CI&T Inc

Technology is more than a device, system or industry.

Technology is built by people for people.

It's built for people with desires and needs and ambitions. By our people who are... ...intelligent, curious, creative... ...and the diverse.

Our people use innovative strategy, design and engineering to offer end-to-end solutions that help companies to quickly transform and scale their operations globally.

While we create technical solutions, all we really want and what motivates us is to make their tomorrow.

CINT, we breathe and build tech to make their tomorrow.

Good morning and welcome to CINT earnings call for the first quarter of 2023. I am Eduardo Galvão, Investor Relations Director at CINT, and I'm happy to be here again to talk about our results. With me on today's call are Cesar Ghosn, founder and CEO, Bruno Ghikadi, founder and president for North America and Europe, and Stanley Rodrigues, our CFO. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After that, there will be a question and answer session for analysts and investors. If you'd like to submit a question, please send it via email to investors at cint.com. The presentation is available on the company's investor relations website, and the replay will be available shortly after the event is concluded. Some of the matters we'll discuss on this call, including our expected business outlook, our forward-looking statements, and as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors described in our earnings release and discussed in the risk factors section of our annual report on Form 20F and other reports we may file from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on those forward-looking statements because they're valid only as of the date when made. During this presentation, we'll comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS measures in the appendix for more details. Our agenda for today includes an update on our financial highlights, followed by some of our successful business cases. We'll then talk about our people and deep dive on our quarterly financial results. After the presentation, there will be a Q&A session. Now, I invite Cesar Ghosn to begin our presentation. Cesar.

Thanks, Eduardo. Good day, everyone. Thank you for joining us. It's a great pleasure to be with you today and discuss our results and achievements. It's unescapable to start by sharing a few reflections on artificial intelligence. 77 years after the introduction of ENIAC in 1946, the first general-purpose digital computer, I believe we are on the verge of probably the most disruptive moment in the history of computers on Earth. However, I must start by saying we are still decades behind achieving sci-fi like artificial general intelligence. But no, AI is not just a hype. It's a transformative technology with real world applications and rapid advancements. However, there is hype surrounding artificial intelligence, leading to inflated expectations and misconceptions. A few weeks ago, I published an article in the MIT's Law Management Review titled, Software is Eating the World and AI is Changing the Manual, organizing my reflections on opportunities and risks associated with this unprecedented productivity disruption in science and engineering. You can download my article on my LinkedIn account. Turning our attention to the corporate world and what is actionable right now, I see two major opportunities. The first one is what I call hyper productivity in the entire flow of producing digital platforms and solutions. This is a very welcome and needed solution for the efficiency dilemma that large companies are facing after so many years of investing in digital. And the second opportunity is starting to explore an entirely new set of possibilities to engage and generate value for customers. starting by moving away from smartphone and app-based interfaces to more human, natural language interactions, and going further for things we will have to invent. At CINT, we are already partnering with our clients, co-creating the future in this new chapter of innovation and endless possibilities. And for me personally, I feel blessed to be living in such exciting times. Now, moving on to our quarterly financial highlights, I'm happy to kick off this cloudy 2023 with solid results from top to bottom. Our net revenue was 610 million reais in the first quarter of 2023, an increase of 24.3% at constant currents year over year. We reached 180 clients with annual revenue above R$1 million, adding 70 new clients in multi-million accounts in the last 12 months. The adjusted EBITDA margin in the quarter was 19.1%, an increase of 1.9 percentage points compared to Q1 2022. Adjusted net profit was 67 million reais, 70% higher than first quarter 2022, with an adjusted net profit margin of 11%. In addition, we generated 116 million in cash from operating activities in the quarter. These figures indicate our strong performances, showcasing our agility in maintaining a lean organizational structure and successfully adapting to changes in their external market environment. I'm grateful to all CITers worldwide who have been dedicated to creating value for our stakeholders. Now let's see some examples of our clients' engagements and some of our business highlights for the quarter.

Alelo, a financial services company specializing in benefits, incentives, and corporate expense management, wanted to expand its multi-benefits product to the retail sector. It was previously only available for large and medium-sized companies. The company needed to integrate the multi-benefits product with the retail sector system in four months. Alelo worked with CI&T engineering team to identify innovation and architecture evolution opportunities.

