CI&T Inc(CINT)2022-11-17 16:30Financial Data and Key Metrics Changes - The company's net revenue for Q3 2022 was BRL 559 million, representing a 49% year-over-year growth, with 35 percentage points from organic growth and 14 percentage points from acquisitions [14][23] - Adjusted EBITDA margin for the quarter was 19.2%, showing a sequential improvement from 19.1% in Q2 2022 and 17.5% in Q1 2022 [28] - Adjusted net profit reached BRL 69.5 million, a 157% increase compared to Q3 2021, with an adjusted net profit margin of 12.4% [29] Business Line Data and Key Metrics Changes - The company added 71 new clients in the last 12 months, increasing the total number of clients with annual revenue above BRL 1 million to 147 [14] - Revenue from financial services grew by 38%, food and beverage by 27%, TMT by 99%, and farming and cosmetics by 50% year-over-year [27] Market Data and Key Metrics Changes - North America remains the fastest-growing market, with expectations for further growth following the acquisition of NTERSOL [26] - The company recorded revenue growth across all regions and industry verticals year-over-year [26] Company Strategy and Development Direction - The company completed its first wave of acquisitions, including NTERSOL, which enhances its capabilities in the financial services sector and nearly doubles its onshore team in the U.S. [8][10] - The focus remains on organic growth, leveraging recent acquisitions to expand presence in new geographies and verticals [13][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver solid growth in 2023, despite macroeconomic challenges, citing a strong pipeline and long-term client visibility [39][65] - The company anticipates net revenue growth of at least 58% year-over-year on a constant currency basis for the full year of 2022 [31] Other Important Information - The company was recognized as a Great Place to Work in Brazil and all countries of operation, highlighting its talent retention and engagement strategies [19][20] - The adjusted EBITDA margin was impacted by lower margins from recently acquired companies and increased G&A expenses due to the IPO [28] Q&A Session Summary Question: Changes in client priorities and project delays - Management noted a strong client pipeline but acknowledged trends towards shorter investment cycles and a focus on efficiency due to the macro environment [34][35] Question: Expectations for 2023 growth - Management is still finalizing the 2023 budget but anticipates solid growth based on a strong 2022 performance and new client additions [37][39] Question: Specific geographies or verticals showing strength or weakness - Management reported consistent growth across all verticals and geographies, with notable trends in financial services and retail [42][44] Question: Supply-side dynamics and wage inflation - Attrition rates have decreased to 15%, and while the market remains competitive, wage inflation pressures have subsided [46] Question: Pipeline of projects and client project postponements - Existing clients are taking a more meticulous approach to project initiation, focusing on initiatives with quicker returns [48][49] Question: Future M&A activity - Management indicated that the focus will shift to leveraging recent acquisitions for organic growth rather than pursuing new M&A in the immediate future [51][53] Question: Integration capacity for multiple M&A - The company has a structured approach to integrating acquisitions as independent growth units, allowing for parallel integration processes [55][59] Question: Financial contribution of recent acquisitions - Acquired companies are expected to initially operate at lower EBITDA margins, with plans to enhance their profitability over the next 1 to 3 years [62]