And also, we have the incremental dilution of our G&A based on our incremental growth. So we are following the same pattern this year and aiming the midpoint of our guidance.
Got it. Are you -- in terms of utilization or, say, attrition in terms of utilization, how is that shaping up? Do you think your bench is adequate for your growth thereafter? Are you -- do you think you have additional capability to increase utilization?
We are keeping our utilization rate in the healthy range of 85% to 89%. We like to play in this space. And we continue to increase our head count based on basically meeting the curve of revenue. So we don't see any meaningful difference in terms of utilization or head count increase along the next quarters.
Got it. In terms of attrition, I know historically, you've always been pretty low. So how is that faring today, both? I know you typically talk about kind of senior management and then the broader employee base. How is that trending?
I think the market is, let's say, comfortable in terms of supply. We have been able to hire and retain people in a very good fashion. This is a combination of, I would say, less aggressive environment, but also our value prop for our teams is very strong around AI. We are turning every single CI&T in an AI-boosted profession. And I think this is helping keeping our attrition very low and also very high level of engagement.
Can you talk to us about your hiring? Like do you use a lot of kind of more junior talent that you can attract with CI&T FLOW and have this opportunity to work on interesting AI opportunities? Or is there like a push for more mid-management or senior management? Just talk to us where you're at with the pyramid of employees.
We are playing both. We are reskilling our most senior CI&Ters to be very strong AI players, but we also invest a lot on fresh grad and trainees because we believe that there is a huge opportunity around creating a new generation of native tech encoders. So we had a lot of good results on speed up careers of juniors and mid-term engineering. And so we are playing both. I think it's part of our long-term strategy of developing our own people, of course, combining with some specific hiring for specific skills that we need.
Can you talk to us about your hiring in terms of where you've seen the talent come from or maybe the attrition? Like where are the people going if they do leave?
I think we -- in terms of geography, for our 2 main markets, that is U.S. and Brazil, we count a lot on Brazil and Colombia. Colombia will be -- is growing a lot. It will be a second source of talent for CI&T, especially to support our largest market that is the U.S.A. In terms of -- we have a strategy of creating partnership with the best universities in every single geography we are playing and fostering long-term relationships with them and creating a reputation inside these schools so we can have access to the best talent. And also, I think we evolve a lot really, we apply a lot of AI in our hiring process. I can say we reinvent the whole workflow of hiring in the last 2 years. So now we have a very effective way to really screen the market and find the right talent we need in the right moment.
That brings me to work from home. What is your -- do you see your staff working a lot on-site? Is there a work-from-home component still? How does that look like for CI&T?
It's a combination of remote and in-person. We have a very flexible model. It varies from geography and business units. There's a lot of flexibility. We believe it's -- the possibility of hybrid work is a value to our team. So we -- and we learned -- since the beginning of the pandemic, we learned how to do that. I think we do in a very streamlined way. So we are comfortable. And the way we operate give us a lot of scalability in terms of expanding new geographies and combining [ in-person ] moments, [ rituals ] to create the kind of relationship we think is necessary to preserve the culture, but also with the flexibility and scalability that remote work can give us. So we are very comfortable with our very flexible model.
Understood. In terms of locations both for clients and employees, we know that the U.S. and Brazil are your core markets, but you have some exposure to other markets. Can you just talk to us about CI&T's ambitions to grow? We see competitors growing globally. What is your plan and your strategy towards this?
Sure. Despite Latin America that we are serving with Brazil and Colombia now and North America, also counting on Colombia. We have Canada. We also have a good team in Portugal, basically focused on supporting U.K., our business in U.K. Recently, we start Philippines as a way to support Australia, and we have China and Japan as locations to support our global clients around the world. So I think we are expanding based on our client demand and the way we see our business evolve.
Understood. Understood. Are these mostly clients like local clients champions or, say, like a global Pepsi operation that you're working with globally? Is it local clients [indiscernible]?
It's heavily based on global players where we are supporting these companies in different geographies and time zones.
We have about 5 minutes left. I'll pause in case any questions in the crowd, else, we'll move on to capital allocation as our final section. If none, one more question on capital allocation. Can you just talk to us about your priorities for the year, specifically M&A and R&D? We'll start there and then maybe talk about some past acquisitions.
Sure. I think our very strong cash flow generation allow us to focus on continuing to invest on R&D team to develop CI&T FLOW and the capabilities of our team, especially around AI. Secondly, we continued our stock repurchase buyback program. I think it's also a way to generate value to our stakeholders, our shareholders. And we are ready for M&A opportunities that we continue to screen the market, especially in the U.S. And if we find opportunities that will add on top of our organic growth, we will execute. So basically, CI&T FLOW, the buyback program and be ready for some M&A opportunities.
In terms of M&A, are there specific like areas that you're focused on? Is it, say, specific verticals you want to bolster? Is it specific capabilities or maybe a geography?
Our main criteria is basically companies that are working with very large customers, customers that we see expanding to become CI&T global typical clients. And the main geography is the U.S., where we see, especially in short and midterm, the largest opportunity for high growth.
And I know like post-IPO, you went through that whole phase of a certain set of number, 4-or-so acquisitions. And then you made it clear that you're going to work on integrating those correctly and then perhaps looking again. So we seem to be in that kind of Phase 2 stage. Is there -- are you seeing opportunities that you like? Is it kind of like why might you not be acquiring right now?
Yes. I think we were -- after the initial wave of acquisition we did after the IPO, we decided to focus on our own AI transformation. I think this reskilling the whole CI&T, creating new offerings evolve our positioning was the main priority. And I don't -- I didn't want any distraction from that. Now that I think we are very comfortable with the way our AI strategy is evolving, we are again open for opportunities. And with the -- one additional, I think pricing, it's a good moment for pricing in terms of M&A. But now there is a new factor, we need to check if this target companies, they have the kind of relationship CI&T can leverage in terms of AI transformation. So it's an additional criteria we are adding on top of the typical ones. So -- but we continue to see screening in the market. And we probably will -- we consider M&A a good way to speed up our main source of value creation that is organic growth, but basically careful regarding if we are finding the right profile.
Understood. That's all we have today. So thank you so much, Cesar, for your insights, and I hope everybody enjoys the rest of the conference.
Thank you, [ Gab ].
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