Alelo and CI&T worked together to modernize the retail sector system.

The engineering team successfully integrated the multi-benefits product into the retail sector system within four months. The new architecture allows for implementing additional features and phases out legacy technology. The product orders increased significantly, boosting revenue and customer base. The collaboration between Alelo and CINT demonstrates the power of technology and innovation to drive business success. Flight Centre, one of Australia's most recognised travel brands, had been on a journey for over 40 years as a travel expert, organising flights, stays, cruises, tours, travel insurances and more. When the partnership with CI&T came in, the goal was to enhance scalability and create a seamless online presence consistent with the brand's image across the world. Through complementary skillsets and collaboration, the teams worked together to rapidly globalize elements of the website, migrate blog content, and develop a Next.js application. In just six months, with CI&T flight center teams, transformed five separate legacy websites into a unified future-proof tech stack. The new architecture includes multi-local market support at its core, making it easier to adapt to changing business needs and support multiple languages. The sweet sound of app modernization success. While a major US audio company featuring broadcast, podcast, digital, social, and events was dominating their industry, the existing sales technology platform was not keeping up. Knowing that speed to market and the ability to adapt and innovate were key to maintaining their market dominance, the company reached out to CI&T to make improvements that would keep them at the top of their industry, worked with the companies in-house, IT team to not only modernize the foundation platform, but also improve apps by creating new features demanded by the business base. Each successful product or feature rollout helped build confidence in the CI&T approach, helping to shift the legacy mindset. The combination of increased efficiency and reduced costs have strongly positioned the organization for the future. Welcome to our latest update. We have gathered the most recent information and insights from our leadership team to share with you. CI&T was on Web Summit Rio, the largest tech event in Brazil. In May 1-4, 2023, the event brought together more than 15,000 people at Rio de Janeiro. Our speakers delivered insights to transform the future of organizations, highlighting perspectives to think about a digitally efficient future powered by artificial intelligence. CI&T was invited to bring insights such as benefits and challenges around the usage of generative AI and presented a session with Tab9 Google Data Cloud and AI Summit on March 29 in the session called Using Generative AI. To code with Tab9 and Google Cloud, Luis Ribeiro and Brandon Jung discussed what generative AI is and why leveraging it for developers is the ideal place to start. Better Future, the world's largest network of design award programs, announced CI&T Australia as a silver winner of the AwardGov Design Awards 2023 in the category Equity and Inclusion. The Vic Emergency Mobile app, a collaboration with Emergency Management Victoria, aimed to use AI translations to provide real-time emergency warnings in multiple languages while maintaining visual and textual context. The project's pilot phase successfully implemented the AI translation solution and delivered a world-leading solution with improved accessibility, features, and multilingual information. Throughout International Women's Month, CI&T continued the commitment to gender equality and equity. In Brazil, TET Voices, Women Edition 2023 was a series of free online events aimed at providing insight for the next generation of women in tech. Other countries celebrated with many events and initiatives, such as workshops, talks, and meetups. The initiatives aimed at the female sphere, including those of Women's Month, were only possible thanks to the Women's Action Group at CI&T. Check out Silvana Chavier presenting the group's goals and achievements so far.

We've made significant progress in the last 5 years. We've increased the number of women in top leadership positions by 6 percentage points and the overall representation in the company by 10 percentage points. We believe in continuous improvement, supported by numbers. That's why the Women's Action Group has developed and implemented a pay gap and glass ceiling model, which led us to close the gap between male and female sellers to a maximum of 2%, which currently stands at 2.6%. We're committed to empower and support women and are always striving to improve.

We believe in building a better tomorrow for all women as we continue to unlock the potential of business transformation. This is our latest news. Our aim is to continue providing transparent and relevant information to keep you informed and up to date on our latest developments and achievements.

