CI&T Inc(CINT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, the company reported a record net revenue of R $656.5 million, a 25.6% increase compared to Q4 2023, with a constant currency growth of 14.7% year-over-year [8][20] - For the full year 2024, net revenue reached R$ 2,368 million, representing a 6.0% increase compared to 2023, with a constant currency growth of 1.3% [10][21] - Adjusted EBITDA margin for Q4 2024 was 19.5%, surpassing the industry average, while the full year adjusted EBITDA margin was 18.7% [9][27] - Adjusted net profit for Q4 2024 was R $78 million, reflecting a 41.3% year-over-year increase, with an adjusted net profit margin improving from 10.6% to 11.9% [9][28] Business Line Data and Key Metrics Changes - The top 10 clients' revenue increased by 40% in Q4 2024 compared to the same period in the previous year, driven by the use of CI&T FLOW [8] - Revenue from North America grew by 7.5% in 2024, while Latin America saw a 6.2% increase, primarily supported by clients in the financial services sector [22] - The retail and industrial goods sectors recorded a 70% year-over-year revenue increase, while consumer goods rose by 14.9% [23] Market Data and Key Metrics Changes - The company experienced stable demand from large organizations despite macroeconomic uncertainties, with a 30% stronger pipeline compared to the previous year [40] - North America and Latin America are expected to drive strong growth, while Europe is anticipated to have a more stable outlook due to geopolitical concerns [67] Company Strategy and Development Direction - The company focuses on three strategic pillars: leveraging artificial intelligence through CI&T FLOW, maintaining a culture of excellence, and a client-centric approach [7] - The company aims to be the partner of choice for clients, scaling engagements as they mature and expanding wallet share [24] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand for AI-driven solutions is increasing, with a strong pipeline indicating promising growth for 2025 [40] - The company expects Q1 2025 net revenue of at least$ 110.5 million, reflecting a 12.6% year-over-year growth at constant currency [34] - For the full year 2025, organic net revenue growth is projected to be in the range of 9% to 15% year-over-year [34] Other Important Information - The company will transition its presentation currency from Brazilian Reais to U.S. Dollars starting with the 2024 annual report [30] - Cash generation from operating activities totaled R$467 million in 2024, indicating strong organic operations [11][29] Q&A Session Summary Question: Concerns about geopolitical macro news affecting client spending - Management indicated stable demand from large organizations despite macro uncertainties, with a stronger pipeline compared to last year [39][40] Question: Use of cash and potential M&A activity - The company may resume M&A to accelerate organic growth, focusing on targets that enhance capabilities in the U.S. [44][45] Question: Sales investment and customer acquisition - The company plans to continue increasing sales investments, leveraging AI for efficiency and expanding its sales structure [53] Question: Capacity utilization trends - The utilization rate is expected to remain strong between 85% and 89% [57] Question: Guidance for 2025 and currency assumptions - The company is guiding for strong growth in North America and Latin America, with a cautious outlook for Europe [67] Question: Impact of Gen AI on client engagement - AI is becoming embedded in all aspects of digital project development, with half of the demand focused on application modernization and the other half on improving customer experiences [76] Question: Sequential weakness in North America and Europe - Management noted that North America's performance is attributed to regular seasonality, while Europe is affected by geopolitical factors [82] Question: Effects of new legislation in Brazil on client reactions - The company is proactively engaging clients to minimize the impact of payroll taxation through productivity gains [90]