CINT prides itself on having a team of specialists who bring expertise to a wide range of industries. We count on valuable insights from two of our specialists, David Ritter, who specializes in financial services, and Melissa Minko, who brings her expertise to the retail industry. Our specialists further elevate CINT's research capabilities and analytical insights. Minku and Ritter both possess deep knowledge of industry trends and challenges that merge with a cross-section of technology. With decades of industry experience covering financial services, payments, consumer finance, and financial technology, as a research analyst on Wall Street, Ritter is our Director of Financial Strategy, where he brings an informed point of view to executive marketing and sales efforts, as well as lead solutions for identified banking pain points. Melissa Minko, Director of Retail Strategy, is responsible for synthesizing strategy, insights, and data to help identify actionable retail services trends and lead strategic sales and client engagements. She is a retail wire brain trust expert and a retail futurist whose methodology is rooted in cross-industry consumer insights and innovation. Through their experiences and knowledge, we can explore the unique challenges and opportunities in these two industries and learn how CI&T is helping clients stay ahead of the curve. Software is eating the world, and AI is changing the menu. An Artificial Intelligence's Odyssey Through Ethical Challenges and Societal Transformation by Cesar Ghosn.

AI can potentially transform the software landscape and redefine work AI will likely impact every profession, just as each technological revolution has created and deprecated activities. In most jobs, this technology has the potential to revolutionize medicine and science, improving the well-being of humanity. But there is also controversy surrounding AI, particularly around issues like privacy, Copyright and transparency in model training. But despite these challenges, AI has the potential to democratize knowledge and empower people around the world. More people than ever before will have access to affordable tools that amplify their power and creativity and impact their lives. The potential to use these tools to solve seemingly impossible problems such as human biology, cancer, dementia, longevity, or anticipating natural disasters is astonishing. The emergence of an industry battle among tech giants to dominate the generative AI space and its foundations is just a symptom of AI's vast potential. I believe the benefits of AI far outweigh the risks. It's a brave new world of possibilities, and I'm excited to see where it takes us.

To learn more about the potential and controversy of AI, be sure to check out Gon's article.

I hope you liked our client stories, news, and highlights selection. From here, I invite Bruno to talk about our talent management.

Thank you, Cesar, and good morning, everyone. It's great to be here again. Our attrition rate in the first quarter of 2023 was 12% compared to 16% in the first quarter of 2022, and it continues in a downward trend. We are glad to be back at our historic attrition levels and to see that our investments in our people are bearing fruits. Most importantly, our leadership attrition rate is below 4%, ensuring consistency in our delivery and high-quality service for our clients. We ended March 2023 with 6,500 CITers, a slight reduction compared to the previous quarter. This decrease reflects our active headcount management to adapt to the current demand environment. Part of this reduction comes from back office functions as we are capturing synergies from the recently acquired companies. On the delivery side, we are reducing the number of people on the bench in order to maintain a lean and nimble organization and adapt to a slower pace of growth. These actions will allow us to direct investments to research and development in our artificial intelligence initiatives, as Cedric mentioned earlier. In other words, we are committed to balancing healthy profitability margins in the short term while keeping investments that will sustain long-term growth. Last year, we made strategic moves to diversify our geographic footprint. Our decision to expand globally was driven by a vision of creating more value for our global clients and pursuing new opportunities in dynamic markets. First, our expansion to the U.S. market with the acquisition of Intersol has proven strategic. We have established a relevant footprint in the U.S. and expanded our expertise in the financial services vertical. The U.S. continues to show great potential for sustained growth and we are committed to maximizing its opportunities organically. In parallel, our foray into the European market has yielded promising results. We have gained traction in this highly competitive landscape by leveraging our established brand with SOMO's reputation. We aim to strengthen our position in Europe even further and develop our strategic partnerships to drive growth in this region. In Asia Pacific, the acquisition of Transpire has allowed us to incorporate key Australian clients successfully, and the growth trajectory in this region is very encouraging. We remain dedicated to capitalize on this momentum. Last but not least, Brazil continues to be an excellent opportunity for us. Besides offering significant market potential, being one of the top 10 tech markets globally, it also has a very progressive digital consumer base that is quick to adapt to tech trends in segments like financial services, retail, and consumer goods. This characteristic, combined with our commanding position of that market, provides us with fertile ground to create innovative digital solutions that are impactful to our clients and trendsetting globally. As we continue to foster our operating model by combining teams close to clients and remote teams working from anywhere, our strategy is to attract and nurture top tech talent across the globe. We understand that our diverse and highly skilled workforce is paramount to staying competitive in today's digital age. So our commitment to fostering a culture of continuous learning and personal development ensures that our tech talent remains at the forefront of industry trends in emerging technologies. Now, I will pass it over to Stanley to comment on our financial results.

Thank you, Bruno, and good morning, everyone. I'm happy to be here again to discuss our financial performance with all of you. We are proud to deliver another set of solid results during the first quarter of 2023. Our net revenue in the first quarter of 2023 was R$ 610 million, 24% higher than the first quarter of 2022, both on a reported and on a constant currency basis. Our strong revenue growth derives from our expansion within existing clients, the addition of new clients every quarter, and our programmatic M&A strategy. North America is our largest market, accounting for 46% of our revenue in the first quarter 23. And if we combine it with Europe, with 9% of revenue, and Asia Pacific, with 5% revenue contribution, we have more than 60% of our revenue coming from mature economies. LATAM represents 39% of revenue and a great exposure to an emerging market, as Bruno mentioned. As of this quarter, we present you with a new classification of our revenue by industry vertical. We have done small adjustments to it, mainly changing the food and beverage to a more broader category of consumer goods and a similar move from pharmaceutical and cosmetics to life sciences. We believe this new classification better represents our business trends and go-to-market strategy. You can find more details of the new revenue breakdown from the previous years in the fact sheet available on our investor relations website. Finally, we continue to grow our revenue base from our top 10 clients, while the addition of new logos and M&A contributed to diversify our revenue base even further. Now, let me detail the components of our growth profile. In first quarter 23, we continued to consistently diversify our client base by adding 70 new clients with revenue exceeding 1 million reais to our portfolio as compared to the same period in 2022. In addition, we increased the number of clients with revenue above R$ 20 million from 22 clients in the previous quarter to 26 in Q1 2023. Our client base remains predominantly from brick-and-mortar clients, representing around 90% of our revenue, while digital native represents approximately 10%, providing resilience to our business during uncertain times. Our net revenue retention rate over the past five years has been around 123%, demonstrating that new clients have the potential to expand and thrive over time, which is critical for our sustainable growth through 2023 and beyond. Moving on to our profitability metrics, our adjusted EBITDA increased by 37.9% from 84.5 million reais in the first quarter 22 to 116.5 million reais in first quarter 23. Adjusted EBITDA margin was 19.1% in the first quarter 23, 1.9 percentage points higher than first quarter 22. The substantial improvement in the EBITDA margin reflects our discipline in managing costs, combined with the dilution of sales, general and administrative expenses, as we indicated in our previous calls. We are taking a proactive and disciplined approach to identify areas where we can optimize our operations. By diligently analyzing our cost structure and streamlining processes, we are promoting innovative cost-saving initiatives and continuously seeking opportunities to enhance productivity. Part of this savings will be dedicated to invest in research and development of artificial intelligence initiatives as we understand the significance of investing strategically in areas that generate long-term value and drive future growth. The adjusted net profit was 67.2 million reais in the first quarter 23, an impressive 70% growth when compared to the same period of last year. The adjusted net profit margin increased from 8% in the first quarter 22 to 11% in the first quarter 23, due to our focus on maintaining a lean cost and expenses structure combined with lower income tax expenses. In addition, we generated R$ 116 million in cash from operating activities, which represents 100% of cash conversion to adjusted EBITDA, and free cash flow was R$ 89 million, excluding the CAPEX from our net operating cash flow. Finally, our board of directors recently approved a share buyback program, authorizing the company to purchase up to 1.5 million of the company's Class A shares over the next 12 months. The amount of shares approved in the program was based on the company's commitment to deliver shares for its stock-based compensation plan and M&A purposes. Therefore, this program will allow the company to substantially offset dilution expected in 2023 and 2024. We project to continue generating solid free cash flow in 2023, providing us flexibility on our capital allocation strategy. With that, I invite Cesar back to comment on our business outlook.

Thank you, Stanley. As we set our sights on the future, it's essential to acknowledge the prevailing uncertainty in the global economy. While our core client base, primarily comprising large enterprises, is, in general, maintaining their digital budgets for the year, we continue to observe a cautious approach when embarking on new initiatives. In this scenario, we will persist carefully in navigating 2023, prioritizing bottom line and cash generation, while preparing our teams and capabilities, especially in artificial intelligence, to resume more aggressive growth in 2024 and beyond. For the second quarter of 2023, we expect our revenue to be at least R$570 million, a 90% growth year-over-year. For the full year of 2023, we are maintaining our FX-neutral net revenue growth guidance in the range of 13% to 17% year-over-year, and our adjusted EBITDA margin expectation of at least 19%. In conclusion, I would like to express my gratitude to our stakeholders, clients, investors, partners, and CIN tiers for your support and dedication toward our long-term shared vision and objectives. Thank you all for attending our call today. We now conclude our presentation and may begin the Q&A session. Thank you.

All right, we'll now begin the question and answer session. I'll announce each participant's name. Once you hear your name, please unmute your line and ask your question. Then when you're done, please mute your line. First question comes from Tyler Dupont from Bank of America. Tyler, your line is open.

Great. Thank you. Thank you, Eduardo. And good morning, everyone. I just want to start by asking if you can speak to some of the demand assumptions that you have baked into the 2023 guidance outlook. I know it looks like both revenue and margins were reiterated, but how should we be thinking about the cadence of demand? Are you assuming that the current macro will remain relatively stable through the year? Or are you anticipating a ramp up in the back half of 23? It looks like based on the 2Q REVS guidance, you're expecting some back half reacceleration on revenue. So just any clarity there would be helpful.

Thank you. Great to see you, Tyler. Well, I think, as you saw, we are probably delivering the best Q1 in our industry, strong top and bottom line. And our Q2 guidance is in line with our budget and forecasts. I think there's two effects when we compare it with Q1. Firstly, in our reported revenue for Q2, we are anticipating an FX effect due to the recent appreciation of the real against the dollar. And we are also delivering a key one above our expectations, mainly due to additional revenue from short-term strategy engagements with new clients. And now we believe that this can turn into long-term end-to-end engagements in the second half of the year on. So we are considering this will be a very positive I would say non-trivial year. We are keeping our guidance. We are optimists, cautiously optimists about the year, but we still are playing conservatively due to the macro uncertainties.

Okay, great. Thank you. I appreciate that. And I guess sticking with the OneCube performance, during the quarter, the results seem fairly strong, growth 400 basis points above guidance. So I was just wondering if you can speak to what surprised you during the quarter. Were there any particular vertical or geographies that experienced an outside surprise that you weren't anticipating or any new client signings that leads to this growth?

I think, Taylor, the main good Good news is this onboarding of new global clients in Q1. Still playing strategy engagements, but we believe that is a good chance on turn this in long-term initiatives with us. I think this demand on strategy is a reflection on on the discussion on how to deal with the new set of possibilities around artificial intelligence, how this will reshape your digital strategy. How should we really adjust our hypothesis based on such a disruptive moment? So I think I would credit this good new set of digital possibilities around not only AI, but mainly AI advancements.

Okay, great. If I can chime in real quick on this matter, like I think that the most of our clients understood that, uh, the possibilities of this new set of AI tools, mainly generative AI in saving, you know, operational costs and kind of automating a lot of, you know, activities. And that's the perfect moment for that type of exploration, right? The economic downturn that everybody's going through. So it's been creating a lot of traction in a lot of discussions that we think some of them will materialize and, you know, great engagements in the second half of the year. that will benefit for us, but also benefit for clients kind of freeing up resources and maybe creating a bandwidth to invest in more innovation in the digital initiatives.

I appreciate all the color. Thanks.

Thank you, Tyler. Next question comes from Brandon from JP Morgan. Brandon, please go ahead.

Hey, guys. Thanks so much. Yeah. And first of all, congratulations. Super strong performance. Puneet conveys his congratulations as well. So I'll kick it off kind of on another question on the 2Q guide. So you guys got it for like a $20 million sequential deceleration when you issued the one quarter guidance and you crushed it by roughly $20 million, you know, just under a $2 million sequential decline. And then now We've got a $40 million sequential decline in the 2Q guidance. So what's kind of going on in the business that makes you lean towards a steeper sequential decline in 2Q? And should we not expect you guys to crush it again?

Thank you, Brendan. I think I mentioned first is effects. We are really anticipating the recent appreciation of Brazilian reais versus dollar. And the second is, I think, is when we compare it, we are with the Q2 in line with our original forecast, but Q1 was surprisingly better based on good news on onboarding new clients and so on. But this onboarding, we believe it will take at least one or two quarters to convert in sustainable long-term operations. revenue source. So again, we are cautious, optimists, but playing conservatively due to the volatility of the year. But I could say we are really optimistic about what we are doing and discussing with our clients. As Bruno mentioned, Probably you remember, since the beginning of last year, we were playing the digital efficiency, value-proper message, and now we are boosting this value-proper with artificial intelligence, and the early results are extraordinary. So we are really optimistic about we can help our clients to, to really, uh, gain, uh, efficiency exploring this new set of possibilities. So I think, uh, we see the year again, cautiously, uh, uh, optimists right now.

Great. Thanks. Yeah. That's we're excited to see it unfold. If I could ask one more, a little bit of a longer term one, maybe, um, on really strong growth out of, uh, europe and and asia obviously off a little bit of a smaller base how do you guys think about that unfolding over more like the mid to longer term and what are you guys doing operationally to propel that strong growth i can take that one yeah please i think like a

Long-term, Brandon, I think our revenue distribution pie should look like more, you know, the size of those markets, right? So if you look at the markets like Australia and Japan and China, they are, you know, top, like China and Japan are like number two and number three in the world, so. Long-term, they should represent a bigger part of CIT revenue. So that's long-term plan. And Australia as well. Australia is actually bigger than Brazil, which is our number two market. So long-term, CIT revenue probably should look like the rankings of the biggest markets in the world.

Great. Thanks so much, guys. Congrats. Thank you, Brandon. Next question comes from Carlos from . Carlos, please go ahead.

Yeah, thank you. Good morning and congrats on the results. Just a couple of ones here. First of all, in terms of profitability, I had understood that you had commented on that you were expecting pressure in Brazil, particularly with the labor increase, the annual labor increase. So obviously the result is quite favorable. I'm wondering how we were able to offset that. And secondly, perhaps a more housekeeping thing for the model, I saw that your effective tax rate was much lower year over year. So I wonder how should we think about that going forward? Thank you.

I can take those. Thank you, Carlos, for the questions. Well, first question, EBITDA margin improvement in the first quarter is mainly explained by the dilution of SG&A expenses as we expected as the company grow. We are closely monitoring the cost and expenses structure to maintain a linear organization, healthy margins, especially during this growth environment that we are on. Part of those savings, though, we are redirecting to investments on AI and R&D. So thus, Carlos, we expect for the full year, we are maintaining that 19% EBITDA horizon, let's say. And for the second question with regard to the tax, last year we acquired And so the previous year we acquired the extra. Those acquisitions provided some tax benefit that they are maturing right now. So we are getting the full benefit right now. We expect, although the first quarter we have a significant extra effects that add to the lower effects rate, let's say, tax rate, sorry. But for the full year, we expect to be in the range of 21, 22%. That's the full year expectation. So due to seasonality, we have a lower, even lower for the first quarter, but the full year, that's the expectation we should have there.

Thank you for that very clear.

Thank you, Carlos. Next question comes from Ashrin from Citi. Ashrin, please go ahead.

Thank you, Eduardo. Good morning, everyone. Good to see you all. I guess my first question is with regard to the impact to the sales cycle because of macro concerns among clients. And if you could comment on that and say by geography, um that that would be would be helpful and i guess when i say sales cycle the the initial sales but also the sales the revenue conversion if you don't mind sure thank you russian great see you

I think we continue to see consistency on keeping the investment on the current initiative, so very, very good visibility on what we are already doing. But there's still a lot of, I would say, low visibility on ramping up of new initiatives. What we are seeing now is really companies, I think, considered to ramp up, especially things related to digital efficiency powered by AI initiatives in the second half of the year. As I said earlier, we are optimist, but still seeing this to be concrete. to update our expectations for the second half of the year. But what I see is I think this is an equation of the fact that 90% of our clients are traditional large brick and mortar companies where we have less volatility in terms of budget and investments, of course, more volatility on the 10% of revenue we have from digital natives companies, tech companies, fintechs, where the environment is playing against their ambitions of leveraging new capital and investments. So it's still, I think, a better moment now than the beginning of the year. But we are still cautious on our ability to convert this new set of pipeline and discussions in real engagements in the second half. But I would say it's a much better moment than in the beginning of this year.

Okay, no, that makes sense.

Regarding regions, we don't see a relevant difference among Latin America, North America, Europe, or APJ.

Okay, okay. No, that makes sense. I guess, you know, what should we then expect for margin cadence through the course of the year? Should it um follow what you have said about about revenues um and then um the related question is you know since you brought up ai applying ai to your own you know uh processes and improving your own productivity um in what impact can that have on your margins uh i guess do you keep it do you keep the benefit do you give it to clients how does that work

I can start and Stanley, you can compliment if you want regarding our plan for margins sequentially. Ashi, I think you are right. We are really boosting our digital efficiency value prop and offering with AI. This has an amazing potential to to generate efficient gains. That means opportunities to increase our pace of replacing performance competitors and increase our client share. And also opportunities to tackle a new set of problems that were hard to solve without this new set of technology possibilities. So I'm talking about new ways to create hyper-personalized solutions for clients or migrate from app-based solutions smartphone interfaces to more human natural language interactions and things that we will have to invent. And internally, there's a lot of opportunities. We are fully committed to apply this efficiency in our internal process. But as Stanley mentioned, we are also dedicating part of these savings to increase our creation of capabilities around AI and digital efficiency because we believe this will be our main vector of regaining high growth from 2024 on.

Okay, understood. So it's very interesting you mentioned the time increases also. It's not just the productivity. So that's a very interesting point. Thank you.

Stanley, do you want to comment on EBITDA?

I think to the EBITDA, as I mentioned before. Hi, Ashwin. Thank you for the question there. Well, EBITDA, again, we are in this focus, let's say, to bring and continue to maintain efficiency from cost to expenses. And of course, taking the opportunity of the synergies from the M&As. So integrations are going on. We are focused this year on integrating those acquisitions, as we mentioned previously. And again, as Cesar reinforced here, we are investing in those AI capabilities. And the sum of everything, that's why we keep focusing on delivering a 19% EBITDA as in line with the guidance we provided. We see lots of opportunities ahead of us, and we really have to be in line with those opportunities. So that's why margins are projected the way we mentioned.

Okay, so flattish through the course of the year.

That's it.

Okay, thank you.

Some seasonality in between, but the full year is 90%. Because as I remember, we have some seasonality, but it's all factored in.

Okay, thank you.

Thank you, Ashwin. We have one question here from the email associated with Ashwin's question. Given the seasonality in your business, how do you expect the EBITDA margin to evolve in the coming quarters? And a related question, cash generation was impressive in the first quarter. How do you project the cash generation for the remainder of the year?

Well, I can take that one. Cash generation in the fourth quarter, we have this 116 million reais in operating cash flow, which represents 100% cash conversion to adjusted EBITDA. Free cash flow was 89 million in the quarter. That's after CapEx. Cash generation benefited from improvement, mainly from improvement in working capital in the first quarter and mainly in the accounts receivable zone, let's say. For the second quarter, we have this profit sharing, cash disbursement. So usually seasonality plays here. First half, we generate less cash in comparison to second half. So, as a whole, for the full year, we expect to be around 50% to 70% cash conversion from EBITDA, I mean EBITDA to cash, which is our historical. So, this 100% that we see now in first quarter, we should consider that 50%. seasonality plays here. So for the full year, we aim for this 50 to 70% cash conversion from EBITDA. Does that answer the question? Yes, yes.

I think it's pretty complete. So that concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar Ghosn to proceed with his closing remarks. Cesar, please.

Thank you, Galvão, Bruno, Stanley. Thank you all for participating in our call. Once again, I want to thank all CINTers for the amazing achievements in this quarter. And a special thank you for our clients that are selecting CINT to co-create this exciting new chapter of innovation powered by artificial intelligence. Stay well. I will see you soon. Bye.